Town Council Approves Shift of Half-Percent Sales Tax to General Fund

Council changes direction of sales tax revenue
Last week, the Oro Valley Town Council voted unanimously to move the half-percent sales tax revenue from the Community Center Fund into the General Fund, while maintaining the Community Center Fund through budgeted transfers from the General Fund. For years, these monies were dedicated to supporting municipal golf, the community center, and some other recreation assets.

Broadening its potential use to all town operations
While the decision may sound like a simple accounting move, it reflects a shift long in the making. The half-percent tax, enacted in 2015 to support early operational deficits at the golf course and community center, was projected to generate about $2 million annually. By 2021, revenues had already grown to more than $2.8 million, and in recent years annual collections have ranged from $2.9 million to $3.9 million, with FY 2025 projected near the high end of that range. Redirecting these funds into the General Fund means a substantial and growing revenue stream will now be available to support overall town priorities, not just recreation-related activities.

Fund will continue to need town financial support

Brings greater financial flexibility while retaining focus on golf and community center operations
Vice Mayor Barrett advanced the idea with the goal of giving the town greater financial flexibility while maintaining transparency about the costs of operating the golf courses and the community center. Barrett argued that this approach allows the Council to fund the community’s highest priorities—“whether that be parks, roads, or police facilities”—while also preserving transparency and historical continuity. “Residents want to know where the money is going, and this structure makes that clearer."

Only one resident spoke on this during the public hearing
This topic was a public meeting. In our June article on this we thought that there would be far more community spokespersons. Only one person spoke, however,  Matt Wood, who serves on the Parks and Recreation Advisory Board spoke in support of what was to be Council’s decision. Wood emphasized trust in the Council’s judgment to use the sales tax revenue wisely across the community. At the same time, Wood underscored that parks and recreation still deserve continued funding attention even under the new arrangement.

These sales tax dollars are pledged ("encumbered") to pay park bonds
Councilmember Mary Murphy floated the idea of “sunsetting the tax when the Naranja Park bond is paid off” so that revenues could eventually be returned to residents. This would be in about 15 years. Barrett noted that the town relies on these monies, pointing out that they not only cover bond payments but also pay for capital expenses, and operating deficits: “These funds are encumbered … they pay for the bond...and they support capital and deficit operations in parks and rec … that’s part of why it’s important that those funds remain.” 

Greene abstains with no comment or reason given
In the end, the Council approved Barrett’s motion by a 6–0 vote. Councilmember Green abstained from voting.  He did not speak on this matter nor did he explain why he abstained.  As a result of the vote, this year, all revenues from the half-percent sales tax will flow into the General Fund. The Community Center Fund will remain in place, with operations and capital needs supported by transfers approved during the annual budget process. This compromise preserves a record of past financial performance while giving the Council broader flexibility to direct revenues to the town’s most pressing needs.
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Contrasting Growth Strategies: Oro Valley vs. Marana - A Tale of State Shared Revenue Trends

Marana’s State Sale Tax revenues growing faster than Ovo Valley’s

A reader has provided us with a chart that illustrates the contrasting trends in state shared revenues between Oro Valley and Marana. These revenues encompass funds obtained by the State from various sources like sales taxes, income taxes, highway fees, and more, with a portion of these collections being distributed to cities and towns. The data is intriguing as it offers valuable insights into how different growth strategies affect the financial stability of these two municipalities.

Marana has a high growth strategy… Oro Valley does not

Thus, as one would expect, the data reveals an impressive 84% increase in state revenue to Marana from 2018 to 2022. Marana’s population grew 19% population during the same time period. In contrast, Oro Valley experienced a 6% population growth during the same period. Still, its state revenue grew a substantial 64%.   

Here’s the chart:

Indeed, there is a discernible difference in the growth of state shared tax revenues each town received but… 
Oro Valley and Marana stand as distinct entities with unique approaches. While Marana actively pursues robust growth, leveraging its strategic location along I-10 to attract commercial businesses, Oro Valley, due to its considerable distance from the interstate and the preferences of its residents, takes a different approach. Oro Valley aims for controlled growth without compromising its reputation as an excellent place to live. Additionally, these two towns are notably different in terms of aesthetics. Marana lacks physical allure and is primarily characterized by cluster zoning and flat desert. On the other hand, Oro Valley boasts visual charm, nestled beside the Catalina Mountains. In this regard, there is no comparison between the two communities.

Gomez Paints Rosy Picture of Town of Oro Valley Financial Condition

Staff: Town finished year in strong financial condition

Town Finance Budget Director Gomez painted a rosy picture of Oro Valley financial results through June at last Wednesday's town council meeting. “We ended the fiscal year in strong financial condition.”  According to Town Manager Wilkins: "...financial performance across all funds has exceeded expectations."

Financial condition means fund balances

The town has sixteen separate funds.  These funds totaled $99.7 million at the beginning of the year. The end of year total was $90.3 million. All Funds were budgeted at a year end total of $68.6 million (per the town's published 2023 approved budget)

“Strong” means fund balances in relation to budget

Gomez based her assessment by contrasting the actual cash holdings in the Town's funds with the predetermined figures. These fund balances are determined by the income received (revenues) and the money expended (expenditures). While the Town has limited sway over its incoming revenue, it exercises full authority over its expenditure decisions. Importantly, the expenditures do not encompass outstanding debts.

Local sales tax revenues “flat” overall

The sole "negative" observation made by Gomez pertained to local sales tax revenues. The primary fund responsible for covering town operations is the General Fund, which derives nearly half of its revenue from local sales taxes. Although local sales tax revenue appeared to remain relatively stable when compared to the previous year, it actually decreased by 10% when adjusted for inflation. 

Gomez noted that all segments of local sales tax revenues exhibited growth, with the exception of construction-related sales taxes, which experienced a substantial 20% decline compared to the prior year. In 2023, construction sales taxes accounted for 20% of total local sales tax revenues, down from 24% in 2022.

The decrease in construction revenue aligns with a nationwide trend of declining housing starts. Economists have attributed this phenomenon to the rise in interest rates and the unprecedented levels of inflation. In simpler terms, potential buyers are finding it increasingly challenging to afford housing. On a more positive note, the higher interest rates have significantly boosted the interest income earned by the town in 2023.

Two major projects not completed..deferred to this fiscal year

One contributing factor to the "strong performance" is the allocation of budgeted funds that were not used. Two specific instances of this allocation can be found in this year's budget: 

Westward Look Roadway Improvement

First, there were funds designated for the revitalization of the Westward Look roadway, in accordance with the town's annexation agreement. The Town agreed to make these improvements when it annexed Westwood look. Once again, it has taken forever to get these done. Maybe this will be the year!

Elevator at the Community Center
Second, there are funds earmarked for the installation of an elevator and necessary structural modifications to render the Community Center compliant with ADA (Americans with Disabilities Act) standards. According to Oro Valley's Public Works Director, Paul Keesler, the ADA improvement project is expected to commence by November. This improvement is long overdue.

 
For years, the Town asserted that the service entrance on the right side of the community center, accessible from the parking lot, was ADA-compliant because it provided direct access to the second floor. However, this path involved struggling up a hill. Town activist Jim Horn raised this issue with the Town Council, prompting them to take action. They would never have done so otherwise. It has taken some time for Mr. Keesler to reach this point, but it appears that significant progress will be made by the end of this year. One day, there will be an elevator.

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The Many Faces Of The Oro Valley Local Sales Tax

 

Oro Valley Set Sales Tax Collection Record In Fiscal 2022 of $30.6 million, a $6.5 million Increase Over Fiscal 2021

Guest View-Diane Peters: "Golf Tourist" Revenue was Based on Speculation with No Supporting Data

Back in 2019, in order to not appear self-serving in their efforts to keep the town-owned golf courses open, residents living along the golf courses figured out that they needed to come up with an argument for why the golf courses were good for the entire town and not just good for their views and their property values.

The bed tax and sales tax argument
They argued that the golf courses benefited the entire town by attracting tourists who came here to play golf and that these “golf tourists” were contributing to the bed tax and sales tax. However, no one ever supplied any statistics on how much revenue these supposed golf tourists are bringing in or any proof that they bring in more in revenue than what it's costing us taxpayers to maintain these courses. As such, I asked the town manager if the town had any statistics to prove those claims. And it turns out, they did not.

My email to the Town Manager

“The argument of the golf crowd is that the golf courses bring in revenue in the form of bed tax from the hotels and sales taxes in our shops and restaurants. But where is the proof of how many people who stay at our hotels are playing golf on the El Con golf courses? Can the town show exactly how much bed tax and sales tax revenue we are receiving from people staying in our hotels who are here for the purpose of playing golf on the town-owned golf courses?”

The Town’s Response

“The Town cannot show exactly how much bed tax and sales tax revenue it is receiving from people staying in hotels within Town boundaries for the purpose of playing golf on Town-owned golf courses.”

As I suspected, the “tourist revenue” argument was purely conjecture and has no merit at all.

Opinions without factual evidence
One person who lives along the golf courses commented on social media that the golf courses were a “net add” to the town. But when I asked him to provide the “actual monetary statistics,” he could not. He responded only that: “They bring people [tourists] in. They are beautiful. The golf courses keep property values up.”

Well, one could argue that the desert landscape brings people [tourists] in, it’s beautiful, and it keeps property values up. But we’ve all seen how Oro Valley allows mass grading of the desert with no concern at all for its beauty or how it affects our property values.

Three reasons why I never believed the “golf tourist revenue” argument

1. When any of our friends or family have visited us in the past 18 years, not one of them inquired about golf courses in the area. They wanted to experience the desert and desert wildlife, red rock country, Wild West history, and Native American history. As such, they took day trips to Saguaro National Park, Tombstone, the White Stallion Ranch, San Xavier Mission, Tubac, and Nogales, Mexico. Others headed up to Sedona for a few days after leaving Oro Valley. Again, not one of them had any interest in playing golf.
2. When my husband and I moved here in 2003, we came for the desert and mountain views and the dry climate. Golf courses were not on our radar.
3. When planning a vacation that includes golf, why choose Oro Valley over Scottsdale when Scottsdale has a far greater selection of adjacent quality dining, boutique shopping, museums, and art galleries?

The “net add” just doesn’t add up. Their whole argument was based on hyperbole. Six years into this boondoggle, I still fail to see what’s in it for the rest of us.
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Diane Peters has lived in Oro Valley since 2003, moving here to escape the humidity of the East Coast. She’s been involved in OV politics and development issues since 2006, including organizing a citizens group in 2014 that spent 9 months negotiating a controversial 200-acre development project. In her past life, she worked in medical research at various University Hospitals in New England. Her interests include reading, writing, nature photography, travel, art galleries, museums, and politics.

Town of Oro Valley's Financial Situation Strong Entering 2021

Good Financial Times Prevailed in fiscal 2021

Oro Valley completed fiscal 2020 with strong financial results. This according to a discussion that town staff will hold with the town's finance and budget commission tomorrow.

“The Town has thus far successfully navigated the challenges posed by the COVID-19 pandemic” according to Oro Valley Finance Director David Gephart and Town Manager Mary Jacobs. “Financial performance across all funds has exceeded expectations," according to a town memorandum that was provided to the town’s Budget and Finance Commission. (Source: "Memo")

Revenues were strong

"...especially for single-family residential permits and construction sales taxes due to a strong housing market, as well as retail and online sales tax collections. There are also indications of improvement in restaurant/bar and bed tax collections.” In addition, the town received federal CARES Act and American Rescue Plan Act funds "ARPA". These totaled $13.5 million, more than $8 million over budget. The town is due some additional ARPA funds this fiscal year.

Fund balances increased

Other highlights provided to the commission include: 

• The General Fund, the fund that finances town operations, had a surplus of almost $15 million, increasing the fund balance to $36 million. This happened because of the stronger than anticipated sales tax revenues and permit fee revenue;
• General Fund expenditures of $42 million were $2.6 million less than budget; 
• Highway Fund Revenues totaled approximately $3.8 million or 102.1% of budget, while expenditures only totaled $3.4 million or 86.8% of budget; and
• The Community Center Fund outperformed the budget. Revenues were $500,000 over plan while expenditures were $1.1 million under plan. 

Municipal Golf Cash Flow a $700,000 deficit.. far better results than expected

Golf operations are part of the community center fund. Total reported losses were $373,000 less than budget. This is because gross income from golf operations exceeded plan by almost $600,000.  Financial performance was boosted from a substantial increase in green fees and and an increase in monthly dues. These two items were $753,000 more than the budgeted amount. In addition, underspending was driven by the town not doing the golf course irrigation project. This happened because bids to replace the irrigation far exceeded planned spending.

Guest View: Mike Zinkin ~ Why cut taxes when you can reallocate the additional funds instead?

 

The above question should not surprise anybody

After all, don’t all governments find a way to spend tax dollars, even when there is no longer a need for the original subsidy?

The history of the increased sales tax to fund the Community Center and Golf Courses
On March 1, 2015 Oro Valley initiated an increase of our sales tax from 2% to 2.5% with the additional .5% to be dedicated to the Community Center Fund. The Town had purchased the HSL properties to include golf, tennis, swimming, and a community center. The Town knew that it needed additional revenues to cover this investment.

According to the ordinance (O) 14-17, “an additional revenue source is necessary to subsidize the operating costs and fund the capital needs of the facility over time.” The tax was forecasted to “generate approximately $1.6 - $2 million annually in additional revenues.”

Some more background for the new residents in town
Immediately after the Town Council motion to purchase the HSL property, a PAC called TOOTH (Tee’d Off Over Tax Hike) was formed to gather signatures to invalidate the Council decision. TOOTH was a play on words as the mayor at that time was a dentist. They needed 1,148 signatures to get the referendum on the ballot.

Despite having to collect the signatures over the Christmas holidays (from 12/18/14 to 1/16/15), TOOTH collected 3,158 signatures (more than twice the required amount) only to have the Town Clerk void the petitions due to a minor clerical error. With one day left to gather the required signatures, another PAC was quickly formed and gathered over 1,100 signatures in just 5 hours. This was just shy of the 1,148 they needed to force a ballot issue. As such, the residents never had an opportunity to vote on whether they agreed with the tax increase to fund the Community Center, thus the purchase and accompanying tax became a reality.

Two Choices
In the current budget (FY 2020/21) which ends on June 30th, the dedicated sales tax is now forecasted to provide $2,492,960. So what does our government (Town Council) propose to do? Instead of reducing the tax, they find another reason to spend the additional revenue. Looking ahead to next year, the Town Manager’s Recommended Budget for FY 2021/22 forecasts the sales tax revenue to be $2,857,779.

The increased tax imposed on the People was to subsidize the Community Center Fund. Now that the revenues are well above the initial $1.6 - $2 million specified in the ordinance, the Council has two choices: (1) reduce the tax or, (2) find reasons to spend the additional revenue. They have chosen the latter and I believe that doing so is fiscally irresponsible.

This tax has forced the entire community of 44,000 residents to subsidize fewer than 300 “golf members.” The tax was wrong to begin with and will continue to be wrong if it is no longer going to be spent as originally proposed.

More tax history: The Utility Tax that never went away
Oro Valley already pulled a similar stunt when they passed a temporary 2% Utility Tax in 2006 to fund 18.5 new staff positions, mostly in the police department. The tax was supposed to sunset in 2009, but in 2009 the Loomis council voted to extend it at the 2% level with no sunset clause. Then, in 2010, the Hiremath council increased it to 4% and we have never gotten rid of this “temporary” tax.

Oro Valley should only tax for what it needs and nothing else.

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Mike Zinkin and his wife have lived in Oro Valley since 1998. He served on the Oro Valley Development Review Board from 2005-2009, the Board of Adjustment from 2011-2012, and the Town Council from 2012-2016. He was named a Fellow for the National League of Cities. He was a member of the NLC Steering Committee for Community and Economic Development and a member of the Arizona League of Cities Budget and Economic Development Committee. He was an Air Traffic Controller for 30 years. Mike has a Bachelor’s degree in history and government from the University of Arizona and a Master’s degree in Social and Philosophical Foundations of Education from California State University, Northridge.

Hornet’s Nest

 

Bits and Pieces

Westward Look annexed

The Oro Valley Town Council voted 4-1 on three measures to annex the Westward Look Resort. This happened at Wednesday’s council meeting. Council Members Nicolson and Solomon were absent from the meeting. Mayor Winfield, Vice Mayor Barrett and Council Members Joyce-Ivey and Green voted in favor. 

Council Member Bohen voted against the measures because the annexation did not include residents who live east and west of the resort. Indeed, as town manager Jacobs confirmed, the town had never considered bringing these residents into Oro Valley. Bohen noted that the town was violating its own annexation policy of only annexing continuous areas, and not annexing “islands.” Bohen is also fearful that these residents, having participated in a rather rancorous process, will not be interested in joining Oro Valley in the future.

Impact of big payment to PSPRS won’t be seen until fiscal 2024
As previously reported, the Oro Valley Town Council approved an additional budget item to be included in the tentative 2021-22 budget. It regards using $10 million from the general fund and using the proceeds from a $17 million pension ob bonds to be issue to fund the PSPRS underfunded obligation. 

If this item is included in the council approved budget, the payment will occur the first week of July. The plan is to then continue to fund PSPRS at State determined annual contribution levels. For the next two years, those payment amounts will be determined as though the $27 million was never contributed. This is because the funding requirement is determined as of June 30 and any change takes place starting the following July 1.

Single family residents permits issued set record
The Town of Oro Valley is on its way to issuing almost 400 single family residence building permits this year. That level is an historic high, an increase of 43% over last year. Projected revenues from permits to the town this fiscal year is $2.8 million.

Projected sales tax revenues set record
One of the unexpected consequences of the Pandemic is seen in the town’s sales tax revenues. Oro Valley sales tax collections were more than 15% higher than the prior year, This was “...helped greatly by an increase in online purchases.” Total sales tax revenues are projected at $14million this year. This extrapolates to $553 million in resident purchases.

“Ghost” golf course in Oro Valley

“We discovered an abandoned, formerly luxurious golf course in Oro Valley that we dubbed the “ghost golf course.” We meandered along the paved cart path wondering what had happened to change this oasis in the desert into a peaceful yet scrubby eyesore to the advantage of walkers and bikers.”  This quote appeared in an Colorado Springs  online publication. We suspect that the writer is referring the former Vistoso Golf Course.  We love the referfence to the “scrubby eyesore”.

Oro Valley wins Distinguished Budget Presentation Award” for 13th consecutive year

“For the 13th year in a row, the Government Finance Officers Association (GFOA) has awarded the Town of Oro Valley the Distinguished Budget Presentation Award for its 2020 budget. The award represents a significant achievement by the Town of Oro Valley. It reflects the commitment of Town Council and staff to meeting the highest principles of governmental budgeting. the conservation” (source)

Former Purchase Golf Course negotiations continue 

Negotiations between Rompsen LLC and The Conservation Fund regarding the purchase the former Vistoso Golf Course continue. Romspen is getting an appraisal of the property for negotiations with the Fund.  Romspen is also in negotiations to sell the parcel of the property that is zoned for multi-family residential.  This according to Town Manager Mary Jacobs, speaking at  this weeks Oro Valley Town Council meeting.

The Town of Oro Valley: Municipal Golf's "Eternal Flame"

Is Oro Valley Growing Too Expensive For Retirees?

One "study" says Oro Valley is getting to expensive
This is the conclusion of a study by gobankingrates.com. The study, published in September, ranks Oro Valley as 22 out of 30 nationwide locations that are getting too expensive for retirees.

Oro Valley’s senior population is approximately 30% according to census.gov (US Census Bureau). We are not just a retirement community; but people have traditionally moved here to do just that.


Reason 1: High Cost of Housing

The study uses median housing list price as a gauge of housing cost.

Gauging the cost of houses using that measure can lead to erroneous conclusions since a "median" is not an average. It is the middle number in a bunch of numbers.

We think that the average price per square foot of living space is a better measure. So, LOVE undertook our own study using data provided by Long Realty.

LOVE calculated the average asking price per square foot. We compared Oro Valley to other local retirement communities. We found that Oro Valley is near the top of the pack, but inline with Saddlebrook, which is a retirement community. Take a look at our infographic (panel left).

Reason 2: High cost of  living
We posted about Oro Valley's high local taxation last week, referencing a Kiplinger report that listed Oro Valley as a "high local tax town".

In that posting, we identified heavy taxation of water, a fact not considered by Kiplinger, as an added high tax factor. We also noted in that posting the relatively high property valuations assigned by the Pima County Assessor to Oro Valley properties, values that enable them to collect proportionately more property tax dollars from Oro Valley  property owners than from other communities.

Other than taxation and the cost of housing, the cost of living in Oro Valley is comparable to other local communities
The cost of living in Oro Valley  is also in line with the national average (panel right).

Our conclusion
Oro Valley's high cost of housing and high local taxes not only make Oro Valley expensive for retirees, but also make Oro Valley expensive for everyone else.
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You can do your own research on cost of living by clicking here, customizing it to your income and preferred locations.

About the  GOBankingRates study: They analyzed 50 cities with large senior populations (i.e., 25% or more of the population aged 65 or older). 

Kiplinger: Oro Valley No 6 In Highest Local Taxes In Arizona

High local taxes
Oro Valley local taxes are higher than those of most Arizona cities and towns, according to a study by Kiplinger, a personal finance advisory company. The study, published in September, ranked the 30 largest cities and towns based on the estimated local tax burden.

Marana tops list....but Oro Valley isn't far behind
Marana was the town with the most local taxes. It was followed by the City of Tucson.  Casa Grande, Apache Junction and Maricopa had more taxes than Oro Valley, but not by much.

Oro Valley's High sales tax
Oro Valley's high local taxes are driven by several factors. One is a high sales tax. We've documented this in a recent prior post.

Tucson and Oro Valley lead the Southern Arizona pack when it comes to sales tax. Oro Valley's half cent sales tax golf levy is indeed unique. It's the only one in Arizona.

Oro Valley's high utility tax 
The Oro Valley utility tax didn't exist until 2007, when a 2% tax was enacted. It was enacted during the recession to avoid cuts in town staffing.  It got doubled to 4% in 2011 to avoid having to reduce the police budget, a reduction that would have been in line with other town staff reductions at that time.

The original 2% utility tax was supposed to have been rescinded two years after its inception in 2007.  That never happened. The 2 percentage point increase imposed in 2011 was supposed to have "gone away" when the economy improved. The economy has improved substantially. Yet, the doubled utility tax remains today.

Want to learn more? Read our deceased colleague John Musolf's post:  "Perpetual Life Of The Utility Tax."

Oro Valley’s high water cost
LOVE has previously reported on the high cost of Oro Valley’s water in our posting: "Taxes, Add-On Fees, and an Inverted Rate Schedule Make Oro Valley Water Expensive.” Fees and tax levies add 41% to the cost of water. Water rates have gone up since that post; and with that increase in rates, so have the add on fees. Oro Valley's high water cost was not considered in the Kiplinger survey.

Oro Valley's higher than average county property values per square foot
Oro Valley also has a leadership role in property values. These values are the basis for the property taxes we pay. LOVE has also documented that Oro Valley's property values are higher per square foot than the rest of the county. Our 2015 analysis revealed that Oro Valley's population was 4% of Pima County but its assessed property values were 9% of total county property values. The result: Oro Valley residents pay more property taxes per square foot than other areas. Oro Valley's higher property taxes per square foot was not considered in the Kiplinger survey.

Up Next: Oro Valley Is Growing Too Expensive for Retirees
Arizona has always been a destination for retirees. Oro Valley has been the beneficiary. This fact accounts for why Oro Valley's median resident age is almost 50 years, while the national median age is 38.  Next monday, learn how things are changing.
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Oro Valley ,Tucson Lead Pack In Highest Sales Tax Rate

Oro Valley and Tucson are virtually tied in terms of the highest sales tax rate
Oro Valley is only 1 tenth of one percent short of the City of Tucson in terms of sales tax rate. Oro Valley's total combined sales tax rate is 8.6%. It is a half cent greater than the comparable Southern Arizona towns of Marana and Sahuarita. Oro Valley's tax rate is far more than the 6.1% total sales tax rate paid when one purchases product in unincorporated Pima County areas that are just to Oro Valley's west.

High sales tax rates have a huge impact on consumer purchases
A high tax sales tax rate is disincentive for the purchase of big ticket items in Oro Valley. Ashley Furniture, which is moving into the Oro Valley Marketplace, will have to charge 8.6% on all sales; while competitors, such as LazyBoy, located to Oro Valley's west, charge only 6.1%.

Impact seen on big ticket purchase
Purchase a couch for $3.000. The buyer pays a $258 sales tax if the purchase in at Ashley. Purchase it it to the west, a few minutes drive, and same buyer pays $157. That's a savings of $100. The savings alone makes it well worth the trip.

We imagine we won't see any car dealerships locating in Oro Valley any time soon.

The following table presents the sales tax numbers:

Marana Cuts Sales Tax Rate By .5%

This January, it will cost more to shop in Oro Valley than to shop in Marana. This is because Marana is reducing it's sales tax from 2.5% to 2.0% (source).  The reduction is part of an agreement with the community to rescind a tax that was put into effect to fund the Marana Police Facility. The facility is done. The tax rescinded.

Shopping in Oro Valley will be more expensive, relatively. Oro Valley's sales tax rate is 2.5%. The town council increased the tax rate in 2015 to fund golf operations of the acquired El Conquistador Country Club. One of the justifications for the increase is that the increase would put in on a competitive par with Marana.

We expect that the economic impact of this will be seen most closely on Oro Valley's western edge. It abuts Marana. Residents in this area have easy access via La Cholla to the many shopping opportunities along Ina Road.

This new tax rate disadvantage presents yet another challenge to Oro Valley's new leadership.

You can view how Oro Valley's tax rate compares to other Pima County communities here.
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Oro Valley Mayor Hiremath's "33% Solution"

Last September, we met with Mayor Hiremath to discuss a community center for Oro Valley. LOVE has advocated for a community center for many years. The Mayor said, during the last month of his campaign that he was in favor of the town having a community center. We were thrilled. Finally, some common ground on which we could build.

 At our meeting with the Mayor, he said that, in order to finance the community center, Oro Valley would have to raise the sales tax a half penny. He also said that "33% of Oro Valley sales tax revenues come from people who do not reside in Oro Valley."  The Mayor thought that, by raising the sales tax a half-penny, a larger share of the sales a tax dollars would come from these people. They would, in effect, pay for the community center.

(At that time we had no idea that the Mayor was talking about purchasing the El Conquistador Country Club and converting the club house to a community center. Had we known it at that time, we would have told you.)

Our conversation with Mayor Hiremath was not about the "33%" number."  We never questioned it. We "assumed" [there is that word again] that Mayor Hiremath and the Town Of Oro Valley had a valid financial analysis that substantiated this fact. After all, the Mayor has asserted that sales tax revenue derived from tourism was way to fund the community center. This financing method would be of less burden to the residents of Oro Valley than any alternative financing method.

Oro Valley resident Paul Emmert was curious regarding the number. He asked Mayor Hiremath, via email, about the support for the number. According Mayor Hiremath, the number was calculated when he was president of the Southern Arizona Arts and Cultural Alliance ("SAACA). It was based on a methodology that he gave to Emmert. When Paul investigated further he found that neither the Mayor nor anyone Paul could contact in that town of affiliated with SAACA could find the actual calculation.

In his correspondence to Emmert, the Mayor recalls the SAACA study. As SAACA applied the methodology, "...it was apparent that a pattern was beginning to develop and that pattern was that, on average, we were looking at roughly 33% of revenues were coming from visitors."

Emmett would  like to see the calculation. The 33% number differs from a number from a study done by the Arizona Department of Tourism that shows that 10.4% of sales tax revenues comes from tourism.

Mayor Hiremath asserts in his email correspondence to Emmert that it is Emmert's job to prove the 33% number is wrong rather than him proving that the number is right. We thought his position on this a bit curious so we  did follow-up with the Mayor. He told us that methodologies provided by American For The Arts [which SAACA uses] and the Destination Marketing Association International [which TREO] would, when their results are combined, exceed the 33% number.

"If you combine the two percentages, you will see that they will be above the 33% and keep in mind that's not even including the daily sales tax [revenue] we receive from Catalina, Oracle, Marana, San Manuel, Tucson, and Pima County residents to name a few."

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Bits and Pieces

Zinkin Nails It...Takes The High Ground.. Makes Clear Case

Council Member Mike Zinkin set the record straight regarding the El Conquistador Country Club purchase during an interview with Garrett Lewis  of KNST yesterday. Unlike Mayor Hiremath's interview the prior week, Zinkin was respectful and focused on the issues. You can listen to the interview below.

Oro Valley Sales Tax Hike Hits The Financially Less Fortunate Hard

Oro Valley Council Member Brendan Burns has done a "quick and dirty" analysis of what the Oro Valley half-percent sales tax increase means to those who love in Oro Valley.

Burns has a special feeling for those in our community who are financially less fortunate. He brings the very important perspective to our town council.

"I am a numbers guy and prefer to focus my debate on this topic. I like to personalize the discussion as much as possible. I discussed the below today but I am not sure if it will be edited out.

The sales tax will cost every citizen $34.15 per year (1.4M diivded by 41,000 residents) (2M accounting for the 30% not paid by residents per Hiremath).

For a family of 5 that is $171 per year.

I also emphasized how this is the second time Hiremath raised taxes. The utility tax will cost $37 per person. (1.5M divided by 41,000). $183 per family of 5.

The total cost to a family of 5 is $354 per year. This is not a small number and significantly impacts families and those on a fixed income. For instance, 24% of CDO students are on reduced or free lunch, 22% in Copper Creek.

If you are struggling to feed your family, $354 per year is a significant amount.

Council "Borrows" $1.2 Million from General Fund To Fund Golf Course Losses

The Financial Impact Of The "Community Center"

Wednesday. the Oro Valley Town Council voted 4-0 (with 3 abstentions) to transfer $1.2 million from the contingency reserve to a fund to pay for some of the  refurbishment of the El Conquistador Country Club ($760,000) and to fund golf course losses from March through June ($440,000). The amount would be "repaid" over 10 years with no interest.

3 residents who live on the golf course, Majority-4 supporters (Lyra Done and Dick Johnson), spoke on how great the golf course is.

However, not all residents are happy. Not all live on the golf course. Not all play golf. But all are paying. One of our readers sent us a semi-handwritten summary (left) of the financial impact of the El Conquistador Country Club purchase.

"More Taxes... Less Reserves".. a direction that individual does not like.

Council Member Zinkin asked how long "we are going to drain the contingency fund. We don't even own this thing and  you want $1.2 million. I'm not going to give you a penny until I see the purchase agreement. We don't own it so what are we don't this tonight?

At Rancho Visoso and Moore Blvd

The "Don't Sign" Sign

Another of our readers sent us this photo of the "Don't Sign" sign that appeared Oro Valley.

They also mentioned that one of the well know supporters of the Majority-4, Richard  Tracy, was wearing a shirt with the same words at this past Wednesday's Oro Valley Town Council Meeting.

Oh. Then angst, the discord, and the anger that the purchase of the El Conquistador Country Club has caused.

The lack of a public vote on it, has wrought a recall referendum Oro Valley.

Bits and Pieces

Appellate Court Denies Stay

The Arizona Appellate Court denied TOOTHINOV.ORG's request for a stay of the Town Of Oro Valley's purchase of the El Conquistador Country Club. The basis of the denial was that the case will be heard by March 4, which is before the town's sworn statement that the deal can not be closed before mid March.

Oro Valley Seeking Designer For El Conquistador Country Club Clubhouse Conversion

According to an article published in Arizona Builders Exchange, Oro Valley has issued a request for proposal for design services to convert the El Conquistador Country Club clubhouse

"The selected firm will be expected to design upgrades, renovations and alterations, as well as any other design services for town facilities. Those services could include site design, ADA and code compliance, civil, mechanical, structural, electrical, communications, landscape, planning, energy and water efficiency, cost estimating and administration of the construction contract".

Increased Sales Tax Starts March 1

Wednesday, the Oro Valley Town Council discussed possibly suspending the sales tax increase to support the community center since the purchase of the El Conquistador Country Club may be delayed. They made no change. So, the increased sales tax starts March 1. The town will hold the money for use if and when a community center comes to fruition.

Car Show Tomorrow

SAACA is hosting a car show at the Oro Valley Marketplace tomorrow, fro 10am to 3 p.m.

"Blending science, mechanics and design is an innovative art form in its own right. Car design is a ubiquitous but often overlooked art form which SAACA beings to light through our annual Classic Car Shows. The event invites thousands of people out to rev up the weekend with live oldies music, kids’ activities and great food. With 20 different classes of autos, awards are given in Best of Show, Best Interior, Best Paint, Best Engine and People’s Choice, as well as a first place award given in each vehicle category. The one day event will feature live Blues music on the main stage, classic BBQ on the grill, and an endless supply of everything we have come to love about fast cars and classic auto"

$5 admission. 10 and under Free.  $1 discount for all Veterans and Active Duty Military

Tonight's The Night: What People Don't Like About The ElCon Purchase (Part 2)

Tonight, the Oro Valley Town Council will consider increasing the sales tax by one half cent to finance the operation of a community center and recreation facility. The facility will be the site of the The El Conquistador Golf and Tennis Country Club.  The facility includes several golf courses, two swimming pools, and 31 tennis courts. Oro Valley will  purchase from HSL Properties for $1 million.  HSL is purchasing it from Met Life.

Monday, we presented the town's case for approving this transaction.    In this posting, we present the objections of those who do not favor this transaction:

• The one half cent sales tax increase lacks community input
• There is a rush to make a decision 
• Some allege insufficient due diligence on the part of an inexperienced Oro Valley management team. (Monday we posted regarding the steps undertaken by the town.  You can and should draw your own conclusions as to whether these steps were sufficient to use to advocate for the purchase...or not.)
• Some fear an appearance of influence based on the campaign relationship between the Mayor, the council majority and HSL Properties 
• Some question the judgment of purchasing and running golf courses at a time when the golf busineess is in a major decline and when other golf courses in our town are suffering financially.
• Others fear the substantial investment required and a financial feasibility pinned on the "hope" of making money five years from now, after investing millions 
• Some question wither the town should go into a business that compete with private enterprise
• Oro Valley's private golf clubs 
• Oro Valley's fitness clubs 
• Perhaps, some allege, the inspection of the facility has not revealed big problems like an allege "black mold" problem
• Others wonder why Oro Valley wants to provide two activities, golf and tennis, that have never even been on the radar of the town before the El Con opportunity.

Some of these concerns have been asked and answered. For example, the town responded to a lack of community input, the urgency of the transaction, and the need for a multi-use facility in its press release last week. In addition, LOVE was provide a list of due diligence activities, which we wrote about on Monday.

• The community will have the opportunity this evening to opine on this transaction.  This will give them the opportunity to opine on the sales tax increase that is proposed.  
• The  urgency of the transaction is based on the timing of the other parties involved in it. 
• The town is providing golf  and tennis  this facility because the community, in a recent survey, said they wanted a multi-use recreation center. 
• The town provided us with a detailed list of due diligence activities that they undertook.  We posted these Monday.

Mayor Hiremath's view of the transaction is that any "...implication that campaign contributions are a factor in my decision making is ludicrous."

Some of the concerns have not been addressed by the town or others:

• It is wise to purchase and operate a golf course? 
• Is it wise for Oro Valley ito compete with private enterprise? 
• Is this transaction and the substantial future costs worth the investment?
• Do people want the community center but  not the "amenities?"

It is expected that many citizens will speak at tonight's meeting. Feelings are running strong.

We have been told  that some are prepared to form a PAC to petition for voter approval of this item. if he council approves this item tonight.

Mayor Hiremath faces a cross roads: Will he jam this purchase down the throats of the many who oppose it, as a 4-3 council vote would do; or will he have the wisdom to should slow down this race, take a breath, and let Oro Valley residents digest it?  

LOVE plans to attend this meeting and post results.  Stay tuned!

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Heather's Corner: A Family Considers An Oro Valley Community Center

There is potential that a Community Center may be on the horizon for Oro Valley sooner rather than later. Regardless of where or when it happens, for my family it would mean a great deal. A Community Center, by definition, is for social, cultural, or recreational purposes, and let's face it, will provide more opportunity to escape the summer heat.

When I was younger, I would accompany my best friend and her family as they frequented our town's community center as members. After school it was a safe place to do to homework and wait for her father to arrive from work where the family would participate in racket ball, tennis, or swimming while catching up with a few neighborhood friends. On weekends we would have lunch at the on-site restaurant and participate in an art class or two. My point is to this day, those are some of the fondest memories I have. I'd like the opportunity to provide the same for my children.

A Community Center could be utilized:

As the place for all-community celebrations at various occasions and traditions.

As the place for public meetings of the citizens on various issues.

As the place where politicians or other official leaders come to meet the citizens and ask for their opinions, support or votes ("election campaigning" in democracies, other kinds of requests in non-democracies).

As a place where community members meet each other socially.

As a place housing local clubs and volunteer activities.

As a place that community members (and sometimes others), can rent cheaply when a private family function or party is too big for their own home. For instance the non-church parts of weddings, funerals etc.

As a place that passes on and retells local history.

There are many reasons to incorporate a Community Center in Oro Valley. I think all ages, interests, and socio-economic groups would benefit from a gathering place offering a variety of recreational, sports-oriented, and artistic amenities that we could all participate in. A place that encompasses the hobbies, interests, and pastimes of my entire family all while in the company of one another. Where else can you say that happens? Yes, reason to celebrate, indeed!

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Heather Nenadovich has lived in Oro Valley a total of five years. She has a B.A. in Psychology from the University of Arizona. Her husband is Canadian so she is a hockey fan by default and so are her two very clever children. When not being a mommy, she enjoys hiking in Catalina State Park, hand building pottery, and gardening. Her favorite things about living in Oro Valley are the towns recognition of art and culture, their commitment to preserving nature and the Christmas parade. (Also anything from GMG Chinese Bistro.)