Town Council Approves $2.1 Million To Fund Burying TEP Wires

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The Oro Valley Town Council approved the $2.1 million for the burying of TEP power lines. The expenditure is for three projects that will be built on Tangerine and on Oracle Road. (See our previous postings ).  The move preserves the view shed.

The  measure passed 6-1. The lone dissent was from Council Member Burns.  He noted that TEP had made a conscious decision not to bury the lines; that, in doing so, TEP was not operating as a responsible corporate citizen. This was especially troubling because TEP is an enormously  profitable company.  In addition, the company purports to be a positive influence in the communities it serves.

The TEP represented had previously noted that the decision to put the wires underground was made because the Arizona Corporate Commission will not TEP them recoup their costs in its rates.

In contrast to the comments of Commissioner Burns, Mayor Hiremath thanked TEP for giving Oro Valley the opportunity to bury the lines.   TEP is also "contributing" about $400,000 to the project.

The Oro Valley contingency fund will pay for this project.  It has yet to be determined whether this is a loan from the contingency fund, such as was done in funding a portion of the aquatic center overrun, or a permanent withdrawal of funds.  The contingency fund balance will be above Oro Valley required levels (25% of the operating fund) after the payment of the $2.1 million.
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A Preview Of Tonight's Council Meeting

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Here's a preview of for of the more interesting items on tonight's agenda of the Oro Valley Town Council
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Will the Town Pay To Bury The TEP Lines?

The most important discussion tonight is item number 3.  Approval would authorize the under-grounding agreement between the town and TEP for utility service along portion of Oracle and Tangerine Road.   We've already written about this extensively.   We will report the result tomorrow.
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Will The Council Raise Aquatic Center Rates?

Regular Agenda Item 14 on tonight's Oro Valley Town Council agenda is discussion of an increase in aquatic center fees.  Essentially, the recommended daily rates are double current rates.  For example, an Oro Valley Resident who is a senior currently pays $2.25 for a day.  The proposed rate is $5.00.  There are new membership options that reduce cost. For example, the same senior could buy an annual pass for $255, less than $1 per day.  The yearly rate includes free use of fitness equipment.  There are also proposed monthly rates; and a 30-visit punch pass.

"The recommended fees are structured to provide sufficient revenue to maintain the Aquatics Center General Fund subsidy at the FY 2010/11 level, which was approximately $305,000. When the facility is fully operational next fiscal year 2013/14, the increased costs of the expanded facility will be covered by a subsidy from the Bed Tax Fund of $150,000, with the full year operational budget for the Aquatics Center estimated at $740,000." (source)

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Will The Council Approve The Extension of "A-Frame" Displays?

Item 12 is an extension of the "A-Frame" program:

"On September 21, 2011, Council approved the temporary use of outdoor displays and A-frames for Oro Valley businesses. On February 1, 2012, Council expanded the temporary use of A-frame signs to include non-profit organizations. As part of the temporary relief, certain fees and administrative reviews are waived and the only requirement is a permit for tracking purposes. These temporary sign relief measures are scheduled to expire February 1, 2013." (source)

The extension would mean that the UPS Store in Rooney Ranch can continue to display its tacky 3 cents per copy sign. We're sure this brings in much profitable business to the UPS Store. Not.

There is no information provided with the request that verifies that, after two years, these signs actually increased business.  We know that the signs didn't do the trick for Down Home Delights and The Loop; and Target and Office Max seem to do fine without them.

So, absent facts, the Council will operate on anecdotal evidence and emotion.
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Will Gil Alexander Retain His Position On CDRB?

The last item on the agenda, item 15, is the approval or disapproval of current (volunteer) Development Review Board ("DRB") member Gil Alexander to second three year team.  Neither Mayor Hiremath no DRB board liaison want Gil on the Board.  The Council member meeting packet of materials include a letter to Gil from Mayor Hiremath. The letter states that the council had decided not to reappoint him.  The fact is: The council never made such a decision.  Or, if it was made, it was made in violation of open meeting laws since the decision was not made at any form of council meeting.

At issue is the belief on the part of some that Gil's role on DRB precludes him from speaking at town council meetings on items related to DRB reviews.  Also, according to the material included in the meeting packet, apparently Gil questions applicants on details of their plans. This latter item seems to bother Town Planning member David Williams, who, according to the filing, rebuked Gil for this. Williams' position is that detail questions are not what DRB members are supposed to do.

We look for  a lively discussion on this one.
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Undergrounding The Power Lines: Our Citizens Opine

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Eight citizens spoke publicly about under-grounding TEP transmission lines at last Wednesday's Special Oro Valley Town Council Session.  We've previously written on the issue in our posting: "Would You Spend $2.1 Million?"  For more on this, read our special page entitled: Primer:  Underground TEP Wires.

Most of the speakers were in favor of under-grounding of the transmission lines to preserve aesthetic and scenic views.

Issues that arose during the study session include:

• Who should pay for burying these wires? 
• The Town considers the zoning code, adopted by Ordinance, to be legally valid and binding on TEP.   To date, TEP has been unwilling to locate lines underground without up-front payment for the differential cost of above ground versus underground installation for infrastructure improvements not associated with any particular development. TEP has placed the burden of paying the differential cost on the Town. TEP's refusal is based on a ruling by the Arizona Corporate Commission.
• TEP helped craft the Town of Oro Valley Ordinance requiring the power lines be buried. All developers have had to comply on their projects. TEP may have a potential conflict of interest in recommending that Transmission Poles be used on these projects (per TEP’s standard internal policy policy of above grounding) instead of undergrounding.
• Should ADOT pay for burying wires on Oracle Road?  Some information was introduced that question whether some of the Oracle Project cost should be borne by ADOT. The reinstallation of poles where under-grounding now exists may be against state law. The Town attorney should investigate statutes 40-352 and 40-353 for clarification.
• Can the three proposed projects be unbundled?  TEP opposed this.
• How can Oro Valley reduce construction cost?  There was mention of the Town subcontracting some of the infrastructure to save cost instead of using the normal TEP subcontractors.
• What about current view obstructions?  Some spoke of the fact that on the Tangerine Project there would still be existing transmission poles that cannot be undergrounded because of power engineering constraints in undergrounding them. These existing poles have already compromised the scenic view. TEP is recommending further compromising of the scenic view with added above ground poles.

Funding of this project is a major issue.  This was also discussed during the study session.

One idea is to borrow the funds form the contingency fund.  Repayment would come from a yet to be determine source.

One funding source a franchise tax, seen as a potential source of continuous funding of the buying utility lines.  Voters would have to approve this tax in August if Council decided to move ahead it.  We noted in a previous posting that a franchise tax is a pass-through tax.  It would be included in your utility bill.

Another suggestion is that the Town of Oro Valley might consider lending the $2.1 million to TEP as a loan and have TEP pay it back with interest.  Oro Valley should not be subsidizing a multi-million dollar public utility. TEP is a subsidiary of UNS Energy Corporation.   This is an unlikely alternative as it would require litigation.

The Wednesday's council meeting includes a hearing on the under-grounding and whether to use the contingency fund for the $2.1 million cost. Then the Council would study all alternative methods to fund the $2.1 million cost.
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Our thanks to John Musolf for contributing this posting.

Underground Wires: A Best Use Of Oro Valley's Contingency Reserves?

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 Oro Valley has a contingency fund.  The purpose of  such reserves are: "...to offset difficulty economic times, stabilize fluctuations in cash flow requirements, provide for emergency situations threatening the public health or safety and provide for unanticipated increases in service delivery costs, unanticipated declines in revenues, unanticipated opportunities and contingencies... reserves should be used only after all budget sources have been examined for available funds and subject to Town Council approval."(Source: Document Page 36 )

Funds available in the Oro Valley contingency fund have varied over time (See chart)  The fund currently sits at a level of about $9 million. Its target level, by town rule, is 25% of the town's operating budget, not including any funding of the operating budget that may come from the contingency fund.  This year's operating budget is $26.8 million.  The town required funding level is $6.8 million.  So, the fund balance is well over town required funding levels.

You can imagine that these fund should be used for extraordinary measures: Threats to public health and safety being the primary focus.  This is not the case. Historically, this fund has been used for ongoing expenditures and "special investments":

• $1.05 Million was used in 2011 for Energy efficiency upgrades
• $410,000 was used in 2010 for Steam Pump Ranch
• $600,000 was used in 2009 and 2010 for services related to Arroyo Grande

This year, $300,000 was used to fund the town's new health care self-insurance fund.  $524,000 was invested in the Oro Valley Aquatic Center construction cost overrun. (Our Report)

Does using $2.1 million the contingency funds to pay for the under-grounding of TEP wires constitute a reasonable use of such funds in light of the funds purpose and its historical use?

Tonight at 6PM in council chambers is your opportunity to give your opinion to Town Council.  They are looking for your input at this special session.  It's your chance to let them know how you feel.  Don't pass up the opportunity.
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Oro Valley Considering Franchise Fee

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There is a second discussion item for this Wednesday's special Council Meeting.  It regards the idea of creating a Franchise Agreement between the town and a public utility.  Read about it here.  A franchise agreement gives the utility the right to use town "right-of-ways."  In return, the utility pays the town an annual franchise fee.

You will have the opportunity to vote on this next May if the Town Council votes, at some point, to recommend it to you.  It becomes law only when the voters approve.

Sound's like a great idea, right? The Town of Oro Valley gets a sustainable source of revenue and an agreement on how the right of way can be used.  The Utility then pays for the right to use that right-of-way.

Here's the problem: "when a franchise fee is levied on a utility the fee is passed on directly to the customer and itemized on their bill as a municipal fee."

That's right. A franchise fee imposed on a utility becomes a back door tax for you to pay on your utility bill.  This is in addition to the Oro Valley utility tax that you already pay.

The typical franchise levy on a consumer utility bill is 5%.  The current Oro Valley utility tax is 4%.  The total is 9% simply because you turn on your lights or have a landline.

What do you think?  Is this a good or a bad idea?
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