Wednesday, March 26, 2025
Oro Valley Financing NWRRDS Project Cost Overruns— $6 Million Loan Approved, $12 Million More Coming
Last week, the Oro Valley Town Council unanimously approved a $6 million senior lien water revenue obligation. This new loan will help fund an overrun on the town’s share of the partnered Northwest Recharge, Recovery, and Delivery System (NWRRDS) project — a multi-agency effort to deliver some of Oro Valley’s Colorado River water allocation directly to the town, rather than routing it through Tucson Water. The project’s partners are Marana and Metro Water.
As it turns out, NWRRDS is a very expensive project
The project has turned out to be far more expensive than town staff envisioned in 2017. Partnered costs have grown from $30 million in 2017 to $49 million today. Oro Valley’s share was projected to be around $12–$13 million in 2017, based on its contractual capacity of 4,000 acre-feet per year. Today, that share is about $21 million. The independent portion of the project, which Oro Valley funds entirely, was originally estimated at $6 million. The town now plans to seek a $12 million WIFA loan in April 2025, doubling that initial estimate as well.
Concerns about project management... and total project cost
This ballooning cost should have prompted discussion by the council last week. Questions like: Are our Oro Valley Water engineers competent in bidding, managing, and, most importantly, reporting to their customers on complex projects where risk and inflation will inevitably revise the initial estimate? — have never been asked. Instead, councilmembers praised the town’s strong finances and debt management during the meeting. But no one asked why this overrun exists, how realistic future funding assumptions are, or whether Oro Valley residents are being asked to pay for mismanagement or avoidable cost increases.
The loan to fund the partnered portion overrun is a private placement
The council approved the $6 million loan to help fund the overrun on Oro Valley’s portion of the partnered project. The funding will come through a private placement loan at an interest rate of 4.085%, repayable over 10 years.
Town is paying a premium interest rate for convenience
Town staff and advisors called the 4.085% tax-free interest rate “favorable,” but not all residents are convinced. One knowledgeable reader pointed out that the town may be paying a premium — less than 1% above what would be typical if they were able to borrow in the public market and exercise early payoff flexibility. Over a 3–10 year window, comparable borrowing rates would range from approximately 2.79% to 3.17%.
The private placement route offered convenience: no underwriting costs, no credit rating expenses, and a simplified process with six institutional bids. However, residents are left wondering whether the town thoroughly explored a public offering. While a $6 million deal is small by municipal standards (where issuance costs can be significant), the absence of comparative analysis leaves questions unanswered. As one resident put it: “It would be helpful if they provided more numbers as a comparison to the private placement.”
More borrowing ahead — and more questions
The $6 million private placement loan is only part of the picture. On April 16, the council will be asked to approve an additional $12 million WIFA loan for the independent portion of the NWRRDS project, bringing the total new borrowing to $18 million. The plan, according to staff, is for 60% of that debt service to be paid by future impact fees and 40% by the groundwater preservation fee (GPF).
But residents are asking: Where will the approximately $11 million in needed impact fees come from? According to the town’s 2022 fee schedule, the residential water impact fee for a standard 5/8" meter is $6,387 per home. That translates to roughly 1,700 new homes needed just to cover the planned impact fee share. Given current market conditions, including a growing apartment surplus in Tucson and slowdowns in new development, that target may be unrealistic.
One concerned resident wrote: “It appears to me that the 60/40 Impact Fee/GPF split can't be maintained. Our impact fee per house yet to be built is far too low to cover 60% of NWRRDS cost overruns. The GPF will possibly need to cover far more than 40% of the new debt service.” In other words, existing residents — not future growth — could end up footing more of the bill than originally planned.
What’s next?
The $6 million loan will close on April 22, giving the town the funds needed to cover project overruns and continue construction. But with another $12 million loan request coming next month and serious questions about funding sources and cost management, residents are left wondering: How much more will they be asked to pay — and when will the town council start asking hard questions of its own?
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Tuesday, March 25, 2025
Oro Valley's Destination Marketing... A Year In... Still a Work In Progress
It has been a year since the town took over responsibility for destination marketing, replacing the services provided by Visit Tucson. By canceling that contract with Visit Tucson, the town saved almost half a million dollars annually. What has been accomplished to date? Well, not much, in terms of their mission: though there are a number of things that have been done.
For one, the town hired a destination marketing manager, Crystal Franke. Last week, Franke and economic development director Paul Melcher discussed with the town council what they have been doing. Their report was requested by Town Council member Mary Murphy at the February strategic planning study session.
The unstated mission: Generate sales and bed tax revenues
There is no formal mission statement for the town’s destination marketing effort. The fact that there is no formal statement is a problem that needs to be addressed. Here's our cut what we think it is: “Drive economic activity through tourism-related events and marketing efforts to increase the town’s sales and bed tax revenue."
To date effort is far short of accomplishment
When asked directly by Mayor Winfield about what they've accomplished, Melcher didn't have much to say except that, based on post-event surveys, he estimated that the Tucson Bicycle Classic generated about $183,000 in economic activity for the town. Multiply that by Oro Valley’s 2.5% sales tax, and that event generated a little over $4,500. Melcher did not report how many hotel room nights, if any, were directly attributable to this event.
...And long on things done
Instead of reporting concrete results, Melcher focused on things they had done. They launched the Explore OV app, created an Instagram account, sponsored a cycling event, organized public art tours, began a leisure travel study, continued monthly meetings with resorts, and planned a June familiarization tour for event planners. The town plans to hold this tour in June, despite Oro Valley’s high summer temperatures. (June is a poor time to invite event planners to Oro Valley — the extreme heat alone is enough to discourage visitors.)
Council questions spending...
Vice Mayor Melanie Barrett raised concern over the large website budget, thinking it excessive. Melcher responded that while the website cost is a one-time expense, there will be ongoing annual maintenance costs of up to $25,000, and the town is still deciding whether to handle this work internally or through outside contractors. Barrett noted: “To me, that seems like a lot of money to spend on a website… hopefully, if there’s that much in the budget for a website, it will be an incredible website.”
Still more activities on the horizon
Looking ahead, steps include completing the leisure travel study within the next six to eight months, which will guide future marketing and venue improvement decisions. Development of a dedicated Explore Oro Valley tourism website will follow, timed to launch with the study’s completion. As mentioned, in June, the the town will host familiarization tours for event planners to showcase local venues and resorts. Additionally, the town will work with Discover Marana on regional tourism initiatives such as developing a joint five-year tourism strategy, and promoting outdoor events such as the Tucson Bicycle Classic, which began in Marana and finished in Oro Valley. The goal is to position the region as a cycling destination and training hub, attracting professional teams and visitors looking for safe roads, good weather, and scenic routes.
Maybe someday these efforts might pay… maybe…
It clear that the town’s destination marketing effort is still in its early stages. While they have taken steps to set up tools like an app, a social media presence, and public art tours, concrete results — such as measurable increases in room bookings or significant economic impact tied directly to their efforts — have not yet happened. Much of what they have presented so far is groundwork, with key initiatives like the leisure travel study, website development, and formation of a tourism advisory board still in progress. Their plans appear to be long-term, with major outcomes likely years away rather than near-term. For now, the effort remains a work in progress.
Friday, March 21, 2025
Bits and Pieces
Oro Valley’s Ventana Medical Systems (also known as Roche Tissue Diagnostics), located in Innovation Park Drive has applied for a permit to release air pollutants from its operations. These include five different pollutant plus one called "Hazardous Air Pollutants (HAPs)". The Pima County Department of Environmental Quality (PDEQ) is processin the request. It is accepting public comments on it through April 21, 2025. You can also request a public hearing. Visit pima.gov to submit a comment or request a hearing.
Thursday, March 20, 2025
Rockin’ 4 Heroes: Honoring Those Who Serve, All Year Long
Rockin’ 4 Heroes is committed to raising awareness of the service and sacrifice of First Responders, Active Military, Veterans, and Gold Star Families. As a nonprofit organization, we support these hero groups beyond hosting an annual free concert in Oro Valley’s James D. Kriegh Park.
What we support
We are fortunate to have a wonderful circle of friends and family who have served, and continue to serve, our country. Along the way, we meet new friends, learning about their experiences and how they remain dedicated to helping our communities.
How we support
We often discover heroes who continue to give back to their communities. Our mission is to raise awareness of these groups and showcase how they serve in retirement, often through volunteer work, mentorship, and community engagement.
How you can learn more
We invite you to follow our social media platforms for updates about the heroes we’ve met. You’ll find information about books they’ve written, nonprofit organizations they’ve founded (and ways you can get involved), and upcoming appearances on radio, TV, or podcasts.
Rockin’ 4 heroes is proud to honor
Rockin’ 4 Heroes is proud to honor and support these groups by showcasing how they continue to serve our communities, states, and nation. Visit our website for links to all our social media platforms, where you can keep up with the activities of many heroes — including those in the Oro Valley region!
Follow us
Facebook: https://www.facebook.com/rockin4heroes/
Instagram: https://www.instagram.com/rockin4heroes/
LinkedIn: https://www.linkedin.com/in/rockin-4-heroes-17010b348/
YouTube: https://www.youtube.com/@Rockin4Heroes
Website: rockin4heroes.org
Wednesday, March 19, 2025
Tackling Key Challenges in Oro Valley’s Latest Five-Year Financial Forecast

Unlike last year, there was no significant discussion of bond funding for capital projects in this year's discussion. However, there were indications that bonds might be issued to finance a new police facility study next year. The town’s latest grant request status report includes a $3.8 million request from the Department of Justice - Byrne Discretionary (Law Enforcement), a fund designed to support community justice projects. The grant is pending.
Tuesday, March 18, 2025
Oro Valley’s Latest Five-Year Financial Forecast Highlights Budget Pressures and Challenges
Two weeks ago, Town Manager David Gephart presented the town's five-year financial forecast to the Town Council. Not much has changed from last year’s forecast. Both forecasts emphasize funding shortfalls beginning in fiscal year 2026-2027, primarily due to declining state-shared revenues, escalating operating and maintenance costs, and insufficient growth in gasoline tax revenues. In other words, the town will need to live within its means over the next few years or identify significant new revenue sources.
Declining state shared revenues affecting General Fund
A primary concern highlighted by Gephart is the significant decrease in state-shared revenues, largely due to Arizona’s implementation of a flat income tax rate of 2.5%. He pointed out that “state-shared revenues are not expected to fully recover to last fiscal year levels until fiscal year ’29,” creating financial strain on the General Fund and a flat revenue projection through fiscal year 2028. This reduction limits the town’s financial flexibility, particularly impacting available capital improvement funds.
Rising personnel and O&M costs increasing budget pressure
Gephart emphasized that personnel and operating and maintenance (O&M) expenses continue to rise due to inflationary pressures of approximately 3-4% annually. Despite conservative assumptions for adding new employees—only one or two new full-time equivalents per year—the expenses keep escalating. Gephart noted that “we’re in a somewhat elevated inflationary environment… versus flat revenues, [this] is causing some squeezing to happen in ongoing revenues versus ongoing expenditures,” highlighting the structural challenges in maintaining balanced budgets.
The Highway Fund faces increasing financial pressure due to rising pavement preservation costs, which have grown from around $2 million annually to over $3 million per year. Gephart explained that while gas tax revenues remain steady, they are insufficient to cover the surge in roadway maintenance and capital outlay, necessitating significant transfers from other town funds. He warned that the town faces “a pinch point because the town is not projected to have excess reserves necessary to fund those necessary road improvements.”
Capital Fund facing future negative balance
Gephart highlighted concerns over declining General Fund transfers to the Capital Fund, combined with significant planned expenditures, including a $5 million cash contribution toward a police facility in FY 26/27. He noted, that “we’re showing a negative fund balance in the Capital Fund,” with deficits expected by FY 2030. This suggests potential financial challenges if the town does not secure additional debt financing or alternative revenue sources. The amount of the transfer is 5% allocation of sales tax revenue as required by town financial policies. Additionally, any General Fund balance exceeding the 30% reserve requirement (excluding contingency funds) is also transferred to the Capital Fund to support capital expenditures.
A key issue is the exclusion of approximately $8 million in bridge repair costs from the forecast. These include necessary infrastructure projects like the La Cañada and Rancho Vistoso bridge deck repairs. The town has applied for federal funding through congressionally directed spending, but Gephart acknowledged uncertainty: “I don’t have a sense as to the probability or prospect of that occurring.” If the funding is not secured, the financial responsibility will fall back on the town.
Unlike other funds, the Community Center Fund remains stable and self-sufficient, with modest 3% annual revenue growth. Gephart pointed out that conservative revenue assumptions for golf and recreation activities, combined with the ending of HOA contributions, necessitate careful planning. He noted positively that the fund is “staying balanced and self-supporting,” demonstrating sound financial management even as other town funds face more significant challenges.
Reasons for optimism: There are solutions
All these factors add up to a challenging financial future for Oro Valley. However, there is reason for optimism. Read about some solutions tomorrow.
Additional resources:
- April 2024 LOVE article on the five-year financial forecast
- Town Seeking Funds for Bridge Repairs"
- January 2025 Grant Status Update
- August 2025 Bridge Celebration
Friday, March 14, 2025
Bits and Pieces
The Oro Valley Triathlon and Duathlon Festival returns for its 11th year on Saturday, March 15, 2025, from 7 a.m. to 11 a.m., at James D. Kreigh Park (23 W. Calle Concordia), welcoming athletes from across the globe and bringing economic impact to the region.
This festival has grown into Southern Arizona’s premier triathlon and duathlon festival, attracting athletes from across the country and beyond. This year, 510 competitors from 32 states, Canada, and Poland, will take on the challenge, with ages ranging from 14 to 86 years old. Notably, 50 percent of participants are first-time participants, underscoring the event’s welcoming and inclusive nature.
Town investigates multi unit short term rental violation
Several weeks ago, LOVE reported on a resident’s comments during the Call to Audience section of a recent town meeting. The resident spoke about what appeared to be a loophole in the town’s short-term rental ordinance. The resident expressed concern that a neighboring property had converted into three or possibly even four short-term rentals. In response, the Mayor instructed town staff to investigate. According to the latest Town Manager’s report, Oro Valley Code Enforcement has since inspected the property for potential code violations related to operating multi-family dwellings within a single-family zoning district. Staff confirmed that no permits were issued for such a conversion, and additional interior inspections are scheduled for this week to identify any further violations. (Source: LOVE report, 02-27-25 and Town Manager Executive Report To Council, March 2025)
Applications submitted for Oro Valley Village Center Apartments
A few months ago, LOVE anticipated significant activity this spring concerning the transformation of the Oro Valley Marketplace into the Oro Valley Village Center—and developments are now underway. HSL Properties has submitted formal applications for architectural design and development plans related to another Encantada apartment project. Located north of the current Encantada complex, the proposed project includes approximately 320 residential units, along with site improvements such as a public recreation area featuring a ramada, self-service bike repair station, and seating accessible from The Loop. The development plans, currently undergoing administrative review, will be checked for conformity with the updated Master Development Plan approved by the Town Council in November 2023. Architectural designs will subsequently be reviewed by the Planning and Zoning Commission and the Town Council. (Source: Town Manager Executive Report To Council, March 2025). There is also a hotel that whose planning is underway.
Brother Brother Oro Valley is watching you
If you regularly travel through the intersections at Innovation & Tangerine, La Cholla & Glover, and Westward Look & Ina, be sure to proceed carefully—Big Brother Oro Valley is now watching! The Town has installed Miovision and Honeywell cameras at these locations, enabling staff to keep an eye on traffic issues and resolve them quickly. (Source: Town Manager Executive Report To Council, March 2025).
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