In an article posted a few weeks ago, we anticipated that the Oro Valley Water Utility would soon ask the Town Council to approve borrowing more money to complete the Northwest Recharge, Recovery and Delivery System (NWRRDS) project. That happened last Wednesday when the Town Council unanimously approved borrowing $12 million from the Water Infrastructure Finance Authority of Arizona (WIFA).
Loan will fund final project components
The loan will help pay for the final two independent components of the NWRRDS project: the Twin Peaks Booster Station and about seven miles of water transmission main. With this funding, the project is expected to be completed by the summer of 2026. Most of the system is already built and funded through impact fees, groundwater preservation fees, a previous $6 million private loan, and a water conservation grant.
Water utility—not the town—is responsible
The loan is not a debt of the Town of Oro Valley’s general government. It will be repaid entirely by the Water Utility, using only its own revenues. No taxpayer funds or general fund dollars will be used, and the loan is not backed or guaranteed by the Town. According to the loan agreement, the debt will be repaid from net revenues of the water system—revenues that come from ratepayers. This arrangement keeps the obligation strictly within the utility’s enterprise fund.
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The NWRRDS project began in 2017 as a joint effort between Oro Valley, Marana, and Metro Water to bring additional Central Arizona Project (CAP) water into the region. Initially, Oro Valley's share was projected at approximately $12–$13 million. However, over time, costs have increased due to factors such as inflation, design modifications, and construction challenges. As of 2025, Oro Valley's share has risen to about $21 million, with the independent portion of the project now estimated at $12 million, doubling the original estimate. This escalation in costs has necessitated financing to ensure the project's completion.
Loan terms and financial impact
According to Water Utility Director Peter Abraham, this additional funding need was projected years ago. “It’s nothing new,” he told the council. “It’s been in our water rate reports since 2019.” Finance Director David Gephart added that the utility would be responsible for repaying just over $11 million, since about $1 million of the principal is forgivable. The estimated interest rate is 3.45%, with an annual debt service of about $797,000. No water rate increases are needed to cover the payments.
This, the last of two loans totaling $18 million, completes utility’s NWRRDS outside funding
With last week’s approval of the $12 million WIFA loan, the Council has now authorized a total of $18 million in borrowing to complete the NWRRDS project. In March, it approved a $6 million private placement loan to fund the town’s share of jointly constructed facilities. This WIFA loan covers the final two independent components. Together, the two loans are intended to ensure that the project is fully funded and completed by 2026.
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You can read more on NWRRDS here.
