Our Oro Valley neighbor John Musolf has questions concerning the recent defeat of the Naranja Bond issue. John also offers his insight with some astute answers concerning the future of this site.
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It should be the goal of any municipality like the Town of Oro Valley to finance projects from general funds without borrowing (pay-as-you-go). It’s called budgeting and all of us do it personally.
Some municipalities feel the some major projects may need to be financed. Since Oro Valley has no Town property tax the major sources of revenue for major projects is the general fund (state shared taxes, sales taxes, and fees).
The Town of Oro Valley has used the municipal bond approach to finance some major projects:
· To acquire the 213-acre properties called the Naranja Town Site.
· To build the Town of Oro Valley Library.
· To currently fund the building of a new Municipal Operations Center.
Municipal bonds are sold to the investing public. Municipal bonds pay interest to the bondholder over a 25 or 30-year period. The bonds appeal is that the interest is exempt from federal taxes and in some cases state or local taxes.
The key to using the municipal bond approach is that the bond interest that will be paid to the bondholder needs to come from an identifiable revenue source. For example, the identifiable revenue source might be a portion of the local sales tax to pay the interest on some municipal bonds.
The primary risk to the municipality is that other priority capital projects such as roads, water development, etc. may not occur since there is not enough identifiable revenue money to go around for all projects (perhaps even for day-to-day operations).
The other danger is that in bad economic times the TOV could default on these municipal bonds because of insufficient funds to go around (such as less state shared tax revenue).
The Town of Oro Valley could have used the regular municipal bond approach to fund the Naranja Town Site Park!
Why did the Town of Oro Valley take the approach of using General Obligation Bonds?
Perhaps the answer lies in the type of municipal bond (general obligation bonds) that the Town of Oro Valley wanted to use to fund the Naranja Town Site Park.
This is the kind of municipal bond that TOV had on the ballot for November 4, 2008. The major difference is that general obligation bonds are issued with the belief that a municipality (TOV) will be able to repay its debt obligation through direct taxation such as a secondary property tax instead of other identifiable revenue sources such as state shared revenue, sales tax, or fees.
There is little danger in default on these bonds since property taxes can be increased. Municipal bond investors like this added security. Taxpayers do not.
The TOV was seeking voter approval to create a secondary property tax to fund the general obligation bonds for the Naranja Town Site Park.
Once this happened, the issue no longer had anything to do with the merits of building a recreational park but with a referendum on a property tax.
Perhaps, the voting against the Park also had to do with the huge amount of money. Many people forget this started as a $150 million dollar project and was “reduced” to $50 million. Many citizens considered that still too high!
Some have suggested we do a more “modest” version of the park. What is the definition of “modest”? Is “modest” like the undefined “open space” definition that the State Land Trust was using in talking about the Arroyo Land Annexation. Some definitive parameters would have to be established.
Others have suggested other uses for the land to recover some costs since only a smaller portion of the property would be used as a park.
Many have suggested a combination of private (corporate/individuals) donations, user fees, and limited public funds.
A dialog has been opened.
I would suggest forming a park citizen committee. There would be limited involvement from the Town Council and Town Staff. There would be extremely limited use of any consultants.
I, for one, would gladly volunteer and I am sure there are others as well.
Let’s start fresh and keep an open mind.
John Musolf
5 comments:
Although I have lived and owned a home in Oro Valley for nearly ten years, I voted NO on the proposition and am pleased to see that it was defeated. Unlike most of the bloggers who have weighed in, I voted no for the park and would have done so even if it was free. Oro Valley has at least two parks, a multitude of schools with sports facilities free for use to the public, and plenty of walking/biking/dog trails. I personally don’'t think that is what our community is missing, and very few of the posts against the park were in this vein, I noticed (most addressed the issue of property tax increases and the floundering economy). How about some more small business cafes and restaurants and shops ? Some trendy places with liquor licenses? Hmmmm, LIQUOR in Oro Valley…. What a concept! Tucson Museum of Art? Bring it on! Less white bread and more foccacia and na'’an, please. Less WASP and more funky, more multiculturalism. How about a concert venue? More things for teenagers to do to keep them closer to home –- the teenagers who do NOT play soccer, and there are plenty of them, thank goodness. How about more books for the library? (God bless them but all their good books are checked out until the next decade) Oro Valley is a friendly place for families with very small children, perhaps, and maybe for retirees who play golf, but it is decidedly boring and downright hostile to those in between. The irony is that we came here for our children. The Naranja park is just for soccer moms bearing white bread sandwiches. No thanks.
Judy E. Ray
Yo judy, I wonder how many people moved here to avoid multiculturalism?
God forbid that the bus line would extend from South Tucson to OV!
Can you imagine that someone would travel all the way up here to steal all the thousands of buicks parked in Sun City?
PS:
Musolf - as usual - provides the best comments concerning our fair valley.
Nombe w.
Judy,
Enjoyed your post and agree with your assessment. I think the property tax issue was big because so many of us see new taxes being levied on us all the time and the money is then squandered on unnecessary things. In this case it was going to be a park paid for by "the many" for the benefit of "the few." But you know, "it's for the children."
My husband and I go outside of OV for just about everything we do...art galleries, museums, fine dining, shopping, even lunch at a New York style deli. You can't find any of this in OV. Not that we want OV to be overrun with business and the traffic it brings, but a few nice places wouldn't hurt. We asked for something nice and we got Wal-Mart and some chain restaurants. No thanks.
So if this town is only going to cater to the elderly and the children, they'll have to accept the fact that the rest of us are going to spend our money elsewhere.
We already have a "park citizen committee".
Nombe...Where were John's 'wise fiscal words' a few weeks ago when the learned, much heralded Town Council voted to give the Town Manager an 18% pay increase and today they are talking about a hiring freeze. Was the bloated raise a fiscally prudent things to do? What message did this send to the other Town emloyees?
Me thinks there is a major disconnect here.
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