Bits and Pieces

Council links reported closure of Berger Performing Arts Center to potential Oro Valley Performing Arts Center
Last week, local media outlets have reported that the Arizona School for the Deaf and Blind will close the Berger Performing Arts Center on its Tucson campus effective June 30, citing funding and the closin of its Speedway location.  That reporting came after the Oro Valley Town Council had discussed the potential impact such a closure could have during last week’s strategic planning study session. At that time, Council members raised concerns about the possible loss of Berger, noting that the theater is widely used by Oro Valley-based groups and would cost tens of millions of dollars to replace. They also linked the issue to Oro Valley’s own discussions about a performing arts center, saying that the loss of a regional venue could shift demand to Oro Valley and affect the urgency and scope of any local project. Council members emphasized that the Town is not pursuing its own feasibility study, but intends to stay engaged with a nonprofit conducting a study and remain part of the broader regional conversation.

Council hires town attorney with Prescott Valley experience
This past Wednesday, the Oro Valley Town Council approved the employment contract for its new Town Attorney, a position that now reports directly to the Council rather than through the Town Manager. The Council selected Steven Zraick, a long-time Arizona attorney whose career has focused on municipal and public-sector law. Zraick most recently served as Deputy Town Attorney for the Town of Prescott Valley, where he advised elected officials, staff, and boards on day-to-day legal matters. Public records indicate that his legal work has been centered on local government rather than private practice, a background that aligns with the Council’s stated interest in strengthening its direct legal oversight.  The town attorney is responsible for providing legal advice directly to the Town Council, managing the Town’s legal department, representing the Town in legal matters, drafting and reviewing ordinances, resolutions, and contracts, and ensuring that Council actions comply with state law and the Oro Valley Town Code.  In his role, he may or may not replace the outside legal council at council meetings. 

Water impact fee shortfall flagged, changes to come before Council
Town water officials reported to the Water Utility Commission last week that the Water Resource & System Development Impact Fee, which is paid by new development to help fund growth-related water infrastructure, is projected to fall short in fiscal year 2026–27. Staff told the Commission that projected expenses of about $2.3 million exceed expected impact fee revenue of roughly $1.2 million, creating a gap tied largely to growth-related debt for major water projects. According to staff, current impact fees were set years ago and no longer reflect rising infrastructure costs. Staff said the next step is to prepare an updated impact fee analysis and bring a proposed fee adjustment to the Town Council later in 2026, following the state-required notice and public hearing process.

You can sign candidate nomination petitions online
Arizona voters can sign candidate nomination petitions online using the Secretary of State’s E-Qual system. Visit this link and select “Sign a Candidate Nomination Petition.” Log in with you Arizona driver license or state ID and date of birth to see which candidates they are eligible to support. The system allows you to review and sign petitions electronically, eliminating the need for in-person signature gathering and making it easier to participate in the local election process.

Stormwater Utility fee going up over three years
The Oro Valley Town Council approved a phased increase to the stormwater utility base rate on January 14. The increase will take effect July 1, at the start of the new fiscal year, and will be implemented over three years. The base rate will rise from $4.50 to $6.50 per equivalent residential unit (ERU) once fully phased in. Town staff said the additional revenue will support stormwater system maintenance, regulatory compliance, and flood control, noting that the stormwater rate had not been increased since 2016.

Water cost increase proposed for next July
At its January 12 meeting, the Water Utility Commission reviewed staff’s water rate analysis for FY 2026–27 and affirmed the recommended water rate changes for consideration by the Town Council. The recommendation includes an increase to potable water base rates only, with no changes to usage-based rates or reclaimed water rates; most residential customers with a 5/8-inch meter would see a $1.86 monthly increase. The Commission also reviewed the Groundwater Preservation Fee, for which no change is proposed. In addition, commissioners discussed the Water Resource & System Development Impact Fee, noting that projected expenses exceed revenues and that proposed changes would be brought to Town Council later in 2026 following the required notice and public hearing process. The amount of the proposed increase was not specified at the meeting.

November Financial Update: Town finances largely on track, construction sales tax trails budget
The town's General Fund revenues are tracking below budget through November 2025, largely due to weaker construction activity. Expenditures remain generally on budget due in part to vacancy savings. Community Center Fund continues to outperform expectations, the Highway Fund is tracking close to budget but may require continued capital fund support, and both the Water Utility and Stormwater Funds are trending positively. To address the General Fund shortfall, staff has taken cost-control measures including extended vacancies, reduced operating budgets, reconsideration of excess pension payments, and potential capital spending reductions, while noting that future transportation funding will depend on the outcome of the March RTA Next election [since the town is dependent on the RTA for public transportation] (Source: Budget and Finance Commission Meeting,  01-20-26)
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2024 State of the Town: Winfield Celebrates Oro Valley

Mayor Winfield’s celebrates Oro Valley

This past Thursday, Oro Valley Mayor Joe Winfield delivered the annual State of the Town address at the El Conquistador Resort. Sponsored by the Greater Oro Valley Chamber of Commerce, the event welcomed roughly 600 attendees and marked the town’s 50th anniversary, reflecting on recent accomplishments and plans for future growth. In his address, Mayor Winfield covered seven key areas impacting Oro Valley’s development and community life.

Safety initiatives focus on police accreditation and courthouse improvements
In public safety, Mayor Winfield highlighted the accomplishments and future goals of the Oro Valley Police Department (OVPD). Led by Chief Kara Riley, the department is completing its third accreditation through the Arizona Association of Chiefs of Police, a credential only two departments in Arizona will hold, further solidifying OVPD’s reputation for safety and excellence. Mayor Winfield also announced the improvements to the town’s court, including upgrades to the lobby, jury rooms, and facilities for safely transporting high-risk individuals. Winfield noted: “Maintaining a high level of public safety contributes to Oro Valley’s attractiveness as a safe community for families and businesses."

Water projects emphasize conservation and reduced groundwater pumping
Mayor Winfield also provided updates on water and sustainability initiatives, key to Oro Valley’s long-term resilience. As he noted, the town’s population in the water service area has grown by 14 percent over the past two decades, yet total water consumption has decreased by 12 percent, a sign of effective conservation measures. Furthermore, Oro Valley’s water utility has reduced groundwater pumping by 60 percent. To sustain these efforts, the town has dedicated $52 million for water utility projects, including $23 million toward the Northwest Recharge Recovery and Delivery System. This system, slated for completion in 2026, is expected to reduce groundwater reliance further, safeguarding the aquifer for future generations. According to Winfield: '“Water remains a key priority for growth and sustainability. Thanks to our community’s conservation ethic, advances in home construction, and strategic investments in water infrastructure, Oro Valley is well positioned for the future."

Economic growth continues through development permits and marketplace plans
On the topic of community development and economic activity, Mayor Winfield shared that Oro Valley issued over 2,200 permits in the past year, representing $133 million in private construction. Residential development continues, with 95 single-family permits expected this fiscal year, alongside two new apartment projects. Commercial growth is set to expand with the addition of a hotel and two senior living communities. Significant redevelopment is also underway at the Oro Valley Marketplace, where plans include four-story hotels, new dining options, and enhanced recreational amenities. He also noted that: '“Annexation remains an important tool for the Town’s future expansion, and we will continue to vigorously pursue all annexation opportunities that can be justified economically, environmentally, and socially for the benefit of Town residents.”

Additional topics covered included tourism, general plan, parks, and partnerships
In addition to these primary areas, Mayor Winfield touched on several other initiatives and accomplishments. Oro Valley was designated an official Destination Marketing Organization (DMO) to enhance tourism; the General Plan update, "OV’s Path Forward," is moving forward with community involvement; the Parks and Recreation Department has completed major upgrades, and partnerships with local, state, and federal entities are helping secure funds for infrastructure improvements. He also noted the November ribbon cutting for the Arizona Heroes Memorial, which is located in Naranja Park.  And, of course, he noted the completion of Naranja Park itself and the creation of the Vistoso Trails Nature Preserve.

Missing: No discussion of the towns' financial financial strength

Absent from this year’s speech was any discussion of the town’s financial health. By all accounts, the town is currently in a strong financial position. This has been achieved without any property tax, making the town unique not only in Arizona but across the country. It is certainly something that should be acknowledged. No organization can be successful if it is not first financially sound. Up to this point, Oro Valley has been just that.

Winfield: "Building a community that we are proud to call home"

Mayor Winfield concluded his address with a reflection on Oro Valley’s progress and a vision for the future, stating that “Oro Valley’s journey has always been shaped by its people, a community bound by a shared vision for excellence. Together, we’ve honored the past, thrived in the present, and laid a strong foundation for an even brighter future. With every project, partnership, and accomplishment, we carry forward the legacy of those who came before us. Here’s to the next 50 years as we continue building a community that we are all proud to call home.” 

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Watch event video

Read transcript

Bits and Pieces

Pusch Ridge Golf "Off to a great start"...But no "lessor" in sight
At Wednesday's Town Council Meeting, Town manager Mary Jacobs' reported activities that have been taking place at the Pusch Ridge golf course. The course opened in November and is "off to a great start." Among other things, she noted that the course has hosted two successful frisbee golf tournaments. 

Tony D'Angelo, President of the "Friends of Pusch Ridge Golf", discussed the remarkable success of the course. 3,958 rounds of golf were played on the course in November and December.  That is equal to total rounds played in 2020, the last year the course was open. "We are confident that we are going to more than exceed the budget."

Neither speaker reported on whether and how the town is taking on the challenge or reducing the enormous amount of drinking water used to irrigate the course.

The town has yet to find someone to lease the course. "Per Town Council’s direction, the Town issued a Request for Proposals (RFP) on November 1, 2021, to competitively solicit proposals for an operating lease at the Pusch Ridge Golf Course. The Town received one proposal from HGM Golf. The proposal was evaluated by Town staff relative to the requirements of the RFP and the specified evaluation criteria. At its conclusion, the proposal was deemed to insufficiently demonstrate that HGM is capable of successfully leasing and operating the Pusch Ridge Golf Course, and as a result, the Town will not proceed with further contract award actions with this firm. The Pusch course continues to perform well and is ahead of revenue projections for the season." (Source: Town Manager January 2022 Executive Report, P1)

Financial Update: "Things continue to look positive"
"Things continue to look positive in all our funds." This was the opening comment of Wendy Gomez, Oro Valley Finance and Budget Administrator, as she covered the town's financial situation through November.  According to Gomez, all general fund revenue sources are trending positive. Expectations are that actual revenues will exceed budget by $4.8 million. That's a 10% increase over budget.  At the same time, expenditures are expected to be $1.1 million under budget. The net result is an almost $6 million over budget result for the General Fund.

Other funds, including the Community Center Fund, are projected to be either on budget or slightly better than budget.

Town undertaking staff compensation study
The town is undertaking a study its compensation to employees. "The Town is finalizing its evaluation of proposals for the planned employee classification and compensation study. The City of Tucson, Town of Sahuarita and Town of Marana have all conducted similar studies recently that have led to some adjustments in their respective employee pay structures, either planned or implemented. The Town will be following the same process. Being the final municipality in the region to do this puts us in an advantageous position regarding salary comparisons. We expect to have the study completed by this summer and I plan to include funding in my FY22/23 Recommended Budget for implementation once finalized and approved by Council. Based on our counterparts’ changes or planned changes to pay structures, we do anticipate our own pay plan adjustments will be necessary to keep pace and remain competitive." (Source: Town Manager January 2022 Executive Report, P1))

The last compensation study that Town did in this area several years ago. It resulted in significant increases in employee compensation.

PSPRS Investment performed at "historic levels" in 2021
The town invested $27 million last year remind insurance in the Public Safety pension fund. Responding to a question of Vice Mayor Barrett at Wednesday's council meeting, Town finance Director and Gephart stated that the investment performed at historic levels in 2021. "The return for the fund was over 27%." 

This result is a tremendous win for the town. Town borrowed the $27 million they invested in the fund at an interest rate of approximately 3%. That investment earned a return far greater than that. 

Here’s What Happened While We Were Away…

Town Finance Director: Oro Valley successfully negotiated the financial challenge of Covid-19

…this according to town finance manager, Wendy Gomez speaking at the May 19 town council meeting was referring to the projections for the year based on actual results through March. Gomez attributed this to holding the line on spending; and that revenues “…have significantly out performed expectations.” 

Speaking of the general fund, Gomez noted said the fund revenues are estimated to be 20% over budget for the year, at $52,2 million. The primary sources of this are federal government “rescue” money; higher than expected local sales tax revenues (12% over budget); and increased commercial and residential construction activity that is driving license and permit revenue. Spending is estimated to be 2.7% under budget.

Council to consider completed Parks and Recreation Master Plan as a “reference” for future spending decisions

The Oro Valley Town Council discussed the parks and recreation master plan at it’s May 19 meeting. According to the town’s master plan project consultant, the master plan “…provides information over which to make decisions” on parks and recreation spending now and in the future. The council made it clear in the resolution it passed (Panel at right) that this plan is not going to be implemented as is and that the community will continue to provide input

“This work is an invaluable tool for us but we are not committing to any particular spending,” noted Council Member Bohan. “It’s a plan. It’s not something we are going to be locked into,” according the Council Member Joyce-Ivey.

Mayor Winfield and Vice Mayor Barrett have proposed what they would like to see happen with Parks and Recreations spending next year.

La Posada Senior Living Facility Development Progressing

In March, LOVE reported that the Nakoma Sky senior living project was back in operation. Owners of the La Posada Senior Living Facility (formerly titled “Nakoma Sky”) develop ment have submitted a new conceptual architecture plan for the main part (Area C on map at left) of their development. This is the five-story apartment portion. This retirement community is located north of Home Depot and on the northern side of the CDO wash. The Hiremath council approved the entire project in 2016. “The maximum height (75', 5 stories)was previously approved as part of the PAD zoning in 2014 and is not under consideration. However, the revised design reduces the building mass by decreasing the height of the residential buildings from east to west.” The Planning and Zoning Commission will hear this item in tonight’s meeting.

GRDF says: “No Burning”

The Golder Ranch Fire District announced this past Thursday that it will not issue any burning permits. Also, any permits issued during the past 180 days are revoked.  “The conditions in our region are very dry and we are going to do everything we can to keep our community safe,” says Chief Randy Karrer. (Source: GRFD Press Release). Remember last summer. One dry lightening strike and the Catalina’s burned for two months.

Fireworks Test June 3

The town is conducting a fireworks test of nine shots this Thursday at 8:30pm.  It is a test of the July 4th fireworks show from Naranja  Park.  The test is a chance for residents to see if they can see the fireworks from their house as there will be no in person visits to the park allowed on July 4.

uPetsia makes pet breath smell better for longer.

No. this is not an advertisement. Its about our Oro Valley based startup.

 

The company, uPetsia, resides in the Center for Innovation in Oro Valley. It is the winner of an event sponsored by the Oro Valley Chamber of Commerce. “uPetsia (rhymes with "“You betcha") is a startup focused on making dog breath smell better for longer by engineering bacteria for dog and cat microbiota. uPetsia's product is incorporated into pet treats and chews and provides hours of minty-fresh breath. The The winner for the UACI Sponsored Launch Fueled by Greater Oro Valley Chamber of underlying technology was developed at the University of Arizona College of Agriculture and Life Sciences and BIO5 Institute by founders Eric Lyons, David Baltrus and Scott Zentack. Tech Launch Arizona (TLA), the technology commercialization arm of the UArizona refined and protected the invention and also helped them identify their best market.” (Source: May 2021 Center for Innovation Newsletter)

Jacobs: Town of Oro Valley In a "Very Good Position"

A very good position

Town Manager Mary Jacobs expressed optimism in her report to the Oro Valley Town Council last week.  She observed: "We're in a very good position in comparison to a lot of communities across the country." 

General Fund Reserves should exceed target level at year end

General fund cash reserves are projected to be $3million more than the target level set by town council. The target level is 25% of total 2020 general fund spending. 

This estimate does not include approximately $105,000 CARE Act funds that the town will receive from the US Treasury via Pima County.

General Fund revenues should finish the year 3% under budget

Total general fund revenues are projected to be 3% ($1.2 million) under the adopted budget for the fiscal year.  Included in this estimate are:

• Sales tax revenues will be 6% under budget for the year.  Sales tax revenues were 10% ahead of budget through February.      
• State share revenues are projected to be 5% over budget. This will somewhat mitigate the loss in sales tax revenue.
• Licensing and permit fees are projected to be 21% under budget. 

General Fund operating and maintenance spending are projected to be 10% under budget. 

Good positioning for town operations

In a LOVE follow up interview with Jacobs, we learned that no town employee has been diagnosed with Covid-19. In addition, the crisis has challenged the town to change the way some things happen, accelerating changes that were "in the works" and likely to stay. For example:

• The town announced new processes for public meetings
• The town launch an updated website
• The majority of town employees telework
• Permitting is done online
• Some inspections are done remotely
• Jacobs hosts "e-Town halls" for town employees to augment email communications, letting staff know what's going on and what the future may hold.

Still, she notes that there is no long term substitute for personal contact.  "I really miss the opportunity for that personal interaction. We get a lot of energy from each other."

It's not a good idea to bet against Oro Valley 

As Yogi Berra once said: "The future ain't what it used to be." Yogi was right.  Times are different. Not necessarily better or worse. Just different. We've never been in this place in our lifetime.

Wednesday, we will take a look at the future as we give a "quick peek" into the 2021 budget. See just how different things might be.

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Bits and Pieces

Council appoints 5 member Finance Commission. 
Last week the town Council appointed a five-member budget committee. The members are:

Cathy Solverson for a term expiring December 31, 2020
John Latchford for a term expiring December 31, 2020
James Beasley for a term expiring December 31, 2020
David Newell for a term expiring December 31, 2021
Susan Rosenberg for a term expiring December 31, 2021

All have at least some background in accounting or finance. Four have lived in Oro Valley for five years or less. One has been a resident of the town for 20 years. None have attended the town's Citizens Academy. Their job will be to take a look at the 2019-20 budget that Town Manager Jacobs will submit later this spring. They will provide their input directly to council.

Is Amphi clamping down on outside facility use?
One of our readers wrote about two schools not allowing use of the outdoor track facilities. "CDO is no longer allowing people who aren't attending school there to use the running track. Cross Middle School is also limiting non students from using their running track."  We wonder if it is the same a Ironwood Ridge?  The town does not have a running track and we have seen none in any of the future plans we have reviewed.

Tennis events on the horizon
The town's El Conquistador Tennis Club, run by longtime tennis pro, Jennifer Fuchs, is hosting two USTA events this month. One is the "USTA Spring Team Championships L 1 BG12". The other is the USTA Level 3 "Go for the Gold."  These events will bring tourism to our community.

Fuchs' company, El Conquistador Tennis LLC, leases the tennis courts from the town. The town maintains the facilities and receives funds from tennis memberships.  You can read more about that arrangement here.

In her recent email to tennis members, Fuchs noted that "The Town of Oro Valley did approve our request and patched the courts this month. They have also budgeted funds to do a complete resurface this spring or early summer. The concept of rebuilding a few courts at a time is always being considered." (Source: Fuchs email of 2-22-19)

Beware: Crime is all around us
The recent suspicious death of a Laurie Draegth on Brearly Drive, the attempted armed robbery by a purse snatcher at Fry's on Oracle and and a recent theft of a credit card from an apartment in Oro Valley, tells us that we need to be very careful both in our homes and when we are "out and about." It is indeed a dangerous world, even in peaceful Oro Valley. One suggestion: Leave the purse and wallet at home. Bring only what you need for the trip you are making. Write us with other ideas.

Free concert tonight at Steam Pump Ranch
Come join SAACA and the Town for the FREE Steam Pump Ranch Concert Series! A concerts will take place tonite. There is an "Family event with fun music Blue Grass music beginning at 5 p.m. and lots of family fun activities for little ones and adults alike. Then from 6:30 – 9 p.m., a second band featuring fun 50s – 90s music for all ages will take the stage. The full event will also include food trucks and Sonoita Vineyards winery. Come for dinner and stay all night!" (Source: Town of Oro Valley)

Outside Audit Finds Errors In Town's 2018 Reported Financial Result

Town financial internal control procedures in question
According to an audit report of the Town's 2018 financial statements, the internal controls surrounding the recording of economic transactions that occur outside the Town of Oro Valley's finance department have been found to be insufficient.

This finding was part of the annual audit report by independent town auditor, Heinfeld, Meech. The auditor will present these and other results at tonight's town council meeting.

Not material?
The lack of internal control resulted in a restatement of previously reported 2018 financial results.  According to town staff: " It is important to note that these findings did not cause a material misstatement of the Town's financial statements." The term "material" is their judgement that the errors detected were a relatively small portion of total town budget.

The auditors, however, did not provide judgment on that. What they did say is that the deficiency is significant. (source)

Impact fees not properly recorded
There were three errors uncovered by the outside auditors:

• Street infrastructure contributed to the Town was not captured in capital asset records.
• Impact fee credits issued to developers were not recorded in the Town’s general ledger
• A cash contribution received was incorrectly recorded as deposits payable.

Significant amount of error: $3.2 million
The amounts of the misstatement are significant:

• The Town received $2.5 million in street infrastructure in the current year which was not added to the Town’s capital asset records. 
• $630,830 in impact fee credits were issued in exchange for the contributed infrastructure. Of these credits, $199,000 were drawn on and used by developers during the fiscal year. The Town did not record transactions related to the impact fee credits, resulting in a misstated general ledger. 
• Also, a cash contribution of $133,000 was incorrectly recorded as a deposit payable. ​

The auditor recommended that "The Town should implement procedures to ensure that all transactions and pertinent financial information is being communicated to the Finance Department and captured in the Town’s financial records."

Procedures being put in place
According to town staff, "...procedures will be completed by mid-February, and will be followed by training with all key staff involved in collecting, approving, managing and accounting for impact fees and impact fee credit agreements." (source)

Independent party review required
We understand that mistakes happen. Occasionally, a transaction does get incorrectly recorded.

But this is more than a mistake in recording a transaction. It is a mistake in not even knowing that a transaction occurred. That is a situation that is ripe for fraud. It is wrong to shrug off the situation by saying that it does not have a material affect on the financial statements. That is because it is a serious breach of the integrity of the accounting system.

It is not sufficient that the same people, town staff, who failed to recognize the breach in the first place be the same people to design, write and train in the procedures to fix the lack of internal control.  The fix should be one that considers all economic transactions that originate outside of the finance department. The town council should retain a third party unrelated to the town and to the town's auditor to evaluate and opine on the "fix." And then to test the "fix"  thoroughly. That person should be retained by and directly report to town council, not town staff.

Bits and Pieces

National Housing Slowdown Comes To Oro Valley
According to the Wall Street Journal: "The national housing slowdown is spreading to markets like Las Vegas and Phoenix, where prices still haven’t reclaimed their pre-crisis peaks."

The Long Realty report for Oro Valley for December, shows a slowdown in sales from the previous year.

"In the Oro Valley area, November 2018 active inventory was 265, a 1% decrease from November 2017. There were 58 closings in November 2018, a 17% decrease from November 2017. Year-to-date 2018 there were 851 closings, a 2% decrease from year-to-date 2017.

For those selling, housing for sale inventory 4.6 months, up from 3.8 in November 2017, a further indication of the slow down.

Colorado River Water Restriction Plan Will Impact Oro Valley
Apparently our warnings of potential CAP water restrictions are much more than our conjecture. They are a fact.

As we have posted numerous times on LOVE, CAP water is going to be restricted. Oro Valley's town touted water supply is going to be affected. Oro Valley needs to deal with the reality. It is a strategic issue. This article supports our continuous harping on the subject. The states need to come to agreement on how they will restrict water use or the federal government will step in.

According to Tucson's KGUN9: "Southern California's largest water wholesaler has approved a drought contingency plan that it hopes will help ensure the drought-stressed Colorado River will supply the Southwest for a decade." Notice that the plan is to supply "...for a decade" and not for 100 years, as Oro Valley's water assurances cover.

"Colorado, Nevada, New Mexico, Utah and Wyoming that have approved plans to take less water from key river reservoirs, including lakes Mead and Powell."  Arizona, which gets CAP water from Late Mead, has yet to approve the plan which will restrict water use starting in 2020. Arizona will be one of the first states to receive Colorado River water restriction because it was one of the last to join the water use pact.

Linda Vista-Oracle intersection may reopen in 2019!
The west side intersection of Linda Vista and Oracle has been virtually unusable for at least three months. This because Southwest Gas is replacing pipleline along Oracle Road.

There is a traffic light at this intersection that allows one to enter safely onto Oracle without having to jump in front of the high volume of traffic on Oracle.  So, getting this intersection back into operation is important to public safety.

While other intersections have been disturbed, such as Concordia and Oracle, they are now open. But not Linda Vista. We see crews working there, from time to time: Digging holes; filling holes.

Oro Valley town constituent coordinator Jessica Hynd tells us that "The reason it seems the project is sitting stale is due to offsite testing of the newly placed upgraded pipes. As testing is done, crews will return to make adjustments as needed." She also told us that the project should be fully completed by early next year.

Bits and Pieces

Oro Valley Has A Stake In Tonight's PAC12 Championship

One of Oro Valley's finest football athletes was honored before last week's University of Arizona final 2014 home game against ASU.  It was senior day.  Graduating and playing in his last game at Arizona Stadium was Jared Tevis, who attended CDO. Tevis was further honored. His picture was on the game day ticket.

Tevis is playing tonight for the Pac 12 championship against the University Of Oregon.  The game is at 7 PM  on Channel XXX.   they will have at least one more game to play in either the Rose Bowl or the Fiesta Bowl depending on whether  the Wildcats when or loose, respectively. Go Cats!
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Holiday Safety Tips From The Oro Valley Police Department

The Oro Valley Police Department is offered a number of worthwhile tips for you consider as you shop for the holidays.  They include only carrying items that you need in your wallet, being aware of your surroundings and making sure that your purse is close at all times.    Shopping tips include shopping only during daylight hours and locking your car doors.  Fraud tips include keeping track of your charges on your credit cards and debit cards and making sure you know where your cards are at all times.  Driving tips include giving yourself plenty of time to get you going and, of course, never drink and drive.  (Source)
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14 Big Horn Sheep Released Into The Catalinas

Two weeks ago, the Arizona game and Fish Dept. release 14 bighorn sheep into the Pusch Ridge area.   Let's hope that most of these survive. "Thirty-one bighorns were released near the same spot last year. Eighteen of them died, most from mountain lion attacks, but organizers say the new sheep should have an easier time."   Maybe the mountain lines to start a smart as used to be! (Source)
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Your Voice Wants You To Opine On Priorities For Spending

The Oro Valley "Your Voice, Our Future" 2015 General Plan Update outreach initiative wants you to opine on Oro Valley's future spending priorities.  Visit the "Your Voice" website to learn more.
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Festival Of Arts This Weekend

The Oro Valley Marketplace will host the SAACA "Festival of Arts" this weekend.  150 artists and craft exhibitors will display.  Hours are 10-5 Saturday and 10-4 Sunday.
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Lou Waters Is Elected Vice Mayor ... Again

This week, the Oro Valley Town Council voted Lou Waters to his third term as Vice-Mayor.  That
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Clean Opinion

The town's independent audit firm provided an unqualified clean opinion on the 2014 financial statements of the Town Of Oro Valley. This was reported at this Wednesday's town council meeting.
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GFRD Wants You To "Be A Santa To A Senior"

John's Place: Oro Valley Self Insured Health Care-Who's Minding The Store?

The Town of Oro Valley has embarked on health self-insurance for its town employees. The original set-up of many of its programs has been handled by the town manager and human resource manager. Recently these two have continued to research and present ongoing health programs such as a self-funded dental program and an in-house wellness clinic. There has been minimal public communication or input on these activities until recommended budget presentations.

One of the most important points in self-insurance is the fiduciary responsibility for the fund itself. Of course, the town is ultimately responsible for the cost of the fund. Self-funded insurance programs usually create a Board of Trustees to give oversight to the fund. This could be a combination of internal staff, employees, citizens, and outside experts and a liaison person from Council.

The Town of Oro Valley should establish a Board of Trustees. Their job would be to "mind the store."

The responsibilities of the Board of Trustees (Health Plan Trustees) would be to make policy decisions for the Health Plan and provide oversight of Plan activities.

The Board provides protection for the taxpayer by:

• determining the third party administrator (such as United Health Care) and other vendors that will work for or support the Plan on a fee for service basis;
• approving contracts with any health care vendors as a Health Plan Trustee;
• assuring that the third party administrator and other persons or vendors hired for administrative purposes carry out their duties in a professional manner (audit ability);
• approving any changes in benefits or rates proposed by third party administrator. (For example, a 7% premium increase has been included in the budget for both employee and employer contributions for FY14/15?);
• undertaking periodic reviews of the Plan's financial performance, funding safeguards, and stop-loss insurance protection and ensure adequate funds are available to pay for any Affordable Care Act (Obama Care) provisions or changes; and
• providing timely reports (monthly or quarterly) to the Council on the numbers of enrollees, claims experience, and the financial condition of the Plan 

The Board provides protection for the employee.

Both the employer and third party the administers the plan, that is reviews, approves and processes claims operate with no oversight, no regulation, and no accountability.  In the self-funded plan, there is no insurer. United Health Care becomes the "Third Party Administrator."  They process the claims, they administer the plan.

If the third party administrator (United Health Care) decides not to pay, the employee will not be able to use state laws or regulations to hold the Town of Oro Valley Employer or the third party administrator to accountable.

The only law that you have to back the employee up will be found on the Department of Labor website, under the "ERISA" section.

The Board provides this accountability for the employee.  For example, the Board would create a claims review committee for purposes of reviewing the payment of claims that have been initially denied by the third party administrator.

The town has embarked on a treacherous road, self insuring what is really a small number of employees.  The risk of doing this will not be seen for several more years as claims begin to mount.  We think that a Board should also be put in place to provide oversight to the program, to measure its results, as well as to assure the employee and the taxpayer fair treatment for all.
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Oro Valley Town Council Rejects "Feathering Its Nest"

The Oro Valley Valley town Council unanimously rejected voting itself a defined benefit pension.  This vote occurred at the December 4 council meeting.  The seven members of this council was the council members that could have participated in the Arizona state defined benefit pension program. The opportunity to do so would have cost the town $45,000 plus an annual contribution of $18,000.

As we previously reported, the state of Arizona has changed its pension program from a defined benefit plan to a defined contribution plan.  The difference between the two plans is:  Under a defined benefit plan, the pensioner receives a specific sum for a specific term, usually lifetime.  Under a defined contribution plan, the employer, in this case the town government, matches, in some fashion, the amount that an employee contributes to the plan.  The employee directs the investment of the plan into "authorized" investment vehicles.

Council Member Snider spoke at the meeting: "One of the reason's the State changed was that defined benefit plans are very expensive. That's the reason they are going to a defined contribution plan.  So, I can't support grandfathering in any council...because it will cost our residents more money in the long run...I really can't support this. I think it's fiscally irresponsible."

How abused have we, the citizens, been of the Arizona's public employee pension program? "Arizonans are propping up public-pension systems that allow civil servants to retire in their 50s, receive annuities that can exceed $100,000 a year, and collect pensions while staying on the same job." (Source)

The State's move to a defined contribution plan puts it in-line with the practices of most commercial enterprises.  However, the State has granted itself (it's employees) a very rich employer portion of the contribution, equivalent to 25% of the employees' contribution.  According to town manager Greg Caton: "This is very rich" in comparison to non government practice, which, we observe, is generally never more than 10%.  There are limits to the amount an employee can contribute annually. The 2014 limit is $17,500 plus one time catch-up limits that could amount to another $17,500.  (Source)
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Oro Valley Receives Clean Audit Opinion

Oro Valley has issued its 2013 Annual Report.

"The Town of Oro Valley has received a clean audit opinion from public accounting firm Heinfeld, Meech & Co., P.C., for the fiscal year ending June 30, 2013. The audit identified no deficiencies or concerns.

These audit findings also confirm preliminary figures that the Town ended FY 2012-13 with a $1.7 million surplus in the General Fund. The revenue overage was primarily due to local sales tax collections (specifically construction sales taxes), and license and permit revenues due to increased development activity. Surplus funds have been carried into the new fiscal year 2013-14, for investment in future capital projects." (Source: Oro Valley press release)

Stacey Lemos, Oro Valley Finance Director, prepared the report. The 126-page report is full of interesting information. Page 1 of the financial section is a copy of the auditor's clean opinion.

Each year, the Oro Valley report has been award winning.  This year should he be no exception.
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Bits and Pieces

GCU Bids Revealed

Last week, we learned what Oro Valley, Tucson, and Marana offered Grand Canyon University to induce them to locate in their communities.

Oro Valley offered land near Naranja Park for $1.8 million and was going to charge an additional $3 million for grading and utility improvements.  Marana proposed about 130 acres near Linda Vista Blvd and a half-mile from I-10 for a price ranging between $24,000 and $34,000 an acre.  Tucson offered the El Rio Golf Course for about $257,000 per year for 50 years. (Source)

Oro Valley Chamber President Dave Perry complemented the town for making a bid at the town council meeting this week, noting that the location of a University in Oro Valley would be a seminal event.

A neighborhood group successfully scared away Grand Canyon University from Tucson. The City of Tucson and its residents, never miss an opportunity to choose poverty and pipe dreams (Rio Nuevo) over economic prosperity. Their success helps cement Tucson as one of the poorest cities in the country.
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Town To Fund Business Incubator Feasibility Study

Town Of Oro Valley is soliciting bids for a feasibility study for the business incubator.   Study cost is estimated from $20,000-$30,000.  The town will host a bidder's conference this monday, September 9, in the Kachina Room at town hall. (Source: Oro Valley Bid Solicitation)
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"OV Aquatic Center receives Outstanding Facility Award

The Oro Valley Aquatic Center was named recipient of the 2013 Outstanding Facility Award for Populations 25,000 – 100,000 by the Arizona Parks & Recreation Association (APRA).  Facilities were judged on several criteria, including: impact on leisure opportunities for the service area, innovative features, aesthetics and unique methods of financing the project." (Source: Oro Valley Press Release)
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Oro Valley 2013 Revenues Exceed Budget

The Town Of Oro Valley's 2013 revenues for three major funds exceeded budgeted amount.

• General Fund revenues came in 5.5% over budget. "The overage was due primarily to Local Sales Taxes (specifically the construction sales tax category) and License & Permit revenues due to increased development activity seen during the fiscal year."  Retail tax collections exceeded budget by almost 5%.
• Highway Fund revenues "...totaled $2,648,329, or approximately $168,000 over the budgeted amount of $2,480,005."
• "Bed tax collections for the fiscal year totaled $788,796, down approximately $6,000, or 0.8%, from last year....Total actual revenues for the year came in over budget by $14,289, or 1.8%."

(Source: Town Finance Director Lemos' report to the Oro Valley Town Council on September 4.)

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Oro Valley Chamber of Commerce Has Active Quarter

The Oro Valley Chamber of Commerce submitted its quarterly report to the Oro Valley Town Council on September 4.  "The Chamber President and staff attended Business Retention Site Visits with the following businesses: Ideal Rehabilitation, Carrabba’s, Pusch Ridge Apartment Homes, Vistoso Drug, Personal Training Institute, B2 Salon and My Gym Children’s Fitness Center....12 Town officials took advantage of the free Chamber breakfasts, luncheons and mixers."
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CDO Multi-Use Path "Connector" To Be Completed By End Of Year

"The Town received bid proposals for the CDO Shared Use Path on August 23, 2013, and anticipates having an executed construction contract by September 25, 2013. Subsequently, construction is expected to begin by October 7th, with an anticipated project completion date no later than December 31, 2013." (Source: Chris Cornelison, Oro Valley Constituent Services Coordinator/Management Assistant)
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September HiVE Deployments

The Oro Valley Police Department will be in force on the following days on Oracle, between Magee and Suffolk:

• September 11, 2013,  7 - 10 a.m.
• September 12, 2013,  4 - 7 p.m.
• September 23, 2013   7 - 10 a.m. 
• September 24, 2013   4 - 7 p.m.

(Source: The Oro Valley Police Department Press Release)
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Do You Know This Woman?

"The Oro Valley Police Department obtained updated photos of the check fraud suspect from the media release on August 26, 2013. OVPD is still asking for the public’s help in locating these suspects. If you have any information on the whereabouts of the suspects, please call 911, 88-crime or (5520) 229-4920."

(Click On This Picture To Enlarge It)

(Source: The Oro Valley Police Department Press Release)
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Bits and Pieces

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Oro Valley projects a relatively balanced receipt and spending pattern over the the next five years in the General Fund, which is the fund that pays for day to day town operations. Total spending is projected to exceed total receipts by about $600,000. This is certainly within the projection's estimating error.  Highway fund spending is projected to exceed revenue by $1.1 million.  The shortfall in both funds is to come from contingency reserves which result at $8.8 million AND $1.7 million by FY 2017 for the general fund and the highway fund, respectively.

The operating fund spending projections includes significant spending on capital items, such as replacement of vehicles and computers, according the Stacey Lemos, Town Finance Director.
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A fresh idea:  Oro Valley Resident Tom Komaski suggested, at last weeks Oro Valley Town Council meeting, that Oro Valley divide into districts, with one Council Member elected to represent a district. His feeling is that residents will receive "better" representation as a result.
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Summer Kick-off Event at the Aquatic Center:

Date: Monday, May 27, 2013
Time: 10 a.m. - 2 p.m.
Location: Oro Valley Aquatic Center, 23 W. Calle Concordia

Join us for free pizza, music and opportunities to register for swim lessons and summer classes and programs! Family Summer Passes will be available for purchase (three-month passes are $155 for Oro Valley residents; $180 for non-residents). Vendor/Instructor informational tents will be set up around the pool. Fitness Partner Program Participants will also be on site to promote dual memberships. (Source: Oro Valley Press Release)
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We won't be publishing Monday. Its' Memorial Day.  Have a great weekend.
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Bits and Pieces

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Tonight is the grand opening of the Oro Valley Aquatic Center.  Festivities start at 5 PM with a ribbon cutting and guest speaker.  And then at 6PM there's a community pool party that runs till 10PM.   You get a chance to meet Olympic champion Lacey Nymyer John and watch a movie at 8 PM.
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 Saturday is the first swimming to be held at the aquatic center.    It is an 8-U meet. "On Saturday, after the competition, the pool will re-open to the public at 3 p.m. (general admission prices apply), and the Town will host a dive-in movie event at 6:30 p.m. for the athletes, their families and the general public. The film will be Madagascar 3, in keeping with the swim competition’s “Under the Big Top” theme." (Source: Oro Valley Press Release)
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Tomorrow, from 10 AM to 2 PM, the Oro Valley Police will be holding a "check the kids car seat" event at the Oro Valley Marketplace.  "With an estimated 85 percent of car seats installed incorrectly, the purpose of this event is to educate caregivers about the importance of car seat safety and proper installation. Certified passenger safety technicians will be on-site to provide one-on-one "hands-on" help with installation." (Source: Oro Valley Police Department Press Release)
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"In an effort to expand the existing Shop Oro Valley Campaign and Business Retention and Expansion Program, the Town of Oro Valley and the Greater Oro Valley Chamber of Commerce partnered to launch OV Cash Mob. The first event will be held Thursday, March 21 at 4 p.m. Participants, or "mobbers," are asked to meet at Town Hall, located at 11000 N. La Canada Drive, where the first business will be announced...Following the March 21 OV Cash Mob, mobbers are invited to attend the Greater Oro Valley Chamber of Commerce's mixer at the Quality Inn and Suites, located at 7411 N. Oracle.

Cash Mob accomplishes several objectives," said Chamber President/CEO Dave Perry. "It raises awareness of local businesses and what they offer, and it keeps money circulating in Oro Valley. Add on the social and networking opportunities at our mixer that evening, and we'll have a fun, valuable time."  (Source: Oro Valley Press Release)
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Check your Comcast Cable bill.  Mine includes a $7.38 franchise fee paid to the Town of Oro Valley.  Another hidden tax we failed to detect.
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Council Meeting Preview

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Tonight's Oro Valley town Council meeting includes a six month update on town finances.

Some highlights from the report that is included in the posted town council meeting packet:

• The General Fund is the fund into which sales tax and utility tax revenue comes and from which, spending on town operations flows. "The financial condition in the General Fund has improved significantly over the past several fiscal years. This is due in part to a recovering economy, but more importantly, from structural changes made to the budget to reduce expenditures through such means as vacancy savings, transferring library operations to the Pima County Library District and partnering with the Regional Transportation Authority to expand transit services while reducing costs to the Town."  
• The Bed Tax Fund is the fund that pays for the aquatic center. Its revenues are a bit more than last year at $333,000.  Bed tax spending is below plan, primarily because the town no longer funds TREO.  

Other topics to be discussed tonight include discussion of and vote on:

• A Planned Area Development (PAD) exemption for signs in Rancho Vistoso (meeting item 2). The requested exemption is for unlit signs that provide directions to local businesses. The Conceptual Design Review Board is recommending approval.
• A Conditional Use Permit for public art at the Town Center. The art will include "...two bronze sculptures of native reptiles, to be located between Shops C & D" in phase 1; and in phase 2: "... a bronze sculpture of a javelina or a pair of white-winged doves, to be located in the civic area."
• A Conditional Use Permit for drive-thru's for CVS' pharmacy and for Paradise Bakery.  These retailers will be located in Town Center, which is on the the east side of Oracle Road, at the First Street intersection. The Oro Valley Development and Infrastructure Department is recommending approval conditional use permits.

This should be one of the Council's quieter meetings.

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The Aquatic Center: "Will Haste Make Waste"?

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Last week we posted: Oro Valley Approves Added Funding For Aquatic Center.  This was a press release from the Town of Oro Valley.  The Town Council, after a lengthy and often confusing discussion,  unanimously approved a 43% increase in spending on the town pool renovation just to get what they thought they were going to get in they approved the initial $3.45 million in spending. (Note: Also see an Arizona Daily Star article)

The council was "between a rock and a hard place".  They had no choice but to approve the added spending.  There is a swim meet scheduled for the fall. There are no further council meetings until  September, thanks to Mayor Hiremath.  The five on council when the initial spending was approved had committed that this would be a first class facility.

Part of the increase in cost is due to the requirement of Pima County that pool be 2-feet deeper, requiring a change in the decking, totaling about $1 million.  Pima County use to own this pool!

The other part of the increase, the part that the council literally had to identify during the meeting, was to put back into the project items that Greg Caton, Town Manager, had "value engineered" out of the project:

• $126,000: Family changing room
•   $50,000: Scoreboard
•   $89,000: Shade structures
•   $79,000: Decking

 The council was surprised to learn that these items had been deleted from the project.

There was one addition to the original project: A 3-meter diving board at a cost of $42,000.

The council not only approved the funding requested, but they added to it in order to retain these items.

We understand that Greg Caton advised Commissioner Legner to "value engineer" these items out in order to reduce the additional amount requested.  Taking major items out of the pool renovation project is a council decision. It is not the decision of a town employee.  Shouldn't they have requested the Mayor to hold a special session of the town council to discuss the situation with the full council?  

The discussion of the request was insanely confusing. Watch the video.  Numbers are tossed about with abandon; and with no relation to what the final product will actually be.  In addition, at no time was there any discussion of whether the numbers being "tossed around" for one item or another had  validity.

The discussion was clearly the product of "tired minds."  The meeting was already four hours into a five hour marathon when the topic was discussed.  At one point, Council Member Snider asked the same questions regarding what was included or not included in the facility as other council members had already asked thirty minutes prior!  At another point, Council Member Hornat spoke to Director Legner asking:

"We sat down individually...with Ainsley and with Town Staff and went through these numbers. Tonight, we come to council for direction and we get  a whole different set of numbers and we get a whole different set of things that were not included in those meetings.  Should I go get the picture [of the proposed facility] so you can point to that, and show us what we're not going to get and what we're going to get now that you value-engineered this?  'Cause that's what we promised to deliver and I want to know what it's going to cost to deliver what we promised the Community cause that's what this is about: What we promised the community." 

Clearly frustrated, Council Member Hornat, placed the responsibility for the confusion on Director Legner. He is only partially correct.  Some of the responsibility falls on Town Manager Greg Caton, to whom Legner reports.  Caton advised Legner to "value engineer" out certain items.   Finally, some of the responsibility should be shouldered by Mayor Hiremath for not being "on top of" the biggest project the town has undertaken in many years and for jamming such an important topic into a five hour meeting.

Mayor Hiremath: "Haste makes waste" Mr. Mayor.

Let's hope that in their zeal to get this right, the Council was not inadvertently forced into making wrong decisions based on bad information or withheld information.  Let's hope that the Mayor's desire to cram everything he can into fewer meetings, causing marathon sessions, did not substantially reduce the quality of the council's decision-making.

There are other issues, issues regarding funding of the project on which we will focus in a future posting.
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Mary Snider's 2010 Appeal Not To Approve The Budget Until The New Members Are Seated

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On May 19, 2010 at 1:28:30 of a Town Council Meeting, Mary Snider appealed to the Council to not approve the 2010-2011 budget until the new members of council were seated in June.   You can view and listen to her eloquent appeal.

It is our belief that the same situation applies now, in 2012, when there are two new council members seated.  As Mary points out, approval of the budget for a new fiscal year does not take place until after the new members are seated.

Mary was quite correct.

-The following is a 7 year history of the dates of approval of the Oro Valley budget:

            Budget Year          Approval Date  Election Year?

·       FY 2011/2012     June 15, 2011   Non Election Year

·      FY 2010/2011     June 16, 2010   Election Year

·      FY 2009/2010     June 17, 2009   Non Election Year

·      FY 2008/2009     July 16, 2008   Election Year

·      FY 2007/2008     July 18, 2007   Non Election Year

·      FY 2006/2007     July 19, 2006   Election Year

We agree with Mary that the budget should be approved by a new council.

The question today is: Does Mary agree with herself?   And what of Mayor Hiremath and Council Members Waters and Hornat, should they not also agree? After all, they benefited from the decision to delay approval in 2010.  Will they agree now that the "shoe is on the other foot" in 2012?
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Want To Buy An Oro Valley Bond?

--- UPDATE: The following is the pricing on the Oro Valley Excise Bonds:

Yesterday, we posted about the bond issue Oro Valley is providing to fund the town pool renovation.
We ask Stacey Lemos, Oro Valley Finance Director, in an email, how those of us in town can purchase one of these. Here is her response:
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"Thank you for your email and interest in our aquatic facility obligations.  The Town has a history of providing our local citizens the opportunity to purchase Town bonds through the public offering method.  This was done in 2010 when we issued the Clean Renewable Energy Bonds (CREBS) to build our solar photovoltaic panels at the Town Hall campus.  We marketed them locally by running ads in the Northwest Explorer and televised ads on CNBC.  While we can certainly explore the feasibility of private placement of future bond issuances, we have found that selling our bonds through a public offering is an efficient means of issuing debt because it opens the bonds up to thousands of investors and provides competitive market yields to benefit the Town.  We rely on the team of our underwriter and bond counsel to ensure that we comply with securities laws and provide the required legal disclosures associated with the debt issue, which is important to maintaining a strong investment grade bond rating.  I have attached the copy of the Standard & Poor’s bond rating report on the Series 2012 Excise Tax Revenue Obligations for the aquatic facility enhancements to this email for your information.  In order to encourage local investors, we also ran the attached ad in the prior two weeks’ editions of the Northwest Explorer.  Interested investors can contact the local office of Stifel Nicolaus, our underwriter, to inquire about purchasing the obligations as they are being priced tomorrow.  Local citizen investors receive priority through this purchase arrangement and get their orders filled first.

Thank you,

Stacey Lemos, CPA
Finance Director
slemos@orovalleyaz.gov
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Updated: Bond Rating on Aquatic Faclity Bond is AA-

UPDATED: March 21, 2012
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Yesterday, we received the following media release from the town.

"ORO VALLEY, Ariz. (March 19, 2012) - Standard & Poor’s rating agency has reaffirmed the Town of Oro Valley’s strong “AA-“rating on the Series 2012 Excise Tax Revenue Obligations to fund the Town’s aquatic facility enhancements.

“We are pleased to receive this strong investment grade rating that reflects the sound fiscal condition of the Town,” said Finance Director Stacey Lemos. “This will contribute to our ability to issue these obligations at historically-low interest rates, resulting in lower borrowing costs for the aquatic facility enhancements project.”

Town finance staff is making preparations to sell these obligations at market."

AA- means that the town's credit rating is somewhere between very strong and strong in terms of it being able to meet its financial commitments.

According the S&P, the basis of this rating is:

"The ratings reflect our view of the town's:

• Above-average income levels and growing local retail and service base with close proximity to the Tucson metropolitan area;
• Good bond provisions, with a rate covenant and additional bonds test (ABT) of 2.0x; and 
• Strong coverage of pro forma maximum annual debt service (MADS) and a low likelihood of issuing additional bonds to reach the 2.0x ABT, given that excise tax revenues represent the largest source of general fund revenues.

These strengths are offset by our view of the town's:

• Moderate concentration in retail sales tax revenue, representing close to 24% of pledged revenues;
• Thirty-percent decline in pledged revenues since 2007; and
• Relatively small population base of 41,000 in 2010 that grew in line with the state's population growth based on the 2010 Census."

(Source: S&P Rating Document)

This is good news for investors at a time when many municipalities, like Harrisburg Pa, or most of the towns in California, are struggling to meet their obligations.

It is also good news for all of us in that the town will pay a relatively low interest rate on debt at a time when interest rates are at a point where they will never be lower.  So, when the town issues its bonds to finance the aquatic facility, the debt service on these bonds will be as low as one can envision.

The aquatic facility bond issue is very small ($2 Million) in relation to the size of issues in the marketplace. 
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