Council Rejects Using ARPA Funds To Extend Reclaimed Water System

Council votes "No" on using $5.4 in ARPA funding to extend the reclaimed water system
Last Wednesday, the Oro Valley Town Council rejected, by a vote of 5-2, using $5.4 million in ARPA funds to bring reclaimed water to Riverfront Park and to the town's town public facilities (Kreigh Park and Pusch View Golf Course) south of the CDO Wash.  

Council Member Solomon, who proposed the measure, and Council Member Green were the only two who voted in favor of it. They did so on the basis that it is "right" to save drinking water in these drought times.

Extending reclaimed water system is not on the town's list of capital improvement projects

The most common council member objection to designating the ARPA funds to extending the reclaimed water system is that the project is not a current project. Indeed, it is not even a project listed in the town's then year capital improvement plan.  As reported in LOVE, the need to eliminate the used of drinking water on town property never rose to council visibility until last June. At that time, the issue was tabled until this spring for "strategic" consideration.

Town staff has no idea of what that project will cost and how long it will take. 

According to Oro Valley Water Director Peter Abraham, town staff is in the process of determining what it will take to extend the system. Staff has developed a preferred route for the reclaimed water system extension. The challenge, according the him, is deciding how to bring the water across the CDO wash. (Our suggestion is that the town run the water lines attached under the Pusch View Bridge. This is a common practice for bring utilities across a river. It is far less expensive than crossing the wash or digging under the wash.) 

Required deadline of ARPA spending a major consideration

A second concern of those who voted against the measure regards the timing of the spending. It is a federal requirement that the ARPA funds be spent by December 31, 2026.  Thus, any project to which the funds are designated must be at least in major progress by then.  As a result, Water Director Abraham would like to spend the money on existing projects. An extension of the reclaimed water system is, at best, in the planning stage. It is yet to be approved by council. Thus, it is highly unlikely that the ARPA funds could be spent on a reclaimed water system extension before the spending deadline.

For those opposed, the better ARPA funding option is the NWRRDS project... but that project has been delayed

The project they specifically identified for ARPA funding is the Northwest Recovery and Recharge District (NWRRDS) project . This project is going to bring CAP water from the northernmost CAP storage pond in Avra Valley to Oro Valley through Marana. According to town Water Director Peter Abraham, that project is currently paused because the cost estimates for continuing to build it have increased substantially. The three partners on the project (Marana, Metro Water, and Oro Valley) are seeking ways to simplify the project and reduce cost. Construction on the project won’t start again for another 18 months at most according to Director Abraham. 

The result: No decision has been made on how to apply the ARPA funds

The Council continued the decision on what to do with the money to a future session.They did so because Council Member Tim Bohen wants to get a "better" understanding of what LOVE has defined as a money laundering loan scheme proposed by the town's former town manager and the town's outside accountants. This has nothing to do with how the ARPA funds are applied. It has to do with how the funds are transferred to the water department.

Use of drinking water on town outdoor facilities still needs to be addressed

The fact is: 715 homes worth of drinking water are being used every day by the town's three outdoor facilities that are south of the CDO wash. Add to this, the drinking water that is being used for outdoor watering by two non town owned facilities that are located south of the CDO wash.  Extending the reclaimed water system south to them plus some clever negotiating could provide enough water to supply almost 2,000 homes [panel above right]. That is a lot of homes.... possibly almost half the size of Rancho Vistoso.

The drinking water saving opportunity of extending the reclaimed water system south is huge.

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Town Manager Jacobs Resigns After Proposing "Laundering" ARPA Funds

Jacobs resigns

Town Manager Mary Jacobs resigned Friday. We do not know the reasons behind this. We do know that she proposed a money laundering scheme regarding $5.38million in ARPA funds. This happened at the Town Council meeting last Wednesday. You can read about this scheme in this article.

We do know that council conducted her annual review as scheduled after she had proposed this scheme. 

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Jacobs proposed laundering ARPA funds 
Jacobs and her staff tried to “pull a fast one”. She put an item, Consent Agenda, item 2, on last week’s council meeting, which was an item that clearly needed discussion. Consent Agenda items are not discussed at the meeting unless a council member requests that the item be pulled for discussion. Otherwise, Consent Agenda items are voted on as a block.

The item called for the council to approve a loan of  $5.38 million from the General Fund to the Water Utility Fund.  These funds were received from the federal government as part of the ARPA award. ARPA required that the funds be used for water infrastructure projects. Under Jacobs’ scheme, the utility would pay back this money with interest over time. 

Rather than simply gifting the money from the town to the Water Utility to build infrastructure, Jacobs wanted to lend the money to the Water Utility so that the town can get it back and use it for another purpose, one not related to the federal allowable use of these funds.

As council member Steve Solomon pointed out at the council meeting, the scheme sounds like the town is trying to get around federal regulations for the use of the money because the town will get the money back and then use it for some other, non ARPA allowable purpose.

Solomon was exactly right.  

The Water Utility was the conduit for the sham transaction

Speaking in defense of the loan arrangement, Town Manager Mary Jacobs said that the money that the utility will be getting would be the ARPA funds which carry the restriction that be used for water infrastructure.  According to Jacobs, the money the town will get back in loan repayment and interest would be unrestricted. It will not get back ARPA funds. The funds would be from the general revenues of the Water Utility.

Attention all.

This is called “money laundering”.

Gephart: It's OK to do this because the Water Utility is an enterprise fund

Town Finance Director David Gephart justified the scheme because he felt that the town should not simply transfer the money to the utility.  Gephart said that the reason that a loan has been proposed is because the Water Utility is supposed to be a self sustaining (“An Enterprise Fund”) entity. Thus, anything that has to do with the Water Utility, including administrative services that are provided by the town must be paid by the utility.

The loan approach, according to Gephart, provides the appearance that the Water Utility is self-supporting. Gephart also explained that the town had no alternative but to use this money for the Water Utility system. That’s because any other allowable uses were just not feasible for the town.

So, why not just gift the money to the Water Utility Fund and be done with it? After all, these ARPA monies were gifted to the town by the federal government  The funds are intended to be used for water infrastructure projects.  In this case, the town’s general fund is merely a conduit to get the money to the town-owned Water Utility Fund because the Water Utility did not get the funds get directly from the federal government.

Jacobs tried to do this "in the dark of night" by putting the item on the “Consent Agenda” segment of the town council meeting

Jacobs claimed at the meeting that she wrote about this loan transaction in April. Council Member Bohen agreed that he found it buried in a document council received back then. The members never discussed it then because they were never really aware of it.

It would not have been discussed last week had it not been for the sharp eyes of Bohen, Jones-Ivey and Solomon. The former two asked for the item to be pulled from the Consent Agenda for discussion. Solomon identified the transaction for the “sham” that it is.

Former Town Manager Jacobs tried to put "one past them." 

Fortunately, she failed.

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Town Council Needs To Designate Use of $10.75 Million Windfall

$10.75 million of remaining ARPA funds yet to be designated for use

The Town of Oro Valley has $10.75 million in federal ARPA funds to designate for use. The town received these funds last fiscal year. The town has until the end of 2024 to assign these funds, obligate them to specific projects. The town must spend these funds by the end of calendar 2026.

The town received a total of $15.4 million of ARPA funds

This is truly a windfall. The town didn’t need this money. The Town of Oro Valley thrived financially during the pandemic. Many communities like Oro Valley are struggling to figure out how to spend all of the ARPA funds by the 2026 deadline.  The panel [below right] shows the total funds received and how they have been used to date.

The use of  $10 million of these fund is mostly unrestricted,  It can be used for replacing town revenues lost during the pandemic

$10 million of these funds can be used on a broader basis to replace “revenue losses” caused by the pandemic. This money can be spent on a broad range of general government expenses. For example, some communities are spending the money on what one would call welfare payments. Others are using it to replace shortfalls in capital spending.

Town staff designated $4.65 million of these unrestricted funds to pay for replacing the town's El Conquistador and Canada Golf Courses' Irrigation

The total cost of the irrigation replacement on the town's two 18-hole golf courses is estimated to be $9.15 million.  $4.5 million of this is being paid for from the $25million Parks Bond; the rest, $4.65 million, from the ARPA funds. 

Town Council did not approve, by resolution, the use of the ARPA funds for that purpose

Nor has the Town Council designated the use of the remaining $5.35 million of unrestricted funds. 

According to town staff, these funds are sitting in the capital improvement fund, waiting to be used to fund future capital projects.  Town staff, without a formal council resolution, used $4.65 million to pay for golf course irrigation replacement.

The use of  $5.4 million in ARPA in funds is restricted

These funds can be used to improve drinking water and wastewater infrastructure.

It is the town council’s job to obligate all ARPA funds. They have not done so.
The town budget does not define the specific use of these funds. Thus, the town council must decide this.  It is then the responsibility of the town staff to spend it as directed. 

Until the town Council meeting of December 7, this council has not focused on fulfilling their responsibility. Thus, Council Member Tim Bohen, prior to and at that meeting, requested that staff to respond to eight questions that he asked regarding these funds. Town staff responded.

None of the restricted funds have been obligated by the Council    

Town Council has not directed staff on how to spend the $5.4 million in restricted funds. LOVE has advocated that the town use theses funds to extend the reclaim water system to the south part of town, thus saving millions of acre feet of drinking water from being used on town parks. The town council rejected this at the last meeting, preferring to wait for the answers to the eight questions asked by Bohen. The answers given by staff don't tell the council how to spend these funds; but their response did clarify one thing.

Town Outside accountant confirms that restricted funds can’t be laundered through the water utility... so that they could be used for another purpose
The Town Council has been terribly misinformed regarding the use of the unrestricted funds for water. Town staff, under the leadership of former town manager Mary Jacobs, current town finance director David Gephart and with some misinformation provided by the town’s independent auditor, suggested laundering these funds through the water utility so that the town can use the funds for non approved purposes. The scheme was to lend money to the water utility, have the utility use it for an intended purpose and then to pay the loan back to the town. Then, the town could use the funds paid back for a non approved use. This is called money laundering. It is illegal. It is chicanery.

As it turns out, LOVE was correct when we identified this as a laundering scheme when Jacobs proposed it to Council in September. In one of the responses to Bohen’s request, the independent accountant recognized that the funds must always be used for the intended purpose, even if they are paid back. The independent accountant concluded this after consulting with a third party organization with which they have recently become affiliated. Frankly, we question the competence of the independent accountant.

Big question still remains: How to spend $10.75 million in remaining ARPA funds?

The clock is ticking. At some point, the council will have to obligate these funds or return them to the federal government.

Carpe Diem on Reclaimed Water

Carpe Diem

Tonight, the Oro Valley Town Council has the opportunity to designate $5.4million in restricted ARPA Funds to extend the reclaimed water system to Riverfront Park, Kreigh Park and the town owned Pusch Ridge Golf Course. This amount may not be enough to do the complete extension, but it is a start on saving millions of gallons of drinking water.

Council has done nothing to stop the outrageous use of drinking water on town parks

This council has done nothing regarding the extensive drinking water wasting that takes place at these facilities. 

 

Rather than "fast track" doing something about this, the Council let the town manager put it on the back burner to let the water director take a year to "dream" of the possibilities

On June 8, Town Water Director Peter Abraham spoke of the wondrous things and possibilities using Oro Valley's unused reclaimed water allotment could bring to the town.

At that time Abraham stated...in almost a dream state...  "When I started diving into this my mind was going to some amazing places that might be of better benefit to the community than just extending the reclaimed water system. We have an opportunity here to further ensure our sustainability. We have the resource. Let's take our time and wrestle with it." 

At that meeting, Town Manager Jacobs took charge and told the council that this was a strategic issue and that it should be added to the strategic leadership plan discussion this February. This was a delay tactic on the part of Jacobs because she wanted to use the ARPA funds for a host of other purposes. These other purposes will be discussed by town staff tonight.

Then, the town manager suggested laundering the ARPA funds through the water utility

Things did change a bit. Because in late September, two days prior to her resignation, Jacobs proposed "laundering" the restricted ARPA funds through the water utility. The money, she said, could be loaned to the water utility and then paid back. The money that was repaid was not ARPA funds, she said, so it could be used for any purpose! She said that the auditors told her this was OK to do. Really? Sounds like a laundering scheme to us. Maybe the town needs new auditors!

Meanwhile, drinking water that could supply at least 715 home is being squandered

In the past seven months, the three town owned facilities have used 35 million gallons of drinking water. That is equivalent to the use of 715 average Oro Valley homes...or... 7,150 homes reducing their water use by 10%.... or... one and a half times the total amount of rain that fell in Oro Valley this past weekend. It is a lot of drinking water!

The money is available. Jacobs is gone.  This ain't rocket science. Extend the reclaimed system.

We are we are. Jacobs is gone. This council is in control. This council can do the right thing. Fund extending the reclaimed water system. Prove that Oro Valley is the community of excellence that we are claim to be.

Bits and Pieces

Council directs staff to spend ARPA restricted funds on existing projects….Violates ARPA spending rules?

This past Wednesday, the Oro Valley Town Council voted (6-1) to fund 2023 budgeted projects with $5.4 million in restricted ARPA funds. Staff had provided the council with a list of eligible projects. Council did not choose which projects to fund. Rather, they are leaving it up to town staff to select the funded projects. 

Essentially, this directive by council adds to town cash reserves. The $5.4 million in ARPA funds replaces $5.4. in town funds that would have been spent on the budgeted projects. Increasing reserves of a town is an explicitly forbidden use of the ARPA funds.

Vistoso Trails Nature Preserve Master Plan community engagement 

"The Town of Oro Valley is holding an open house on Wednesday, Jan. 25 for the community to review the Vistoso Trails Nature Preserve Master Plan Community Input Report. The open house, which will be

held in the newly restored Garage at Steam Pump Ranch (10901 N. Oracle Road) from 10 a.m. to 6 p.m., will allow community members to drop in at their convenience to review the data gathered from previous public engagement meetings, provide feedback and learn about the Master Planning process." (Source: Town of Oro Valley Media Release) You can review the report in advance of the meeting. "Those who cannot attend the Jan. 25 open house, can review the report and email comments to project's manager.

Head-on Crash on Oracle in December was caused by a reckless driver

There was lots of talk about the horrific accident at Oracle and Pusch View Lane last month. Here's the facts: "On the morning of December 16, an attempt to locate was dispatched, referencing a reckless driver in a black Chevy Silverado heading south on Oracle Road from Rancho Vistoso Boulevard at over 90 mph. An officer was on a traffic stop on Orace Road just north of La Reserve Drive when he observed the suspect vehicle drive by at an extremely high rate of speed, weaving through traffic and then passing vehicles on the shoulder of Oracle Road. The speeding truck then crossed into the northbound lanes of traffic while still heading south where a head-on collision occurred in front of the Target shopping plaza with a maroon Chevy Silverado driven by the victim. The drivers of both vehicles were declared deceased on scene and no other passengers were in either vehicle. The drivers both had to be extricated from each vehicle due to the excessive amount of front end damage to both trucks." (Source: Town of Oro Valley Town Manager Executive Report, January 2023)

Take the 2026 General Plan Survey

The Town of Oro Valley invites residents of all ages to participate in a brief survey to identify the best ways to engage the community as the Town prepares for the next General Plan, which will be on the ballot in 2026. The survey, which is open now through January 26, can be taken by multiple members of the household.

Chamber Business Summit is January 26

The Greater Oro Valley Chamber of Commerce is hosting a "Business Summit" On January 26 at the Westward Look Resort & Spa.  Registration starts are 8am with sessions beginning at 9am and ending at 2:00 p.m.. Tickets are  $50. There will be breakout sessions on Financial Sustainability, Vision Boarding, Marketing, and Leadership. "Not only will Oro Valley Mayor Joe Winfield address the group at a delicious luncheon on the Sonoran Rooftop Terrace, but you’ll also hear from keynote speaker retired Major General Ted Maxwell of the Southern Arizona Leadership Council. It’ll be a great day for business owners, managers, and front-line staff. All of this for only $50, and that includes a 3-course lunch!" (Source)

LaPosada at Pusch Ridge is back

You may have noticed that construction activity is back for LaPosada at Pusch Ridge. It is located behind Home Depot. La Posada at Pusch Ridge. "The former Nakoma Sky development has re-broken ground as the La Posada at Pusch Ridge development located at Lambert Lane and First Avenue. Previous activities as part of the Nakoma Sky development included the Cañada Del Oro Wash soil cement bank protection, Federal Emergency Management Agency Letter of Map Revision and general site grading. The current activities for the La Posada at Pusch Ridge development include cutting in access roadways, setting up stormwater pollution prevention best management practice elements, and site mobilization. " (Source: Town of Oro Valley Town Manager Executive Report, January 2023) 

Federal ARPA Funds Could Help Fund Golf Irrigation Replacement

Town council to discuss options for replacing irrigation of two municipal golf courses tonight
Tomorrow night, the Oro Valley Town Council will discuss replacing the irrigation on the town’s two 18-hole golf courses. According to the town, both courses need the irrigation replaced. The irrigation of both courses is from 31 to 40 years old. This is beyond the expected life of irrigation according to the American Society of Golf Course Architects.

Irrigation systems showing their age
Indeed, according to town staff, the irrigation system of both courses is showing its age: “Over the past five years, the Conquistador and Cañada courses have experienced a combined 175 main line breaks. These breaks have occurred on nearly every hole and vary in severity and impact. During this timeframe over $200,000 has been spent on irrigation repair. It is estimated over 5 million gallons of water have been lost due to these irrigation breaks.”

Bid for irrigation replacement for both courses total $7.8 million

Wadsworth Golf Construction Company is the low bidder for replacing the irrigation The bid is $7.8 million. That bid is well above what was anticipated when the town acquired the courses from HSL Properties (link) in 2015.

ARPA and Parks and Recreation Bond funds could be funding sources
“The Town is in a strong financial position and can currently afford to absorb the additional cost beyond the original budget using American Rescue Plan Act (ARPA) revenue replacement funds, which are unrestricted as to their use.”

According to staff calculations, $4.6 million of ARPA funds qualify as revenue replacement. Per town council direction in July, an estimated $4.5 million of the $25 million Parks and Recreation bond was planned for use towards the irrigation system replacement.”

Staff presenting three options

Staff is presenting three options for the council to consider this evening:

• Full Irrigation Replacement
  The town use $3.3 million of ARPA Funds to supplement the July designated parks and recreation bond money if the council wants to move forward with a complete replacement of the irrigation on both courses.
• Complete Canada Course only
  The Cañada course has experienced 20 percent more main line breaks than the Conquistador course over the last five years. Fully replacing Cañada’s irrigation system would be a form of triage that addresses the system with the most failures. The estimated cost of this option is $3.95 million.
• Partial Irrigation System Replacement to Mitigate Catastrophic Loss Including Main line Section Running Underneath Major Roadways
  This option involves replacing various portions and equipment on both courses at a cost ranging from $3 to $8 million.

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Tonight, Council Will Consider (Once Again) How to Spend $5.4 million in ARPA Funds

Previously rejected using the funds to extend reclaimed water system

Tonight, the Oro Valley Town Council will once again consider obligating $5.4 million in restricted American Rescue and Recovery Act Funds ("ARPA").  The council discussed this in December, rejecting an opportunity to obligate these funds for extending the reclaimed water system.

Restricted use funds

These funds can only be used for any of the following three qualified uses: Responding to the Public Health and Economic Impacts of COVID-19; Premium Pay; and Water, Sewer & Broadband Infrastructure. 

Town staff has identified four broad capital improvement project areas where the funds could be obligated

These four areas are shown in the panel right. They include projects identified in the town's current 10 year capital improvement program.

Tourism

The primary focus of the tourism projects is the refurbishment of Steam Pump Ranch. Projects include renovating the Proctor-Leiber House ($1.5m);building a new northern entry by panhandle stables/event space( $1.5m) and repairing the Tack building ($550k). Staff also suggests that the funds could be used to fund restoring Westward Look Drive. These improvements were agreed upon when the town annexed the area.

Stormwater

The funds could be used to pay for Sierra Wash improvements.

Water

There are six water projects. All of these relate to either obtaining or distributing water

Wastewater

Using the ARPA money to extend the reclaimed water system is still a viable option. Use of the funds for that purpose was rejected by the council majority for four reasons: 

• The cost of extending the system will most certainly exceed the $5.4 available. Still, the APRA funds will be a substantial contribution to the total cost. Town staff will provide that estimate in June
• The town might treat the reclaimed water and add it to the town's water supply
• Maybe more water will be available one day from desalinization
• The town might not be able to spend all of the $5.4 million before the spending deadline if this project is chosen

There is no urgent need to obligate the funds now

The funds must also be obligated to a specific use by the end of calendar year 2024. The funds must be spent by the end of calendar 2026. Thus, there is still time to make a decision on how to use these funds.

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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.

Parks and Recreation Projects Dominate Initial Cut At Oro Valley 2023-24 Capital Improvement Program

2023-24 Oro Valley Capital Budget-first cut- is almost $47 million

This Wednesday, the Oro Valley Town Council will study a $46.9 million capital budget for fiscal 2024. It is the largest capital budget (CIP) in Oro Valley history. Significant capital spending is being driven by the requirement to spend Parks Bond Funds and Government ARPA funds within the next few years. The result is that much of the spending is on parks and recreation and on water projects.

Parks projects are almost half of all spending

There are twenty-one proposed parks and recreation type projects that total $22.9 million. Two-thirds ($15.1m) of this spending is for continuing the buildout of Naranja Park. Even with this investment, future year capital investment plans call for continuing to add to and improve this facility with two additional fields, restrooms, and an asphalt roadway.  Other proposed parks projects for 2024 include doing the LaCanada Golf Course irrigation at a cost of $2million and adding a $1.7million elevator to the Community Center.

$12 million in proposed water related projects to add efficiency and operating flexibility

There are fifteen proposed water projects that focus on the operations and maintenance of the water utility. These are investments in the the storage and distribution of water. Generally, the cost of each project ranges from $100,000 to $200,000. These estimated total cost of these projects is $2.2 million. Generally, this cost stays the same for each of subsequent nine years. 

There is an added $10million in capital investment that appears to be for one-time projects such as the expansion of the booster station on La Canada ($3.7 million) and continued spending to bring water directly from Avra Valley to Oro Valley (NWRRDS). This will allow the town to reduce its dependence on Tucson Water for getting the town's CAP water allocation. We are guessing that the $5.4 million in ARPA funds are being used for the NWRRDS project.

Proposed spending to keep Oro Valley's roads the best in the county

Oro Valley's roads are the best in the County.. probably in the State. The proposed capital budget would spend $6.2 million on roads. A third of this is spending on the town's pavement preservation program. Also, there are several proposed pavement overlay projects, one road reconstruction and "annexation promised" road improvements at Westward Look.  There is also a budget item of $750,000 for "something" to be done at the very busy Rancho Vistoso and Woodburne Ave intersection  (perhaps a traffic light?).

Remaining capital improvement spending is primarily for public safety

There are two other areas of proposed capital spending. One area is public safety. There is proposed capital spend on an expansion of the town court office ($1.5 million) and on vehicle replacement ($1.9 million). The town court project is proposed to continue into 2025 for the same amount.  The vehicle replacement program also continues at about $2million annually for all of ten years included in the proposed CIP plan.

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Town Manager Mary Jacobs Resigns

Town Manager Mary Jacobs resigned yesterday

Jacobs was with the town for five years. We do not know detailed reasons for her resignation. What we do know is that it comes after she attempted on Wednesday to get the council to approve, without discussion, a scheme to launder certain federal ARPA funds for use in a non approved manner. You can read more about that Monday.

That same night, council held an Executive Session annual review of Jacobs’ performance. That review happened after her advocacy of the sham transaction.

Her resignation Friday followed that council performance review.

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Financial Headwinds in the Offing Starting in 2026

Town projects that it may need at least $11 million in bond funds in 2026-27
The Town of Oro Valley will need to issue a minimum of $11 million in bonds in fiscal year 2026-2027 to cover a major shortfall in funding for major highway projects and the ever-growing costs of the pavement preservation program. 

This information was disclosed by Town Finance Director David Gephart during his presentation of the latest five-year financial forecast to the town’s Finance and Budget Commission last week. "We've got a funding gap that we're going to have to address in some form or fashion," he stated. This gap manifests as a negative ending balance of $8.5 million in the capital fund by Fiscal year 2029 if no bond is issued. It is a gap that begins to build in fiscal year 2027.

This is the minimum needed because it assumes the deferral of many capital projects, including one that would replace the current police facility
“We placed a lot of projects that have been in the CIP in prior years…off to the side. We're going to be looking for again additional alternative sources to fund some of those grant funding and you know probably might be looking at some revenue enhancements and things like that….We don't have those really really dialed in or assumed in the forecast.”

Three reasons for the projected funding shortfall

• The forecast predicts that the General Fund will experience a reduction in the surplus of revenues compared to expenditures (see panel right). According to Gephart, one cause is a decrease in state shared tax revenues. The other cause is a significant increase in operating and maintenance costs “…because we're seeing higher inflation.” 
• The town has a number of bridge and road repairs that need to be done. At the same time, the costs of the pavement preservation program are skyrocketing. “We’re hoping that that growth moderates. We don't anticipate that it's going to go up another 50% but this is where we're at.” 
• Growth in gasoline tax revenues cannot keep up with inflation. “What we're assuming is really moderate growth 3.4% to 3.6% in highway user gas tax revenues and that's provided to us from the Arizona Department of Transportation.” 

Taken as a whole, the town’s cash balances will decrease by $6.8 million even after an $11 million bond issue
Gephart reflected on the situation by focusing on four funds. However, funds in these accounts are frequently transferred around. For example, in this instance, the bond funds would initially be part of the General Fund, then transferred to the Capital Fund, and subsequently to the Highway Fund. So, we totaled their balance. We included the Community Center Fund because it also receives such transfers for capital spending. According to Gephart, "The Community Center Fund actually looks solid.”

The shortfall is really $17.8 million.
According to Gephart’s forecast, by 2029, the total ending balances of these funds will decrease by $7 million. This decrease is after the issuance of the $11 million in bond funding. So, the shortfall in funding is $17million. (see panel left)

And remember…there are other capital projects that Gephart has assumed will be deferred.

Financial headwinds ahead
Several weeks ago, in "In For A Penny, In For A Pound," we mentioned that the town would begin encountering challenging financial decisions once the Parks Bond Money and the ARPA Funds are depleted. We highlighted this after the town council swiftly approved $390,000 to replace a bridge on a town golf course. "Those days are behind us. The 2025 budget will reflect some remaining funds, but the bulk of town funding will need to come from ongoing revenue sources. We anticipate budgets becoming increasingly constrained over time.”

The town has ample time to set the right course

Yes. Gephart’s five year financial projections affirm just that. Remember: These projections are based on a set of assumptions of events that may or may not happen. The further out the forecast year, the less likely that the forecasted result will happen. But, the projected results are a warning that strong financial discipline will be required to navigate the choppy waters.
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LOVE’s Top Five Stories of 2023

What a year it was
We've scoured our hundred or so postings this year and selected our top five.

1. St. Patrick’s Day Tragedy
There's no doubt that this is the top story of the year. Olivia Villalobos was killed, and her sister was severely injured when struck by a car on St. Patrick's Day at the Naranja Park entrance. They were just trying to get home from the park when they were struck by the car driven by Sabrina Garcia. The case against the driver, Sabrina Garcia, is being prosecuted by the City of Tucson, and we anticipate resolution in 2024. The town had planned to make immediate significant improvements to pedestrian safety in the area, but that has been put on hold because of an $89.6 million lawsuit due to the accident. What happens regarding the settlement of the suit will be a big story in 2024.

2. Residents rail against OVCN proposed sports complex

At the beginning of the year, the Oro Valley Church of the Nazarene (OVCN) continued to press for rezoning for a huge sports complex on residential land it had purchased some years ago that is adjacent to the church on Concordia. Residents have fought hard against it. The proposal was heard by the Planning and Zoning Commission in February. It was supposed to be heard by the council after that, but that hearing was postponed. Nothing has happened since then. One might think that the proposal is dormant at this point, but we don't think so. Things like this never go away, so the residents are going to have to continue to be vigilant.

3. Marketplace approved to start with zero town funding

The Town Council "stood tall" when it rejected investing about $10 million in infrastructure to support the recreation area proposed by Town West as part of its planned revitalization of the Oro Valley Marketplace. It will be called the Oro Valley Village Center.  Instead, Town West requested, and the council approved changes to the recreation area so that the revitalization could start. 

4. Record town budget of $148 million

In June, the Town Council passed an historic budget of $148 million, driven up by the imperative to use remaining $25 million from the Naranja Park Bond and the use of $15 million in ARPA funding. Anticipating reduced funds in the future, we foresee subsequent budgets being significantly lower. A major question for 2025 will revolve around how the Town manages its budget amidst the substantial increase in infrastructure costs, coupled with the apparent decline in future construction, thereby restricting potential construction tax revenue.

5. Wilkins era begins

In April, the Town appointed Jeff Wilkins as Town Manager. His hiring was the result of a nationwide search in which the community participated. Wilkins joined the town in July. We don't know Wilkins. From afar, his style strikes us as someone who is focussed on managing the business of Oro Valley as opposed to striving to change our community.

They were many other stories from which to select

• The “Umbrella Lady”, Lydia Reis, was killed in a hit-and-run accident on Ina Road. 
• The Arizona Heroes Memorial in Naranja Park broke ground. 
• The Town of Oro Valley earned the 2023 Water Waster Award. 
• Henry Zipf, great grandson of the Pusch Family and avid LOVE reader died. 
• The town enacted and implemented a short-term rental ordinance. 
• Long-time Parks and Recreation Director Kristy Diaz-Trahan resigned in July, just two months after we celebrated her 10th anniversary with the Town. 
• Sinking houses on Moore Loop Road. 
• The town council asked for a report on golf operations. The report will include an independent audit of reported operating and financial results. 
• Staff kicked off a three year process to create the 2026 general plan. They're calling it Oro Valley's Path Forward.

We look for more exciting stuff next year.

In the meantime, it's time to kick back and relax.

We'll see you January 2 to help launch Tim Tarris’ historic flight around the globe.

Enjoy the holidays.

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$148,489,391

Town Council likely to approve record  $148.5 million budget tomorrow night
The Oro Valley Town Council will hold the second public hearing on the 2023-24 Town Manager Recommended Budget (TMRB) tomorrow night. The budget calls for $148.6 million in spending. It is the largest budget in Oro Valley history. The budget includes spending for ongoing town operations and for capital items.

2023-24 Budget is more than recommended by Interim Town Manager Cornelison
The budget that the Council will consider is $600,000 more than recommended by Interim Town Manager Cornelison. There are a more than thirty adjustments that are proposed. Most of these are changes in estimates or the movement of costs to another year. It is $785,000 more than this year’s budget.

Our previous reports have detailed TRMB spending
LOVE has previously reported on the 2023-24 TMRB spending budgets:

• TMRB Budget Overview 
• Capital Projects 
• Operations and Maintenance 
• Staffing 

These four areas comprise the bulk of budget spending. There is also spending to service debt and contingency reserves, which are funds to be designated at a later time.  LOVE also reported on learnings from the Council’s two study sessions.

Funding comes from multiple sources
Funding for this spending comes from nine sources (chart right). The main source this year is a reduction in fund balances. This reflects the drawdown of Parks Bonds Funds ($17.1million) and the use of Federal ARPA funds ($10.5 million). That means that $16.9 million is coming from funds earned by the town from “normal” sources.

Unless something dramatic happens tomorrow night, this is our final report on the Town of Oro Valley 2023-24 Budget.

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Note: The town council voted 6-0 (Nicolson absent) to approve this budget.

Bits and Pieces

Funding for Golf Course Irrigation Approved

Wednesday, The Oro Valley Town Council authorized the Town Manager Mary Jacobs to engage the services of Wadsworth Golf Construction Company to replace the irrigation on the town owned E; Conquistador and La Canada Courses. We reported about this project and the various options that were considered also on Wednesday. The town will fund the project using Parks and Recreation Bond Funds and Federal ARPA funds. The motion to approve was 6-1.  Council Member Bohen voted against the measure because he believed there are more important parks and recreation initiatives that serve the greater community that should be funded from the bond funds. 

Oro Valley To Manage A Portion of the NWRRDS Effort
The town has crafted an agreement between itself, The Town of Marana, and Metro Water to manage the construction and inspection of  the booster stations and discharge piping of the Northwest Recharge, Recovery, and Delivery System (“NWRRDS”). [See panel]. 

This is a 15 month project that will cost the three partners $65,500 each. The town will save itself and its partners more than $100,000 each because it will do the work that a consultant would be employed to do.

When completed, that project will recover Central Arizona Project (CAP) water stored underground at various locations in Avra Valley and deliver that water to the Northwest Recharge, Recovery and Delivery System (NWRRDS). From there, the water will be transported to the Oro Valley Water Service Area. It will increase the amount of Oro Valley  Water delivered to the town.

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Town of Oro Valley launches new Adopt-A-Road/Trail website

"The Town of Oro Valley has launched a new website for the Town’s Adopt-A-Road/Trail programs, designed to save volunteers time and alleviate wait times with several new improvements. 

The Adopt-A-Road/Trail website is now a one-stop shop for volunteers to fill out forms and watch training information. In fact, volunteers no longer need to travel to Town buildings to watch a safety video or fill out paperwork. The process is 100% paperless, and the training video is available on the website." (Source:Town of Oro Valley Press Release)

Bits and Pieces

Barrett and Bohen "get it."  Oro Valley’s stewardship requires balancing the financial impact of buildout and the sustainability of maintaining a maturing infrastructure

In January, LOVE reported on an independent study of the town's financial future. This study focussed on the impact of a "buildout" on Oro Valley's future. That study concluded that the town's budgets will remain sustainable through the expected residential buildout in 2034. However, the projected financial margin is very tight, leaving limited resources for long-term maintenance and unforeseen costs. Then, a few weeks ago, we reported regarding the town's five year financial projection. This was prepared by staff. That report projected that the town will face financial challenges starting in 2026, necessitating at least $11 million in bond funds to cover shortfalls for major highway projects and rising pavement preservation costs. 

The study and the five year projection address different time frames regarding the town's financial future; but both do emphasize the need for careful planning and spending as the town continues to mature. Given what we observed in the two day TMRB study session last week, two council members, Bohen and Barrett, "get it." And Nicolson is not far behind.

Town Grant Update: $18.1 Million in Progress, $213K Awarded

Town Manager Wilkins added a section in his May report to the council. That section discusses the status of grants sought by the town over the past six months. The report lists eight grants in progress, totaling $18.1 million. $213K has been awarded to date. Most of the pending dollars requested are for three public works bridge projects. $4.5 million is sought for public safety, including a $3 million request for the design of a police station. The town will file a $2 million grant request for the Vistoso Nature Preserve revegetation project in the next fiscal year. (Source: Town Manager May Report to Council, page 32)

Town Financial Update through February: Revenues rise, expenditures driven by capital Projects

"The Town continues to perform as expected from a Townwide financial perspective. Total Townwide revenues are up $7,399,890 through February 2024 in comparison to February 2023. Meanwhile, total Townwide expenditures are greater than February 2023 by $6,388,977. Capital is the primary driver of the increase in spending from the prior year, as it accounts for $4,875,207 of the $6,388,977, or 76%. Personnel and O&M also continue to outpace last year’s outflows through February. Total estimated Townwide Fund Balances through February 2024 are $84,981,826, which is about $4.2 million less than the Town carried into the fiscal year. This reduction in fund balance is primarily a function of the large capital projects being executed and the continued spend down of ARPA and Parks and Recreation bond monies." (Source: Town Manager May Report To Council, page 31) 

Let’s hear it for CDO’s… An Arizona sports leader

The Canyon Del Oro High School sports teams have had an impressive year, showcasing their talent and dedication. While both the baseball and softball teams narrowly missed winning the 3A Arizona State Championships this past week, their effort and skill were commendable. Last fall, the football team triumphed, securing the 3A State Championship. Congratulations to all the athletes for their hard work and for being outstanding representatives of Oro Valley. Your community is proud of your achievements and spirit.

Get ready to rock at OV Battle of the Bands, May 17

"This free concert, which runs from 6:30 to 9 p.m., on Friday, May 17, at the Riverfront Park Amphitheater (551 W. Lambert Lane), features three bands comprised of students from local high schools. The bands will bring their musical talents to a live audience with a three-song setlist...Admission to the concert is free and food trucks will be on site with items available for purchase. It is recommended that attendees bring a lawn chair or blanket." (Source: Town of Oro Valley Media Release).