Bits and Pieces

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Last Week, Oro Valley Finance Chief, Stacey Lemos, reported to town council that actual Oro Valley sales revenues were less than projected because sales tax audit recoveries were less than expected. Her explanation: Some of the contractors being audited are not longer in business.
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Town Council still needs to decide if the town should "repay" the contingency fund for the $2.1 they agreed to pay TEP to fund the under-grounding of wires on Oracle and Tangerine.
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An article in the Daily Star discussed the development of almost 500 apartments coming to Oro Valley. We've discussed this in various prior postings.  Oro Valley is no longer a small town.  It is fast becoming a city.  The article is a puff-piece about the Steam Pump Ranch HSL Properties apartments. It extols the virtues of these upscale apartments and how needed they are because of all the business growth and Oro Valley.

Oro Valley's biggest challenge however is that it is landlocked. As we have already noted in a previous posting regarding safety this week, there's no easy way to get in and out of Oro Valley.   La Canada south of Ina Road is unusable and will be that way for another 18 months.   The reconstruction of the Ina and Oracle interchange has begun.  There are often long lines of traffic in all directions during the day.   The future doesn't look any better because there will still only be two southbound roads after these projects are completed.
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Oro Valley is launching The virtual art gallery—part of the Town’s new website. It can be found online. "Taking it a step further, the Town will also be hosting monthly public art tours, where residents and visitors can reserve a spot on a tour van for an in-person, narrated tour of the Town’s many public projects. Beginning May 23, 2013, and recurring on the 4th Thursday of each month, these free tours will be available on a first-come, first-served basis. Reservations are limited to 12 people, and can be made online." (Town Of Oro Valley Press Release)  It will cost the town approximately $50 per month for this service.  (Source: Oro Valley Economic Development Department) That sounds low to us, given the cost of gas, insurance, drivers, maintenance.
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This morning, The Oro Valley Police Department  is hosting "Drug Awareness Day For Fifth Graders" at Riverfront Park from 9:30 am to 1:30 pm.  "The Oro Valley Police Department's Dispose-A-Med program will also be on site to collect unused or expired medications for proper disposal." (The Oro Valley Police Department Press Release)
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The The Oro Valley Police Department a list of the town's top 10 accident intersections for the first quarter of this year.  Here's the list.  Our advice: Driver Beware.

• Oracle and Magee                  12
• Oracle and Suffolk                   7
• Oracle and El Conqistador       6
• Oracle and Pusch View Ln      6
• Innovation and Tangerine        4
• Oracle and Steam Pump          4
• Tangerine and Rancho Vis      4
• La Canada and Naranja           3
• McGee and Northern              3
• Oracle and Hardy                   3

Its no coincidence that Oracle Road is the culprit in all but 3 listings.  Its huge volume of 50 mph traffic make it the ideal candidate for an accident/

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Shop Oro Valley runs from May 1 thru July 1.  "Participation is simple. Just bring your receipts to Oro Valley Town Hall, located at 11000 N. La Cañada Drive, Monday through Friday, 8 a.m. to 5 p.m. Winners will be announced each Friday at 5 p.m. The final prize, a $500 Oro Valley Marketplace gift card donated by Vestar, will be announced on July 1, 2013. All weekly winners are eligible for the final drawing.." (Town Of Oro Valley press release)
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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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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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