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HomeMy WebLinkAboutPackets - Council Packets (1856)         AGENDA ORO VALLEY TOWN COUNCIL REGULAR AND STUDY SESSION MARCH 6, 2024 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE For information on public comment procedures, please see the instructions for in person and/or virtual speakers at the end of the agenda. To watch and/or listen to the public meeting online, please visit https://www.orovalleyaz.gov/town/departments/town-clerk/meetings-and-agendas Executive Sessions – Upon a vote of the majority of the Town Council, the Council may enter into Executive Sessions pursuant to Arizona Revised Statutes §38-431.03 (A)(3) to obtain legal advice on matters listed on the Agenda.        REGULAR SESSION AT OR AFTER 6:00 PM   CALL TO ORDER   ROLL CALL   PLEDGE OF ALLEGIANCE   UPCOMING MEETING ANNOUNCEMENTS   MAYOR AND COUNCIL REPORTS ON CURRENT EVENTS   TOWN MANAGER'S REPORT ON CURRENT EVENTS   ORDER OF BUSINESS: MAYOR WILL REVIEW THE ORDER OF THE MEETING   INFORMATIONAL ITEMS   CALL TO AUDIENCE – At this time, any member of the public is allowed to address the Mayor and Town Council on any issue not listed on today’s agenda. Pursuant to the Arizona Open Meeting Law, individual Council Members may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Mayor and Council may not discuss or take legal action on matters raised during “Call to Audience.” In order to speak during “Call to Audience” please specify what you wish to discuss when completing the blue speaker card.   PRESENTATIONS   1.Proclamation - National Procurement Month   CONSENT AGENDA  (Consideration and/or possible action)   A.Minutes - February 16 and February 21, 2024   B.Final Plat approval of an 18-lot residential subdivision located on the east corner of Rancho Vistoso Blvd. and Morning Vista Drive (Case No. 2302435)   REGULAR AGENDA   1.RESOLUTION NO. (R)24-07, PROVIDING NOTICE OF INTENT TO INCREASE THE POTABLE WATER BASE RATES, INCREASE THE POTABLE WATER COMMODITY RATES AND INCREASE THE POTABLE GROUNDWATER PRESERVATION FEE FOR THE ORO VALLEY WATER UTILITY   2.DISCUSSION AND POSSIBLE ACTION REGARDING THE VISTOSO TRAILS NATURE PRESERVE   FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may not discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)   ADJOURNMENT OF THE REGULAR SESSION   STUDY SESSION   CALL TO ORDER   STUDY SESSION AGENDA   1.PRESENTATION AND DISCUSSION REGARDING A POTENTIAL ZONING CODE AMENDMENT REGARDING VEHICLE STORAGE FACILITIES   ADJOURNMENT The Mayor and Council may, at the discretion of the meeting chairperson, discuss any Agenda item.   POSTED: 2/29/24 at 5:00 p.m. by dt POSTED: 2/29/24 at 5:00 p.m. by dt When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior to the Council meeting in the office of the Town Clerk between the hours of 8:00 a.m. – 5:00 p.m. The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk’s Office at least five days prior to the Council meeting at 229-4700. PUBLIC COMMENT ON AGENDA ITEMS The Town has modified its public comment procedures for its public bodies to allow for limited remote/virtual comment via Zoom. The public may provide comments remotely only on items posted as required Public Hearings, provided the speaker registers 24 hours prior to the meeting. For all other items, the public may complete a blue speaker card to be recognized in person by the Mayor, according to all other rules and procedures. Written comments can also be emailed to Town Clerk Michael Standish at mstandish@orovalleyaz.gov for distribution to the Town Council prior to the meeting. Further instructions to speakers are noted below. INSTRUCTIONS TO IN-PERSON SPEAKERS Members of the public shall be allowed to speak on posted public hearings and during Call to Audience when attending the meeting in person. The public may be allowed to speak on other posted items on the agenda at the discretion of the Mayor. If you wish to address the Town Council on any item(s) on this agenda, please complete a blue speaker card located on the Agenda table at the back of the room and give it to the Town Clerk. Please indicate on the blue speaker card which item number and topic you wish to speak on, or, if you wish to speak during Call to Audience, please specify what you wish to discuss. Please step forward to the podium when the Mayor calls on you to address the Council. 1. For the record, please state your name and whether or not you are a Town resident. 2. Speak only on the issue currently being discussed by Council. You will only be allowed to address the Council one time regarding the topic being discussed. 3. Please limit your comments to 3 minutes. 4. During Call to Audience, you may address the Council on any matter that is not on the agenda. 5. Any member of the public speaking must speak in a courteous and respectful manner to those present. INSTRUCTIONS TO VIRTUAL SPEAKERS FOR PUBLIC HEARINGS Members of the public may attend the meeting virtually and request to speak virtually on any agenda item that is listed as a Public Hearing. If you wish to address the Town Council virtually during any listed Public Hearing, please complete the online speaker form by clicking here https://forms.orovalleyaz.gov/forms/bluecard at least 24 hours prior to the start of the meeting. You must provide a valid email address in order to register. Town Staff will email you a link to the Zoom meeting the day of the meeting. After being recognized by the Mayor, staff will unmute your microphone access and you will have 3 minutes to address the Council. Further instructions regarding remote participation will be included in the email. Thank you for your cooperation.    Town Council Regular Session 1. Meeting Date:03/06/2024   Proclamation - National Procurement Month Subject Proclamation - National Procurement Month Summary Attachments Proclamation     Town Council Regular Session A. Meeting Date:03/06/2024   Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Minutes - February 16 and February 21, 2024 RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to approve (approve with the following changes), the February 16 and February 21, 2024, minutes.  Attachments 2-16-24 Draft Minutes  2-21-24 Draft Minutes  D R A F T MINUTES ORO VALLEY TOWN COUNCIL STUDY SESSION February 16, 2024 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            STUDY SESSION AT OR AFTER 8:30 AM   CALL TO ORDER    Mayor Winfield called the meeting to order at 8:31 a.m.   ROLL CALL Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice Mayor Tim Bohen, Councilmember (Attended via Zoom) Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember STUDY SESSION AGENDA    Facilitator Mike Letcher, of the Bridge Group LLC, introduced himself and gave an overview of the Study Session format. Town Manager Jeff Wilkins presented the future use of Rooney Ranch item. Discussion ensued amongst Council and staff regarding the future use of Rooney Ranch. Public Works Director and Town Engineer Paul Keesler presented the RTA Next and contingencies for possible failure of the referendum item. Discussion ensued amongst Council and staff regarding the RTA Next and contingencies for possible failure of the referendum. The meeting was recessed at 10:18 a.m. The meeting resumed at 10:37 a.m. Community and Economic Development Director Paul Melcher presented the use of staff and possible software regarding consumer gap analysis and retail tourism item. Discussion ensued amongst Council and staff regarding the use of staff and possible software regarding consumer gap analysis and retail tourism. Chief Financial Officer Dave Gephart presented the buildout analysis item. Discussion ensued amongst Council and staff regarding the buildout analysis. Mayor Winfield recessed the meeting for lunch at 12:00 p.m. 2-16-24 Minutes, Oro Valley Town Council Study Session 1 Mayor Winfield reconvened the meeting at 1:01 p.m. Water Utility Director Peter Abraham presented planning for 100-year water supply and Growing Water Smart Workshop item. Discussion ensued amongst Council and staff regarding the planning for 100-year water supply and Growing Water Smart Workshop. Mr. Letcher presented the Oro Valley housing study item. Discussion ensued amongst Council and staff regarding the Oro Valley housing study. Town Manager Jeff Wilkins presented the annexation strategy item. Discussion ensued amongst Council and staff regarding the annexation strategy. Town Manager Jeff Wilkins asked Council to provide future study session agenda topics. The following topics were requested: Councilmember Greene requested a future study session topic to look at rail transit between Oro Valley, Phoenix and Los Angeles. Councilmember Greene requested a future study session topic regarding desalination of water. Vice Mayor Barrett requested a future study session topic to complete a comprehensive analysis of the return on investment and benefits derived from the Town's partnership with Visit Tucson and bring options to Council regarding the Town's tourism and attraction plans. Vice Mayor Barrett requested a future study session topic to analyze and update impact fees to ensure all Town services and current costs are included. Town Manager Jeff Wilkins provided closing remarks.   ADJOURNMENT    Mayor Winfield adjourned the Study Session at 2:36 p.m. _____________________________________________ Michelle Stine, MMC Deputy Town Clerk I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the study session of the Town of Oro Valley Council of Oro Valley, Arizona held on the 16th day of February 2024. I further certify that the meeting was duly called and held and that a quorum was present. ______________________________________________ Michael Standish, CMC Town Clerk     2-16-24 Minutes, Oro Valley Town Council Study Session 2 D R A F T   MINUTES ORO VALLEY TOWN COUNCIL REGULAR SESSION FEBRUARY 21, 2024 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 6:00 PM   CALL TO ORDER    Mayor Winfield called the meeting to order at 6:01 p.m.   ROLL CALL Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice-Mayor Tim Bohen, Councilmember (Attended Via Zoom) Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember PLEDGE OF ALLEGIANCE    Mayor Winfield led the audience in the Pledge of Allegiance.   UPCOMING MEETING ANNOUNCEMENTS    Town Clerk Mike Standish announced the upcoming Town Meetings and the Oro Valley Path Forward Community Events.   MAYOR AND COUNCIL REPORTS ON CURRENT EVENTS    Councilmember Greene reported on the construction progress at the Oro Valley Community and Recreation Center. Councilmember Jones-Ivey encouraged citizens to volunteer for Project Graduation and to participate in their workdays. Mayor Winfield reported on the passing of Mr. Lauren Rhude. Mr. Rhude was Oro Valley's oldest surviving member of any previous Town Council, and served on the first Town Council following the Town's incorporation in 1974. Mayor Winfield requested a moment of silence in honor of Mr. Rhude. 2/21/24 Minutes, Oro Valley Town Council Regular and Study Session 1   TOWN MANAGER'S REPORT ON CURRENT EVENTS    Town Manager Jeff Wilkins reported the following information: Upcoming Naranja Park closure dates. Encouraged citizens to sign-up and participate in Oro Valley's 50th Anniversary Parade. Reported that from February 9 through March 3, 2024, Nautical Bowls, Fleet Feet, and Planet Beach were the highlighted businesses as part of the Oro Valley 50 businesses for 50 Years event. Welcomed new business Cabali Tiki on North Oracle Road. Upcoming Friday night concert series events.   ORDER OF BUSINESS    Mayor Winfield reviewed the order of business and stated that the order would remain as posted.   INFORMATIONAL ITEMS    There were no informational items.   CALL TO AUDIENCE    Oro Valley resident Anthony Ferrara voiced his concerns regarding the proposed Oro Valley Church of the Nazarene project. Oro Valley resident Tim Tarris spoke regarding his flight around the world to celebrate the 100th Anniversary of the Army Air Service.   PRESENTATIONS   1.Recognition of outgoing Board and Commission Members       Mayor Winfield recognized the following outgoing Board and Commission members, who were in attendance, for their service: Matthew Wood - Parks and Recreation Advisory Board Jacob Herrington - Planning and Zoning Commission Daniel Sturmon - Planning and Zoning Commission William Thomas - Stormwater Utility Commission Richard Tracy - Public Safety Personnel Retirement System Board Mayor Winfield expressed appreciation to the Board and Commission members who were not in attendance, for their service.   2.Presentation and update by President/CEO Kristen Sharp of the Greater Oro Valley Chamber of Commerce      2/21/24 Minutes, Oro Valley Town Council Regular and Study Session 2  President and CEO of the Oro Valley Chamber of Commerce and Oro Valley resident, Kristen Sharp, provided an overview of presentation item #2 and included the following: New Mission Statement Chamber Relocation Membership Growth & Diversity Successful Events & Programs Support for Local Businesses Community Giving Economic Development Looking Ahead Importance of Continued Partnership Discussion ensued amongst Council and Ms. Sharp regarding the Oro Valley Chamber of Commerce partnership.   3.Presentation and possible discussion of the Town's FY 23/24 Quarterly Financial Update through December 2023       Chief Financial Officer Dave Gephart presented the Town's Fiscal Year 23/24 Quarterly Financial Update through December 2023 and included the following: Overview/Reminders Highlights General Fund General Fund Revenues - Year to Date General Fund Uses - Year to Date Highway Fund Highway Fund Revenues - Year to Date Highway Fund Expenditures - Year to Date Community Center Fund Community Center Fund Revenues - Year to Date Community Center Fund Uses - Year to Date Water Fund Water Fund Revenues - Year to Date Water Fund Uses - Year to Date Stormwater Fund Stormwater Fund Revenues - Year to Date Stormwater Fund Uses - Year to Date Discussion ensued amongst Council and staff regarding the Town's Fiscal year 23/24 Quarterly Financial Update through December 2023.   4.Presentation about the community's effort to create the next 10-Year Plan, known as OV's Path Forward       Principal Planner Milini Simms presented the community's effort to create the next 10-Year Plan, known as OV's Path Forward and included the following: Community Engagement Process Awareness and Education Online engagement Community events Phase 1: Community Participation Join the discussion 2/21/24 Minutes, Oro Valley Town Council Regular and Study Session 3 Discussion ensued amongst Council and staff regarding the next 10-Year Plan, known as OV's Path Forward.   CONSENT AGENDA   A.Minutes - February 7, 2024      B.Resolution No. (R)24-05, authorizing the Chief of Police to sign and enter into, on behalf of the Town, an intergovernmental agreement between the City of Tucson and the Town of Oro Valley for the funding of 9-1-1 services      C.Resolution No. (R)24-06, approving the Agenda Committee assignment for the period of March 1, 2024, to May 31, 2024       Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to approve Consent items (A) through (C).  Vote: 7 - 0 Carried   REGULAR AGENDA    There were no regular agenda items.   FUTURE AGENDA ITEMS    No future agenda items were requested.   ADJOURNMENT OF THE REGULAR SESSION    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to adjourn the regular session at 7:30 p.m.  Vote: 7 - 0 Carried    Mayor Winfield recessed the meeting at 7:31 p.m. Mayor Winfield reconvened the meeting at 7:41 p.m.    Vice Mayor Barrett left the meeting.   STUDY SESSION   CALL TO ORDER    Mayor Winfield called the Study Session to order at 7:42 p.m.   2/21/24 Minutes, Oro Valley Town Council Regular and Study Session 4 STUDY SESSION AGENDA   1.DISCUSSION REGARDING THE STAFF ANALYSIS OF THE TOWN OF ORO VALLEY COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY (CEDS)       Community and Economic Development Director Paul Melcher presented the staff analysis of the Town of Oro Valley Comprehensive Economic Development Strategy. Discussion ensued amongst Council and staff regarding the staff analysis of the Town of Oro Valley Comprehensive Economic Development Strategy. Council provided guidance and direction to staff regarding the Town of Oro Valley Comprehensive Economic Development Strategy. Mr. Melcher stated that the next step would be to return to the Council with formal recommendations and amendments for the Council's final review and consideration.   ADJOURNMENT    Mayor Winfield adjourned the Study Session at 8:47 p.m.     __________________________________________ Michelle Stine, MMC Deputy Town Clerk I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular and study session of the Town of Oro Valley Council of Oro Valley, Arizona held on the 21st day of February 2024. I further certify that the meeting was duly called and held and that a quorum was present. ___________________________________________ Mike Standish, CMC Town Clerk 2/21/24 Minutes, Oro Valley Town Council Regular and Study Session 5    Town Council Regular Session B. Meeting Date:03/06/2024   Requested by: Bayer Vella, Community and Economic Development  Submitted By:Kyle Packer, Community and Economic Development Case Number:2302435 SUBJECT: Final Plat approval of an 18-lot residential subdivision located on the east corner of Rancho Vistoso Blvd. and Morning Vista Drive (Case No. 2302435) RECOMMENDATION: The Conceptual Site Plan for this subdivision was approved by Town Council in June 2022. The Final Plat complies with the design previously approved by Town Council and is compliant with all Zoning Code Standards. Staff recommends approval. EXECUTIVE SUMMARY: The purpose of this request is to consider a Final Plat (Attachment 1) for an 18-lot residential subdivision located south and west of Tortolita Mountain Circle within Stone Canyon (highlighted in blue in the image below). Final Plat approval is a ministerial function, as the design was previously reviewed and approved by Town Council as a Conceptual Site Plan (Attachment 2). The Town must approve a code-compliant final plat. The proposed Final Plat consists of 18 residential lots subdivided on approximately 3.5 acres, with a density of 5.13 units per acre. The residential design provides one main access point from Morning Vista Drive.   BACKGROUND OR DETAILED INFORMATION: The Final Plat requires Town Council approval prior to being officially recorded with Pima County. In June 2022, the Town Council reviewed and approved the Conceptual Site Plan (Attachment 2). The Final Plat has been reviewed by staff and conforms to the approved site design and all development standards including building height, setbacks, and lot sizes. Proposed Improvements  3.51 acres subdivided into 18 residential lots (5.13 units per acre) Minimum lot size: 3,534 sq. ft. Maximum lot size: 4,099 sq. ft. One access point off Morning Vista Drive via Rancho Vistoso Boulevard Maximum permitted building height is 34', three stories and proposed is 16', single story History and Previous Approvals:  1987 - Annexed via Ordinance No. (O)152, Translational zoning applied via (O)156 1989 - Assigned Rancho Vistoso High Density Residential zoning via (O)89-5 2022 - Conceptual Site Plan approved by Town Council 2023 - Final Site Plan approved by Town staff FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to APPROVE the Final Plat for the proposed 18-lot subdivision located on the east corner of Rancho Vistoso Boulevard and Morning Vista Drive, based on the finding that it meets Town requirements.   Attachments Attachment 1 - Morning Vista Final Plat  Attachment 2 - Approved Conceptual Site Plan  FM FM 2 3 4 5 6 7 8 9 14 151213 16 17 10 11 1 CA "B" CA "A" 18 CA "D" CA "C"CA "C" CA "C" CA "C" CA "A" SHEET OF 2 SEQ# ___________________The first thing we design is your confidence FINAL PLAT FOR RESIDENCES AT MORNING VISTA LOTS 1 - 18 AND COMMON AREAS "A" THROUGH "D". A PORTION OF THE SW QTR. SECTION 24, T-11-S, R-13-E G&SRM, TOWN OF ORO VALLEY, PIMA COUNTY, ARIZONA 85755 PREPARATION DATE: 12/8/2023 2302435 REF:2003075, 2102029, 2102270 1 LOCATION MAP AREA DEVELOPEMENT (PAD) 5 RANCHO VISTOSO PLANNED LEGEND FINAL PLAT FOR RESIDENCES AT MORNING VISTA 2302435 APPROVALS ASSURANCES CERTIFICATION OF SURVEY CERTIFICATION OF ENGINEERINGRECORDING DEDICATION GENERAL NOTES ’ DEVELOPEROWNERCIVIL ENGINEER LOT 109 (OCCUPIED) RANCHO VISTOSO NEIGHBORHOOD 5 ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 LOT 108 (OCCUPIED) LOT 107 (OCCUPIED) RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 CA "A" LOT 100 (OCCUPIED) LOT 99 (OCCUPIED) LOT 98 (OCCUPIED) LOT 97 (OCCUPIED) LOT 96 (OCCUPIED) LOT 95 (OCCUPIED) LOT 91 (OCCUPIED) LOT 92 (OCCUPIED) RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 49, PG. 27 RANCHO VISTOSO NEIGHBORHOOD 5ZONE: RANCHO VISTOSO PAD#5BK. 51, PG. 8LOT 106 (OCCUPIED) LOT 90 (OCCUPIED) LOT 93 (OCCUPIED) ASSURED WATER SUPPLY WEBB TAYLOR J. 52699 2 3 4 5 6 7 8 9 14 15 12 13 16 17 10 11 1 CA "B" ACTIVE REC. AREA CA "A" 18 CA "D" CA "C"CA "C" CA "C" CA "C"Δ Δ Δ Δ ΔΔ Δ Δ Δ Δ Δ Δ Δ Δ Δ Δ RANCHO VISTOSO NEIGHBORHOOD 5 ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 LOT 107 (OCCUPIED) LOT 108 (OCCUPIED) LOT 109 (OCCUPIED) CA "A" RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 LOT 100 (OCCUPIED) LOT 99 (OCCUPIED) LOT 98 (OCCUPIED) LOT 97 (OCCUPIED) LOT 96 (OCCUPIED) LOT 95 (OCCUPIED)RANCHO VISTOSO NEIGHBORHOOD 5ZONE: RANCHO VISTOSO PAD#5BK. 51, PG. 8RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 49, PG. 27 SHEET OF 2 SEQ# ___________________The first thing we design is your confidence FINAL PLAT FOR RESIDENCES AT MORNING VISTA LOTS 1 - 18 AND COMMON AREAS "A" THROUGH "D". A PORTION OF THE SW QTR. SECTION 24, T-11-S, R-13-E G&SRM, TOWN OF ORO VALLEY, PIMA COUNTY, ARIZONA 85755 PREPARATION DATE: 12/8/2023 2302435 REF:2003075, 2102029, 2102270 LOT 91 (OCCUPIED) LOT 92 (OCCUPIED) CA "A" 2 CA "A" Δ EEEW 8''WWWWWG W 12''W 12''SSSSEEEEEEPOOL2 3 4 5 6 7 8 9 14 15 12 13 16 17 18 10 11 1 C A " C " C A " C "CA "C"CA "C"CA "C"C A " A " ACTIVE REC. AREA CA "B" CA "C" LOTS 1 - 18 AND COMMON AREAS "A" THROUGH "C" A PORTION OF THE SW QTR. SECTION 24, T-11-S, R-13-E G&SRB&M, TOWN OF ORO VALLEY, PIMA COUNTY, ARIZONA 85755 GRENIER ENGINEERING,I NC. 6300 E. El Dorado Plaza Suite A120, Tucson, Arizona 85715 Phone: 520.326.7082 ~ Fax: 520.326.7508 of 3 RESIDENCES AT MORNING VISTA REF.: 2003075 1 1 CONCEPTUAL SITE PLAN for RESIDENCES AT MORNING VISTA 2102029 RANCHO VISTOSO - PARCEL B PAD#5 BK. 51, PG. 8 LOT 108 LOT 109 LOT 107 LOT 106 LOT 104 LOT 105 LOT 103 LOT 102 LOT 101 CA "A" RANCHO VISTOSO - PARCEL B PAD#5 BK. 51, PG. 8 CA "A" LOT 100 LOT 99 LOT 98 LOT 97 LOT 96 LOT 95 LOT 92 LOT 91 LOT 90 RANCHO VISTOSO - PARCEL B 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 49, PG. 27 RANCHO VISTOSO - PARCEL B 219-38-0570 ZONE: RANCHO VISTOSO PAD#5 BK. 59, PG. 23 LEGEND COVER SHEET LOTS 1 - 18 AND COMMON AREAS "A" THROUGH "C" A PORTION OF THE SW QTR. SECTION 24, T-11-S, R-13-E G&SRB&M, TOWN OF ORO VALLEY, PIMA COUNTY, ARIZONA 85755 GRENIER ENGINEERING,I NC. 6300 E. El Dorado Plaza Suite A120, Tucson, Arizona 85715 Phone: 520.326.7082 ~ Fax: 520.326.7508 of 3 RESIDENCES AT MORNING VISTA REF.: 2003075 2 2 ABBREVIATIONS NOTES GRADING CALCULATIONS · · · · · · · NOTES OPEN SPACE AREA CALCULATIONS VEHICULAR PARKING CALCULATIONS EEEEEEEEW8''W8''W8''W W W W W W W W W W G G W16''W16''W16''W16''W16''W 8'' C C RWRWRWRWRWRWRWRWRWWWW12''W12''W12''W12''W12''EEEEEEEEEPOOL2 3 4 5 6 7 8 9 14 151213 16 17 10 11 1 CA "B" ACTIVE REC. AREA CA "C"CA "C"CA "A" CA "A" 18 CA "C" CA "C"CA "C" CA "C" CA "A" CA "C"SSSSSSSSSSSS LOTS 1 - 18 AND COMMON AREAS "A" THROUGH "C" A PORTION OF THE SW QTR. SECTION 24, T-11-S, R-13-E G&SRB&M, TOWN OF ORO VALLEY, PIMA COUNTY, ARIZONA 85755 GRENIER ENGINEERING,I NC. 6300 E. El Dorado Plaza Suite A120, Tucson, Arizona 85715 Phone: 520.326.7082 ~ Fax: 520.326.7508 of 3 RESIDENCES AT MORNING VISTA REF.: 2003075 RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 LOT 107 (OCCUPIED) LOT 108 (OCCUPIED) LOT 109 (OCCUPIED)CA "A" RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 51, PG. 8 LOT 100 (OCCUPIED) LOT 99 (OCCUPIED) LOT 98 (OCCUPIED) LOT 97 (OCCUPIED) LOT 96 (OCCUPIED) LOT 95 (OCCUPIED)RANCHO VISTOSO NEIGHBORHOOD 5219-20-435AZONE: RANCHO VISTOSO PAD#5BK. 51, PG. 8LOT 90(OCCUPIED)RANCHO VISTOSO NEIGHBORHOOD 5219-38-0570ZONE: RANCHO VISTOSO PAD#5BK. 59, PG. 23RANCHO VISTOSO NEIGHBORHOOD 5219-20-435AZONE: RANCHO VISTOSO PAD#5BK. 51, PG. 8RANCHO VISTOSO NEIGHBORHOOD 5 219-20-435A ZONE: RANCHO VISTOSO PAD#5 BK. 49, PG. 27 3 3 CONCEPTUAL SITE PLAN    Town Council Regular Session 1. Meeting Date:03/06/2024   Requested by: Peter Abraham Submitted By:Mary Rallis, Water Department:Water SUBJECT: RESOLUTION NO. (R)24-07, PROVIDING NOTICE OF INTENT TO INCREASE THE POTABLE WATER BASE RATES, INCREASE THE POTABLE WATER COMMODITY RATES AND INCREASE THE POTABLE GROUNDWATER PRESERVATION FEE FOR THE ORO VALLEY WATER UTILITY RECOMMENDATION: The Water Utility Commission and Water Utility staff respectfully recommend approval of Resolution No. (R)24-07, providing notice of intent to increase the potable water base rates, increase the potable water commodity rates and increase the potable groundwater preservation fee for the Oro Valley Water Utility. EXECUTIVE SUMMARY: In accordance with the Town Council Water Policies, Water Utility staff review water rates on an annual basis. The Water Utility Commission evaluates staff recommendations based on a water rates analysis to ensure the recommendations meet Town policies and bond covenants. On January 8, 2024, the Commission voted to recommend approval of the water rates identified in the Proposed Financial Scenario and supported by the 2024 Water Rates Analysis Report.    Pursuant to A.R.S. § 9-511.01, a municipality must adopt a notice of intent to increase water rates at least 60 days prior to the public hearing. The resolution sets in motion the public process by:  Making the Water Rates Analysis Report available for public review by placing a copy in the Town Clerk's Office and on the Water Utility's website. 1. Directing the Town Clerk to publish the resolution in a newspaper of general circulation at least 20 days prior to the public hearing. 2. Scheduling a public hearing for June 5, 2024, when the Council will consider adoption of the proposed water rate increases. 3. Once the notice of intent is approved, the increase in water rates that can be adopted may not exceed the water rates shown in the Water Rates Analysis Report. BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: There is no fiscal impact associated with adopting a notice of intent to increase water rates. SUGGESTED MOTION: I MOVE to (approve or deny) Resolution No. (R)24-07, providing notice of intent to increase the potable water base rates, increase the potable water commodity rates and increase potable groundwater preservation fee for the Oro Valley Water Utility. Attachments (R)24-07 Resolution with Exhibit "A"  FY 24-25 Rate Report  Staff Presentation  RESOLUTION NO. (R)24-07 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, PROVIDING NOTICE OF INTENT TO INCREASE THE POTABLE WATER BASE RATES, INCREASE THE POTABLE WATER COMMODITY RATES AND INCREASE THE POTABLE GROUNDWATER PRESERVATION FEE FOR THE ORO VALLEY WATER UTILITY; AND DIRECTING THE TOWN MANAGER, TOWN CLERK, TOWN LEGAL SERVICES DIRECTOR, OR THEIR DULY AUTHORIZED OFFICERS AND AGENTS TO TAKE ALL STEPS NECESSARY TO CARRY OUT THE PURPOSES AND INTENT OF THIS RESOLUTION WHEREAS, pursuant to A.R.S. § 9-511, et seq., the Town has the requisite statutory authority to acquire, own and maintain a water utility for the benefit of the residents within and without the Town’s corporate boundaries; and WHEREAS, pursuant to A.R.S. § 9-511, et seq., the Town finds it necessary to consider increasing the potable water base rates, increasing the potable water commodity rates and increasing the potable groundwater preservation fee for the Oro Valley Water Utility; and WHEREAS, pursuant to A.R.S. § 9-511, et seq., the Town is required to give a Notice of Intent at a regular Town Council meeting to increase the potable water base rates, increase the potable water commodity rates and increase the potable groundwater preservation fee; and WHEREAS, the Town has completed a Water Rates Analysis Report, attached hereto as Exhibit “A”, which supports these water rate increases for the Oro Valley Water Utility; and WHEREAS, not less than twenty (20) days prior to the public hearing on the proposed rate increases, the Town shall cause to be published one time in a newspaper of general circulation within the Town’s boundaries, a Notice of Intent showing the date, time and place of the hearing. NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Oro Valley, Arizona, as follows: SECTION 1. This Resolution serves as the Notice of Intent, which is hereby publicly given, for the Town of Oro Valley to increase the potable water base rates, increase the potable water commodity rates and increase the potable groundwater preservation fee. SECTION 2. A public hearing shall be held at the regular meeting of the Mayor and Council at 6:00 p.m. on June 5, 2024, in the Council Chambers of the Town Hall, Town of Oro Valley, 11000 North La Cañada Drive, Oro Valley, Arizona, to deliberate and vote on the proposed increases. SECTION 3. That Exhibit “A”, attached hereto and incorporated by reference, be made available to the public in the Office of the Town Clerk and on the Town of Oro Valley Water Utility website for review prior to the public hearing. SECTION 4. That the Town Manager, Town Clerk, Town Legal Services Director, or their duly authorized officers and agents are hereby authorized and directed to take all steps necessary to carry out the purposes and intent of this resolution. SECTION 5. If any section, subsection, sentence, clause, phrase or portion of this Resolution, is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions thereof. SECTION 6. All Oro Valley resolutions or motions and parts of resolutions or motions of the Council in conflict with the provision of this Resolution are hereby repealed. PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona, this 6th day of March, 2024. TOWN OF ORO VALLEY Joseph C. Winfield, Mayor ATTEST: APPROVED AS TO FORM: Michael Standish, Town Clerk Tobin Sidles, Legal Services Director Date: Date: EXHIBIT “A” Potable Water Base Rates: Cost per month Potable Water Commodity Rates: Per 1,000 gallons Potable Groundwater Preservation Fee: Current $0.90 to proposed $1.00 per 1,000 gallons used. Town of Oro Valley Water Utility Water Rates Analysis Report March 2024 TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT MARCH 2024 ORO VALLEY TOWN COUNCIL Joseph Winfield, Mayor Melanie Barrett, Vice Mayor Timothy Bohen, Councilmember Harry “Mo” Green, II, MD, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember ORO VALLEY WATER UTILITY COMMISSION Greg Hitt, Commission Chair Alan Forrest, CommissionVice-Chair David Atler, Commission Member Kay Lantow, Commission Member Tom Marek, Commission Member Patricia Olson, Commission Member Naranjan Vescio, Commission Member TOWN STAFF Peter A. Abraham, P.E., Water Utility Director Mary E. Rallis, CPA, Water Utility Administrator TABLE OF CONTENTS SECTION TITLE PAGE Index of Appendix Executive Summary 1 Introduction 4 Methodology 5 Growth Rates 6 Water Use Trends 7 Debt Service 8 Debt Service Coverage Requirements 9 Cash Reserve Policy for Operating Fund 10 Operating Fund Revenue Forecast 11 Revenue Requirements 13 Water Resource and System Development Impact Fee Fund 15 Proposed Financial Scenario 17 Recommendation on Water Rates 19 Conclusion 21 Appendix APPENDIX A. Proposed Financial Scenario Pro Forma A-1 Operating Fund A-2 Groundwater Preservation Fee A-3 Water Resource and System Development Impact Fee Fund A-4 Summary of all Funds B. Rate Schedules & Tables for Bill Comparisons B-1 Proposed Water Rate Schedule B-2 Tables for Bill Comparisons by Meter Size - Potable B-8 Tables for Bill Comparisons by Meter Size - Reclaimed C. 5-Year Capital Improvement Schedules C-1 Operating Fund C-2 Groundwater Preservation Fee C-3 Water Resource and System Development Impact Fee Fund D. Assumptions for Proposed Financial Scenario D-1 Operating Fund D-4 Water Resource and System Development Impact Fee Fund E. Development Impact Fee Schedule E-1 Water Resource and System Development Impact Fee Schedule - 1 - TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT MARCH 2024 Executive Summary An annual review of the revenue requirements and water rates is an integral component in ensuring the long- term financial health of the Water Utility. The Oro Valley Water Utility Commission reviews and makes recommendations for water revenue requirements, water rates and fee structures. The Commission evaluates staff recommendations based on a rates analysis to ensure compliance with Town policies and bond covenants. Water rates and service charges are reviewed annually in accordance with Mayor and Town Council Water Policies – II.A.2.b(4). The Water Utility has based these financial projections on the American Water Works Associations (AWWA) cash-needs approach. The AWWA is the largest national organization that develops water and wastewater policies, specifications and rate setting guidelines accepted by both government-owned and private water and wastewater utilities worldwide. This Water Rates Analysis Report contains detailed information on the Operating Fund and the Water Resource and System Development Impact Fee Fund. Funds are analyzed annually to project revenue and revenue requirements. As an enterprise of the Town, the Water Utility generates revenue from rates, fees and service charges and does not receive revenue from taxes or other monies from the General Fund. Additionally, revenue generated by the Water Utility does not fund operating costs of any other Town department. In accordance with policy, the water rates analysis is prepared annually based on the most up-to-date information available for a five-year period. Although the analysis is for five years, any rate increase considered would be approved only for the first year in the five-year projection period. The Water Utility Commission has made a recommendation on the proposed financial scenario. Under the proposed financial scenario, the Operating Fund is projected to have a cash balance of $6,551,443 at the end of the five-year projection period. This exceeds the cash reserve requirement. In addition, the debt service coverage ratio of 1.3 is exceeded each year. Operational needs and capital improvements are included in the analysis. The proposed financial scenario demonstrates a planned use of cash reserves to finance capital projects. The proposed financial scenario evaluates the impact of future costs and the revenue sources that will be required to meet those costs. The proposed water rates in the financial scenario will increase the Utility’s fixed and variable cost recovery. - 2 - The Water Utility Commission and Water Utility staff have made the following recommendations on water rates in the proposed financial scenario for Fiscal Year 2024/25: A. Increase to the potable water base rates B. Increase to the potable water commodity rates C. Increase to the potable Groundwater Preservation Fee (GPF) A. The current and proposed monthly base rates for potable water are shown in Table 1 below: Table 1 Cost per month B. The current and proposed commodity rates for potable water usage are shown in Table 2 below: Table 2 Per 1,000 gallons - 3 - The financial impact of the proposed base and commodity rate increase for a customer with a 5/8-inch meter using 7,000 gallons is $3.65 per month. Customers with a 5/8-inch meter represent 87 percent of the total customer base and include residential, commercial and irrigation classifications with the vast majority of those being residential. The base rate increase would be $1.06 per month for all customers with this meter size. The proposed commodity rate increase for customers in Tier 1 would be $0.27 per 1,000 gallons used per month. C. Groundwater Preservation Fee (GPF) is proposed to increase from $0.90 to $1.00 per 1,000 gallons used per month. An increase of $0.10 per 1,000 gallons used per month. The Water Utility presents this water rates analysis in support of the recommended rates contained in the proposed financial scenario. The Oro Valley Water Utility Commission and Water Utility staff respectfully recommend the proposed increase to the potable base rates, increase to the potable commodity rates and increase to the potable groundwater preservation fee (GPF) as detailed in the proposed financial scenario. - 4 - TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT MARCH 2024 Introduction The Oro Valley Water Utility was established in 1996 as a self-supporting enterprise of the Town. The Water Utility is comprised of two separate funds that have been established for specific purposes. The Funds are as follows: ► Operating Fund ► Water Resource and Development Impact Fee Fund The Operating Fund is the primary fund for the Water Utility. Revenues for this fund include water sales, service fees, miscellaneous charges and interest income. The expenses in this fund include personnel, operations and maintenance for both potable and reclaimed water systems, capital costs for existing potable water system improvements and related debt service. The Water Utility pays the General Fund for services received including finance, human resources, fleet services, information technology, legal, insurance and rental of office space; however, it does not receive revenue from taxes or other payments from the General Fund. Additional information is provided on page 11 of this report. Groundwater Preservation Fee (GPF) revenue and expenses are accounted for within the Operating Fund but are segregated because GPF revenue is restricted for specific uses. This is illustrated in Appendix A, Page A-2. The Water Resource and Development Impact Fee Fund (WRSDIF) is used to account for development impact fees collected. Funds may be used for all types of water resources, the infrastructure to deliver those resources and any related debt including Central Arizona Project (CAP) capital infrastructure repayment costs. Additional information is provided on page 15 of this report. The revenue and expenses of the Operating Fund and the WRSDIF Fund are combined to determine if the Water Utility meets the debt service coverage requirement established in the Mayor and Town Council water policies and current bond covenants. Revenues and expenses are accounted for separately in each fund. Pursuant to ARS 9-463.05 Section B.9., impact fees must be placed in a separate fund and accounted for separately. ARS 9-463.05 Section B.5. states that the impact fees may not be used for operations and maintenance of existing facilities. - 5 - Methodology Step 1: Five-Year Financial Plan The first step of the water rates analysis is to develop a five-year financial plan that projects the Water Utility’s revenues, expenses, capital project financing, annual debt service, and cash reserve funding. The factors used in determining the projections are growth rates, water use trends, debt service coverage requirements, cash reserve requirements and inflation rates. The financial plan is used to determine the revenue adjustment, which allows the Water Utility to recover adequate revenues to fund expenses and cash reserves. Step 2: Revenue Requirement Determination for Test Year After completing the five-year financial plan, the rate making process can begin by determining the revenue requirement for the test year, also known as the rate-setting year. The test year for this water rates analysis is Fiscal Year 2023/24 which will be used to capture the rate impacts resulting from a change in rate structure without a revenue adjustment. The revenue requirement should sufficiently fund the Water Utility’s operating and maintenance (O&M) costs, annual debt service, capital improvement plan (CIP) costs, and cash reserve funding for the upcoming Fiscal Year 2024/25 budget. Step 3: Water Rates Analysis The annual cost of providing water service, or the revenue requirements, is then distributed to customer classes and tiers based on their water usage and demand on the system. Fixed and variable costs are analyzed to determine the impact on customer classes and tiers. Step 4: Rate Design and Calculation After allocating the revenue requirements to each customer class and tier, the rate design and calculation process can start. Rates are designed to properly support and optimize the Water Utility’s policies and objectives. Rates also act as a public information tool in communicating these policy objectives to customers. This process also includes a rate impact analysis for all proposed water rates and sample customer bill impacts. Step 5: Administrative Record Preparation and Rate Adoption The final step in a water rates analysis is to develop the administrative record in preparation for the rate adoption process. The administrative record, also known as the Water Rates Analysis Report, documents the results of the water rate analysis and presents the methodologies, rationale, justifications, and calculations utilized to determine the proposed water rates. - 6 - Growth Rates As indicated in the graph below, new metered connections continue to remain stable due to continued development within the Town. The Water Utility had a total of 2,599 new metered connections over the last 10 years. At the end of Fiscal Year 2022/23, the customer base totaled 21,300 metered connections. In developing the growth projections, assistance was received from the Town’s Community and Economic Development Department for the current housing inventory, along with plans that have been submitted for review, to conservatively estimate future growth. The growth projections used for this report are consistent with the Town’s financial forecasting and are shown below in Table 3. Table 3 0 100 200 300 400 500 600 165 155 232 340 331 264 273 505 148 186 ANNUAL GROWTHFISCAL YEAR Annual Growth - 7 - Water Use Trends Water use remains consistent even though the number of connections has increased by 2,599 over the last ten years. The graph below indicates water usage from Fiscal Year 2013/14 through Fiscal Year 2022/23. As noted below, in Fiscal Year 2013/14 water usage was at 3,071 million gallons and 2,763 million gallons in Fiscal Year 2022/23. A decrease of 308 million gallons even though new connections increased by 2,599 during this time period. The revenue projections in this water rate analysis compiled water data from Fiscal Year 2022/23 when the average water use was 7,000 gallons per month, which is consistent with prior years. Historically there has been a decline in water use not only on a local level, but also on regional and national levels. This can be largely attributed to water conservation – both intentional and unintentional. Intentional water conservation is the conscious effort to reduce water use by commonly known measures including changing landscape to drought tolerant plants and the removal of lawns. Unintentional water conservation is a result of plumbing code changes and other regulatory changes regarding water efficiency. For example, all new water using appliances and fixtures are required to be low flow. The consumer’s intention may not have been to conserve water when they chose to replace an aging or broken dishwasher, clothes washer or bathroom faucet. - 500 1,000 1,500 2,000 2,500 3,000 3,500 3,071 2,889 2,929 3,045 3,288 2,707 2,929 3,232 2,981 2,763 Gallons in MillionsFiscal Year Potable & Reclaimed Water Deliveries - 8 - Debt Service The current annual debt service obligations are met with revenue generated from water rates, groundwater preservation fees and impact fees. A summary of the existing debt and the outstanding balances as of June 30, 2023 are shown below in Table 4. Table 4 In April 2017, the Town entered into an Intergovernmental Agreement with Metropolitan Domestic Water Improvement District and the Town of Marana to construct a recharge, recovery and delivery system known as the Northwest Recharge, Recovery, and Delivery System (NWRRDS) project to bring additional Central Arizona Project (CAP) water into the Town. For FY 2024/25, new debt issuance is proposed in the amount of $20 million for the NWRRDS project. Debt service for $8 million will be paid with Groundwater Preservation Fees (GPF) and $12 million will be paid with Water Resource and System Development Impact Fees (WRSDIF). Project costs identified for the NWRRDS project may be found in the five-year capital plan shown in Appendix C. There is no new debt for existing system capital improvements in this analysis. Capital costs in the five-year capital plan for existing system projects will be cash funded. - 9 - Debt Service Coverage Requirements The method for calculating the debt service coverage ratio is pursuant to the Town Financial and Budgetary Policies adopted by the Town Council in 2023. Section 1-9 Debt, Policy 9.0 - Pledging of Utility Revenues states the following with respect to debt service coverage ratios: “When utility revenues are pledged as debt service payments, the Town will strive to maintain a 1.3 times debt service coverage ratio to ensure debt coverage in times of revenue fluctuation. This will be in addition to the required ratio of the bond indenture.” The 2014 Water Infrastructure Finance Authority (WIFA) loan and Series 2021 Senior Lien Water revenue refunding bond are used in the calculation of the debt service coverage requirement. The Water Utility revenues are specifically pledged as the repayment source for these obligations at 1.3 times coverage per the Town’s adopted financial policy. The remaining outstanding debt obligations of the Water Utility are excise tax pledged obligations meaning that the Town’s unrestricted sources of sales taxes, fines, permit fees and state shared revenues are pledged as the repayment sources for these bonds in the bond indentures. Even though the bond indentures pledge these excise taxes as the repayment source, the Water Utility is responsible to pay for these debt service payments from water sales revenues. However, since excise taxes are pledged as coverage, a calculated debt service coverage ratio of 1.0 is applied to avoid double coverage when calculating the debt service coverage ratio for these excise tax-backed bonds in the water rates analysis. Bond indentures for the excise tax-backed bonds require that the Town’s excise tax collections each fiscal year total at least 2.5 times the annual debt service requirements to avoid funding a debt service reserve fund. These conditions have been met annually in the past and are expected to continue in the future. This methodology of segregating the water utility revenue-pledged debt from the excise tax-pledged debt in the rates analysis process is an accepted practice in the industry and has been reviewed by the Town’s Chief Financial Officer and the Town’s financial advisors with Stifel, Nicolaus & Company, Inc. The debt service coverage ratio is determined by dividing the annual net operating revenue by the annual debt service payments. The methodology described above is in accordance with the 2023 policy and reduces the amount of the required debt service coverage. Applying this methodology has been key in minimizing water rate increases. Debt service coverage for the Water Utility’s outstanding senior lien debt issuances and loans in the proposed financial scenario is shown in Table 5 below. As shown below, debt service coverage increases as existing debt service is paid off. Table 5 - 10 - Cash Reserve Policy The cash reserve policy may be found in the Town of Oro Valley Mayor and Council Water Policies Section II.A.1.d. The policy states “The Utility shall maintain a cash reserve in the Operating Fund of not less than 20% of the combined total of the annual budgeted amounts for personnel, operations and maintenance, and debt service. This cash reserve amount specifically excludes budgeted amounts for capital projects, depreciation, amortization and contingency. No cash reserve is required for the water utility impact fee funds.” In the proposed financial scenario, the projected cash reserve balance for the Operating Fund for each year in the analysis is listed below in Table 6 showing compliance in all years. The projected cash reserve balances include annual increases in the monthly base rate and commodity rates. Table 6 Cash reserve balances in the Operating Fund are projected to be stable throughout the analysis. This is a result of strategically balancing the required financing of capital projects with the planned used of cash reserves. There is no cash reserve requirement for revenue from the GPF because these funds are restricted to pay for renewable water resources, infrastructure and associated debt. Although accounted for in the Operating Fund, the GPF cash is segregated from the Operating Fund cash. It is not fiscally prudent to combine cash that has a restricted use with cash that has unrestricted use when determining compliance with a cash reserve policy. Expenses paid by GPF revenue are segregated from the general operating expenses for purposes of calculating the cash reserve requirement. In the proposed financial scenario, the projected cash reserve balance for the GPF in each year of the analysis is listed below in Table 7. Table 7 GPF cash reserve balances are projected to remain stable over the five-year projection period. This is a direct result of balancing the use of cash and the proposed issuance of $8 million in debt to pay for capital projects associated with the delivery of additional CAP water through the NWRRDS project. - 11 - Operating Fund Revenue Forecast The Operating Fund is projected to have a cash balance of $4,177,340 at the beginning of Fiscal Year 2024-25 and is projected to have a balance of $6,551,443 at the end of Fiscal Year 2028/29. These funds may be used for operating costs including personnel, operations and maintenance, capital improvements for the existing potable water system and debt service. Groundwater Preservation Fees are included in the Operating Fund; however, the revenues, expenses and cash balances for the GPF are accounted for separately within the Operating Fund and are not included in the cash balance above. The use of GPF funds is restricted to renewable water resources, infrastructure and associated debt. The following revenue forecast was based on analysis of the Water Utility’s historic water use trends and projected growth in the number of new connections. The revenue forecast includes proposed increases in the potable water base rates as shown below in Table 8. Table 8 - 12 - The revenue forecast includes proposed increases in the potable water commodity rates as shown below in Table 9: Table 9 The potable water base and commodity rates are projected to increase annually beginning in Fiscal Year 2024/25 and remain stable starting in Fiscal Year 2026/27. The proposed base rate increase will generate a 54 percent fixed cost recovery. Fixed costs are expenses incurred that do not fluctuate based on the volume of water sold. Examples of fixed costs include, but are not limited to, debt service, personnel, billing costs, fleet maintenance and regulatory costs. The proposed commodity rate increase accounts for the remaining 46 percent of the fixed costs which are recovered with revenue generated from the volume of water sold. The proposed rate increases encourage water conservation with higher commodity rate increases for higher water usage. Potable groundwater preservation fee (GPF) is proposed to increase from $0.90 to $1.00 per 1,000 gallons used. Table 10 below includes the water sales for potable, reclaimed and GPF revenue forecast for the five-year projection period using the proposed base and commodity rates: Table 10 Other revenue generated by the Utility consists of service fees and charges. Service fees and charges include funds received from an Intergovernmental Agreement with the Pima County Wastewater Reclamation Department to provide monthly billing services on their behalf. Service fees and charges also include, but are not limited to, new service establishment fees, late fees, reconnection fees, inspection fees and plan review fees. The total of all service fees and charges are projected to generate annual revenue of $800,000. Projections for interest income for the Operating Fund are a cumulative total of $814,141 over the five-year period. Projected interest income for the GPF monies is a cumulative total of $372,474 over the five-year period. The interest rate assumed for the projection period is 3 percent annually. - 13 - Revenue Requirements Below in Table 11 is a summary of revenue requirements for the Operating Fund that were used in the financial analysis. These revenue requirements exclude expenses to be paid with GPF revenue. Table 11 Projected personnel costs include 3 percent annual merit increases, retirement contributions of 12.29 percent and 3 percent annual increases in health care costs. There are no new employees being added within the five- year projection period. A portion of the personnel costs are allocated to the reclaimed water system based on a weighted average of 5.10 percent annually. The projected operations and maintenance (O&M) costs for both the potable and reclaimed water systems are based on the Fiscal Year 2023/24 budget and include inflationary increases of 3 percent annually. A cost allocation model is used to allocate various administrative and operational costs to the reclaimed water system. Costs charged by Tucson Water for wheeling reclaimed water are projected to increase 5.5 percent annually. Central Arizona Project (CAP) wheeling costs are fees charged by Tucson Water to wheel Oro Valley’s CAP water through their recharge and recovery system. The Intergovernmental Agreement with Tucson Water was renegotiated in Fiscal Year 2016/17. Costs are projected to increase by 5.5 percent annually. The total annual delivery of 2,850 acre feet is projected in the five-year projection period. Central Arizona Project (CAP) water recharge costs represent costs to take annual delivery of the Utility’s entire CAP water allotment of 10,305 acre feet. This water will be recharged and stored in various recharge facilities including the Tucson Water facilities. Costs to take delivery of and store the CAP water are calculated with the rate schedule adopted by the Central Arizona Project. The five-year projection period includes an increase of 20 percent in Fiscal Year 2024/25 as projected by the CAP rate table. Projected capital outlay for existing system improvements in this analysis includes well rehabilitation, tank replacement, re-lining of reservoirs, booster station modifications, water main replacements, vehicles and water meters. These projects will be cash-funded in the five-year projection period. The schedule for five-year capital improvements may be found in Appendix C. - 14 - Potable existing system debt service is declining as debt is paid. GPF and WRSDIF debt service will increase due to the proposed new debt issuance in FY 2024/25. Expenses paid with GPF funds include the existing customers’ portion of CAP water capital costs associated with ownership of the CAP water allotment. These costs increase annually based on projected rates developed by the Central Arizona Project. Debt service for the reclaimed water system is paid with GPF funds. Outstanding debt on the reclaimed water system will be paid in full by Fiscal Year 2029/30. Table 12 is a summary of expenses paid with GPF revenue that were used in this financial analysis: Table 12 - 15 - Water Resource and System Development Impact Fee Fund The Water Resource and Development Impact Fee Fund (WRSDIF) is used to account for development impact fees collected. Revenues are from impact fees collected at the time water meters are purchased and from interest income. Expenses include capital repayment obligation charges for the Town’s CAP allotment, CAP infrastructure and associated debt incurred to deliver CAP water to the Town to meet the demands of future growth. In addition, wells, pump stations, reservoirs and mains for the potable water system required to meet the demands of future growth will also be financed with these impact fees. The WRSDIF Fund is projected to have a cash balance of $10,769,603 at the beginning of FY 2024/25 and is projected to have $3,540,993 at the end of FY 2028/29. The revenue sources for the WRSDIF Fund are from impact fees collected when a water meter is purchased and from interest earned on cash balances. Interest income is projected to be a total of $867,364 for this analysis. The interest rate assumed for the projection period is 3 percent. The revenue forecast was based on new service units related to the number of new connections. A service unit is the equivalent of one single family residential (SFR) 5/8-inch water meter. The SFR service units are equal to the number of new connections. Other service units are forecast based on pending development projects within the Town. Other service units include commercial, multi-family and irrigation uses with the number of service units depending on the estimated meter sizes for each project. In addition, the service units are forecasted based on historic trends and pending development projects within the Town. The impact fee for a SFR 5/8-inch water meter or one service unit is projected to be $6,387. It is assumed that the Development Impact Fees will remain constant throughout the five-year projection period. Table 13 below indicates the projected growth in service units and the revenue associated with that growth. These growth projections are consistent with the Town’s financial planning. Table 13 WRSDIF funds may be used for capital expenses related to CAP water. Capital costs assessed by the Central Arizona Project for 3,000 acre feet of the Town’s CAP water allotment are included under operating expenses. Capital expenses during this projection period total $21.7 million and include the design and construction of the NWRRDS project that will deliver additional CAP water to the Town. Funds may also be used for capital expenses related to potable water system improvements including wells, booster stations, reservoirs and water mains required to meet the demands of new growth. Capital projects are identified in the five- year capital improvement plan shown in Appendix C. Debt service for previously constructed growth-related facilities is also paid from impact fee revenue. The annual expenses and debt service for the WRSDIF Fund are listed in Table 14 (shown on next page) - 16 - $12 million of new debt is proposed for the NWRRDS project during this projection period. Table 14 - 17 - Proposed Financial Scenario Prior to developing forecasts, financial considerations were evaluated relating to projected operating costs, capital expenses, the Water Utility’s existing cash reserves, existing outstanding debt and debt service payments. When developing a proposed financial scenario, the goal of the Water Utility is to ensure all existing rate setting policies are met, cash reserves are utilized to minimize future debt and proposed rate increases do not result in rate shock. One of the rate setting policies included in the Mayor and Council Water Policies is for rate structures to be designed to encourage water conservation. The development of water conservation pricing, also known as a tiered commodity rate, began in 1999 when a second tier was added to the uniform or flat commodity rate. That structure evolved into four tiers by 2007. The Water Utility has increased the tiered commodity rates to a level that encourages water conservation. This year, the proposed financial scenario includes increases to both the potable base and commodity rates and no increase to the reclaimed rates. The chart below illustrates an overall decline in potable and reclaimed water deliveries over the past four years even though the Water Utility experienced growth in the customer base. 17,500 18,000 18,500 19,000 19,500 20,000 20,500 21,000 21,500 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 SERVICE CONNECTIONSGALLONS DELVIEREDWater Sales & Growth (potable & reclaimed) Water Sales Service Connections - 18 - Table 15 below illustrates how regional water providers have increased their base rates to compensate for the declines in water consumption as compared to the historical and the 2024 proposed rates for Oro Valley. Table 15 Table 16 illustrates Oro Valley’s proposed potable base and commodity rates per 1,000 gallons. Water rates of other water providers in the region are included for comparison purposes along with water resource fees that are similar to the Oro Valley Water Utility GPF. Table 16 The Water Utility developed a proposed financial scenario that supports key financial and policy goals. The proposed scenario generates the revenue needed to maintain an adequate cash balance in all funds over the projected five-year period therefore meeting the cash reserve requirements in each year. The financial projections for the Operating Fund and WRSDIF Fund were combined to evaluate the overall debt service coverage at the end of each fiscal year. Analysis indicates that, under the proposed financial scenario, the Utility will meet the debt service coverage requirement established by the Mayor and Council Water Polices and bond covenants for all five years. The pro forma for the proposed financial scenario may be found in Appendix A. The assumptions used to develop the financial projections in the proposed financial scenario may be found in Appendix D. - 19 - Recommendation on Water Rates After reviewing the analysis of the two funds and their respective revenue requirements contained in the proposed financial scenario, the Water Utility Commission and Water Utility staff recommend the following for Fiscal Year 2024/25: A. Increase to the potable water monthly base rates B. Increase to the potable water commodity rates C. Increase to the potable groundwater preservation fee (GPF) A. Tables 17 & 18 shown below are the proposed potable water base rates and commodity rates for each meter size. Approximately 87 percent of the Utility’s customers have a 5/8-inch water meter and consume an average of 7,000 gallons. These customers will see an increase in their bill of $3.65 per month. Table 17 Cost per month B. Table 18 Per 1,000 gallons - 20 - C. Groundwater Preservation Fee (GPF) is proposed to increase from $0.90 to $1.00 per 1,000 gallons used per month. An increase of $0.10 per 1,000 gallons used per month. Direct comparison of specific base rates and commodity rates is not ideal for cost comparisons because of the varying rate structures of each utility. A more effective comparison is to calculate the cost for specific consumption levels for one month. Table 19 below provides a calculation of a monthly bill amount for a single-family residential customer with a 5/8-inch meter for the water utilities surrounding the Oro Valley Water Utility service area. Table 19 Proposed rates for all Oro Valley Water Utility meter sizes may be found in Appendix B. In addition, tables that calculate monthly bills under the proposed rates may also be found in Appendix B. Monthly bill amounts are calculated in 1,000-gallon increments for the 5/8-inch meters and a variety of increments for larger meter sizes. - 21 - Conclusion On an annual basis, the water rates analysis is prepared with the most up-to-date information available. Operational needs and capital improvement requirements change annually and are carefully evaluated when they are included in the analysis. It is important that the Water Utility performs a water rates analysis every year to plan for changes in operating costs, capital costs or debt service. This Water Rates Analysis Report is presented in support of the water rates contained in the proposed financial scenario. The Oro Valley Water Utility Commission and the Water Utility staff respectfully recommend approval of the water rates detailed in the proposed financial scenario. The Oro Valley Water Utility staff and Commission are dedicated to serving the Town of Oro Valley and the customers of its water utility and extend their appreciation to the Mayor and Council for consideration of the recommended water rates. APPENDIX A Proposed Financial Scenario Pro Forma A-1 Operating Fund A-2 Groundwater Preservation Fee A-3 Water Resource and System Development Impact Fee Fund A-4 Summary of All Funds Oro Valley Water Utility – Operating Fund A-1 Budget FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 REVENUES Water Sales Potable Water Sales (excluding golf courses)14,681,000$ 16,528,453$ 17,992,589$ 18,894,280$ 18,894,280$ 18,894,280$ Potable Water Sales from Growth - Res. & Com.- 37,367 128,701 232,450 319,887 377,653 Potable Water Sales - Golf Course - 111,595 117,242 120,208 120,208 120,208 Total Potable Water Sales 14,681,000 16,677,415 18,238,532 19,246,938 19,334,375 19,392,141 Reclaimed Water Sales 1,379,000 1,384,079 1,384,079 1,384,079 1,384,079 1,384,079 Total Water Sales 16,060,000 18,061,494 19,622,611 20,631,017 20,718,454 20,776,220 Other Operating Revenue Service Fees & Charges 800,500 800,000 800,000 800,000 800,000 800,000 Interest Income 100,000 116,603 118,766 140,998 186,267 251,507 Total Other Operating Revenue 900,500 916,603 918,766 940,998 986,267 1,051,507 Total Operating Revenue 16,960,500$ 18,978,097$ 20,541,377$ 21,572,015$ 21,704,721$ 21,827,727$ OPERATING EXPENSES Potable Operating Expenses Personnel 3,557,593 3,791,790 3,903,345 4,018,246 4,136,595 4,258,493 Operations & Maintenance 4,082,053 3,831,066 3,945,997 4,064,378 4,186,309 4,311,539 Power for Pumping 975,000 1,004,250 1,034,378 1,065,409 1,097,371 1,130,292 CAP Wheeling Costs 2,099,000 2,224,099 2,346,276 2,475,172 2,611,158 2,754,623 CAP Water Delivery Costs 2,623,000 2,880,825 3,076,620 3,210,585 3,334,245 3,426,990 Total Potable Operating Expenses 13,336,646$ 13,732,030$ 14,306,616$ 14,833,790$ 15,365,678$ 15,881,937$ Reclaimed Operating Expenses Personnel 313,216 203,774 209,769 215,944 222,304 228,855 Operating & Maintenance 946,720 971,569 1,000,727 1,030,748 1,061,671 1,093,521 Power for Pumping 64,020 65,951 67,919 69,956 72,055 74,217 Total Reclaimed Operating Expenses 1,323,956$ 1,241,294$ 1,278,414$ 1,316,649$ 1,356,030$ 1,396,593$ Total Operating Expenses 14,660,602$ 14,973,324$ 15,585,030$ 16,150,439$ 16,721,708$ 17,278,530$ Net Operating Revenue 2,299,898$ 4,004,773$ 4,956,347$ 5,421,576$ 4,983,013$ 4,549,197$ DEBT SERVICE - POTABLE P&I - 2014 WIFA Loan - Sr. Lien - AMI 372,214 376,416 376,298 376,178 376,054 375,927 P&I - 2015 Excise Tax Bonds - Refinance 2005 149,845 150,756 149,918 P&I - 2017 Excise Tax Bonds - Refinance 2007 1,621,775 1,638,991 1,638,851 1,638,703 P&I - 2018 Excise Tax Bonds - Exist. System CIP- 15 yrs.$6M 508,997 515,154 514,546 514,338 514,506 514,289 P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 365,376 274,422 275,489 276,064 274,061 169,843 Total Potable System Debt Service 3,018,207$ 2,955,739$ 2,955,102$ 2,805,283$ 1,164,621$ 1,060,059$ Net Balance From Operations before capital outlay (718,309)$ 1,049,034$ 2,001,244$ 2,616,293$ 3,818,392$ 3,489,138$ Capital Outlay Meters & Equipment & Vehicles 489,792$ 470,000$ 720,000$ 790,000$ 860,000$ 860,000$ Capital Improvements: Existing System 1,750,000 680,000 960,000 1,260,000 2,000,000 2,000,000 Total Capital Outlay 2,239,792$ 1,150,000$ 1,680,000$ 2,050,000$ 2,860,000$ 2,860,000$ Net Balance From Operations including capital outlay (2,958,101)$ (100,966)$ 321,244$ 566,293$ 958,392$ 629,138$ Beginning Cash Balance 7,135,441$ 4,177,340$ 4,076,375$ 4,397,619$ 4,963,912$ 5,922,304$ Net Balance From Operations (2,958,101) (100,966) 321,244 566,293 958,392 629,138 Ending Cash Balance 4,177,340$ 4,076,375$ 4,397,619$ 4,963,912$ 5,922,304$ 6,551,443$ Oro Valley Water Utility – Operating Fund Groundwater Preservation Fees A-2 Budget FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 GPF Beginning Balance 4,631,512$ 3,138,279$ 5,778,492$ 841,743$ 1,963,140$ 3,134,637$ Revenue GPF Revenue - Potable 2,141,500 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 GPF Revenue - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500 GPF Revenue - Growth - 5,713 14,868 24,520 31,228 36,061 Total GPF Revenue 2,400,000$ 2,564,213$ 2,573,368$ 2,583,020$ 2,589,728$ 2,594,561$ 2025 Loan Proceeds (20 years @ 3%)- 8,000,000 - - - - Interest Income - 120,815 86,326 21,193 53,849 90,291 Total All Revenue 2,400,000$ 10,685,028$ 2,659,694$ 2,604,213$ 2,643,577$ 2,684,852$ GPF Expenses Capital Cost for CAP Allotment 7305 AF 387,000 394,470 489,435 474,825 467,520 467,520 Capital Costs for NWRRDS Project 2,880,000 6,860,000 6,100,000 - - - Capital Improvements - Reclaimed - 320,000 - - - - P&I - 2021 Sr. Lien Water Revenue Refunding Obligations 626,233 470,345 472,174 473,158 469,726 291,102 P&I - 2025 Loan Payable - - 534,834 534,834 534,834 534,834 Total GPF Expenses 3,893,233 8,044,815 7,596,443 1,482,817 1,472,080 1,293,456 GPF Ending Balance 3,138,279$ 5,778,492$ 841,743$ 1,963,140$ 3,134,637$ 4,526,034$ Water Resource and System Development Impact Fee Fund A-3 Budget FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 REVENUES Impact Fee Revenue- Residential 760,053$ 881,406$ 1,258,239$ 1,341,270$ 849,471$ 536,508$ Impact Fee Revenue- Non-Residential 143,296 107,472 107,472 107,472 107,472 107,472 Subtotal Revenue 903,349$ 988,878$ 1,365,711$ 1,448,742$ 956,943$ 643,980$ Other Operating Revenue 2025 Loan Proceeds (20 years @ 3%)- 12,000,000 - - - - Interest Income 150,000 315,825 225,324 104,368 112,638 109,209 Subtotal Other Operating Revenue 150,000 12,315,825 225,324 104,368 112,638 109,209 Total Operating Revenue 1,053,349$ 13,304,703$ 1,591,035$ 1,553,110$ 1,069,581$ 753,189$ OPERATING EXPENSES Capital Cost for CAP Allotment 3000 AF 159,000 162,000 201,000 195,000 192,000 192,000 Total Operating Expenses 159,000$ 162,000$ 201,000$ 195,000$ 192,000$ 192,000$ Net Operating Revenue 894,349$ 13,142,703$ 1,390,035$ 1,358,110$ 877,581$ 561,189$ DEBT SERVICE P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 74,586 56,019 56,237 56,354 55,945 34,671 P&I - 2025 Loan Payable - - 802,250 802,250 802,250 802,250 Total Debt Service 74,586$ 56,019$ 858,487$ 858,604$ 858,195$ 836,921$ CAPITAL OUTLAY Capital Improvements: Capital Costs for NWRRDS Projects 4,320,000 10,290,000 8,500,000 - - - Capital Costs for Other Potable Projects 4,750,000 2,300,000 - - - - Total Capital Outlay 9,070,000$ 12,590,000$ 8,500,000$ -$ -$ -$ Net Balance From Operations (8,250,237)$ 496,684$ (7,968,452)$ 499,506$ 19,386$ (275,732)$ Beginning Cash Balance 19,019,840$ 10,769,603$ 11,266,287$ 3,297,835$ 3,797,340$ 3,816,726$ Net Balance From Operations (8,250,237)$ 496,684$ (7,968,452)$ 499,506$ 19,386$ (275,732)$ Ending Cash Balance 10,769,603$ 11,266,287$ 3,297,835$ 3,797,340$ 3,816,726$ 3,540,993$ Summary of All Funds A-4 Budget FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 REVENUES Water Sales Potable Water Sales (exclude golf courses)14,681,000$ 16,528,453$ 17,992,589$ 18,894,280$ 18,894,280$ 18,894,280$ Potable Water Sales from Growth - 37,367 128,701 232,450 319,887 377,653 Potable Water Sales - Golf Course - 111,595 117,242 120,208 120,208 120,208 Total Potable Water Sales 14,681,000 16,677,415 18,238,532 19,246,938 19,334,375 19,392,141 Reclaimed Water Sales 1,379,000 1,384,079 1,384,079 1,384,079 1,384,079 1,384,079 Total Water Sales 16,060,000 18,061,494 19,622,611 20,631,017 20,718,454 20,776,220 Other Operating Revenue Groundwater Preservation Fees Groundwater Preservation Fee - Potable 2,141,500 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 Groundwater Preservation Fee - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500 Groundwater Preservation Fee - Growth - 5,713 14,868 24,520 31,228 36,061 Loan Proceeds - 8,000,000 - - - - Total Groundwater Preservation Fees 2,400,000 10,564,213 2,573,368 2,583,020 2,589,728 2,594,561 Water Resource & System Development Impact Fees 903,349 988,878 1,365,711 1,448,742 956,943 643,980 Loan Proceeds-WRSDIF - 12,000,000 - - - - Service Fees & Charges 800,500 800,000 800,000 800,000 800,000 800,000 Interest Income 250,000 553,243 430,416 266,559 352,754 451,007 Total Other Operating Revenue 4,353,849 24,906,334 5,169,495 5,098,321 4,699,425 4,489,548 Total Operating Revenue 20,413,849$ 42,967,828$ 24,792,106$ 25,729,338$ 25,417,879$ 25,265,768$ OPERATING EXPENSES Potable Operating Expenses Personnel 3,557,593 3,791,790 3,903,345 4,018,246 4,136,595 4,258,493 Operations & Maintenance 4,082,053 3,831,066 3,945,997 4,064,378 4,186,309 4,311,539 Power for Pumping 975,000 1,004,250 1,034,378 1,065,409 1,097,371 1,130,292 CAP Wheeling Costs 2,099,000 2,224,099 2,346,276 2,475,172 2,611,158 2,754,623 CAP Delivery Costs 2,623,000 2,880,825 3,076,620 3,210,585 3,334,245 3,426,990 CAP Capital Costs paid by GPF Revenue 387,000 394,470 489,435 474,825 467,520 467,520 Total Potable Operating Expenses 13,723,647$ 14,126,501$ 14,796,051$ 15,308,615$ 15,833,198$ 16,349,457$ Reclaimed Operating Expenses Personnel 313,216 203,774 209,769 215,944 222,304 228,855 Operating & Maintenance 946,720 971,569 1,000,727 1,030,748 1,061,671 1,093,521 Power for Pumping 64,020 65,951 67,919 69,956 72,055 74,217 Total Reclaimed Operating Expenses 1,323,956$ 1,241,294$ 1,278,414$ 1,316,650$ 1,356,031$ 1,396,592$ WRSDIF Operating Expenses CAP Capital Costs 159,000 162,000 201,000 195,000 192,000 192,000 Total WRSDIF Operating Expenses 159,000$ 162,000$ 201,000$ 195,000$ 192,000$ 192,000$ Total Operating Expenses 15,206,603$ 15,529,795$ 16,275,465$ 16,820,265$ 17,381,229$ 17,938,049$ Net Operating Revenue 5,207,246$ 27,438,033$ 8,516,641$ 8,909,073$ 8,036,650$ 7,327,719$ Summary of All Funds A-5 Budget FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 Debt Service Debt Service - Potable- Existing System P&I - 2014 WIFA Loan - Sr. Lien - AMI 372,214 376,416 376,298 376,178 376,054 375,927 P&I - 2015 Excise Tax Bonds - Refinance 2005 149,845 150,756 149,918 - - - P&I - 2017 Excise Tax Bonds - Refinance 2007 1,621,775 1,638,991 1,638,851 1,638,703 - - P&I - 2018 Excise Tax Bonds - Exist. System CIP- 15 yrs. $6M 508,997 515,154 514,546 514,338 514,506 514,289 P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 365,376 274,422 275,489 276,064 274,061 169,843 Total Potable Existing System Debt Service 3,018,207$ 2,955,739$ 2,955,102$ 2,805,283$ 1,164,621$ 1,060,059$ Debt Service - GPF P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 626,233 470,345 472,174 473,158 469,726 291,102 P&I - Loan Payable (20 years @ 3%)- - 534,834 534,834 534,834 534,834 Total GPF Debt Service 626,233$ 470,345$ 1,007,008$ 1,007,992$ 1,004,560$ 825,936$ Debt Service - WRSDIF - Growth Related P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 74,586 56,019 56,237 56,354 55,945 34,671 P&I - Loan Payable (20 years @ 3%)- - 802,250 802,250 802,250 802,250 Total WRSDIF Growth Related Debt Service 74,586$ 56,019$ 858,487$ 858,604$ 858,195$ 836,921$ Total Water System Debt Service 3,719,026$ 3,482,103$ 4,820,597$ 4,671,879$ 3,027,376$ 2,722,916$ Capital Outlay Meters & Equipment & Vehicles 489,792$ 470,000$ 720,000$ 790,000$ 860,000$ 860,000$ Capital Improvements: Existing System 1,750,000 680,000 960,000 1,260,000 2,000,000 2,000,000 Groundwater Preservation Fees 2,880,000 7,180,000 6,100,000 - - - NWRRDS Projects 4,320,000 10,290,000 8,500,000 - - - Other Potable Growth Related Projects 4,750,000 2,300,000 - - - - Total Capital Outlay 14,189,792$ 20,920,000$ 16,280,000$ 2,050,000$ 2,860,000$ 2,860,000$ Net Balance From Operations (12,701,572)$ 3,035,930$ (12,583,957)$ 2,187,194$ 2,149,274$ 1,744,803$ Growth - New Metered Connections 300 138 197 210 133 84 Monthly (Avg.) increase to residential customer using 7K gals.N/A 7.9%4.7%2.5%0.0%0.0% Monthly (Avg.) increase to residential customer using 7K gals.N/A $3.65 $2.32 $1.28 $0.00 $0.00 Monthly increase to reclaimed customer using 10M gals.N/A 0.0%0.0%0.0%0.0%0.0% Monthly increase to reclaimed customer using 10M gals.N/A $0.00 $0.00 $0.00 $0.00 $0.00 Debt Service Coverage Ratio: Sr. Lien & WIFA 3.62 6.32 3.38 3.54 3.20 3.32 Debt Service Coverage Requirement = 1.30 Required Operating Fund Cash Reserves (20% of personnel, O&M, debt)3,535,762$ 3,585,813$ 3,708,027$ 3,791,145$ 3,577,266$ 3,667,718$ (does not include depreciation/amortization) Operating Fund Cash Reserves 4,177,340$ 4,076,375$ 4,397,619$ 4,963,912$ 5,922,304$ 6,551,443$ Groundwater Preservation Fees 3,138,279 5,778,492 841,743 1,963,140 3,134,637 4,526,034 WRSD Impact Fee Fund 10,769,603 11,266,287 3,297,835 3,797,340 3,816,726 3,540,993 Total Ending Cash Balance 18,085,222$ 21,121,154$ 8,537,197$ 10,724,392$ 12,873,667$ 14,618,469$ APPENDIX B Rate Schedules & Tables for Bill Comparisons B-1 Proposed Water Rate Schedule B-2 Tables for Bill Comparisons by Meter Size – Potable B-8 Tables for Bill Comparisons by Meter Size – Reclaimed Tier 1 - $2.92 Tier 2 - $4.85 Tier 3 - $8.17 Tier 4 - $12.32 Meter Size Base Rate Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons 5/8 Inch 22.20$ 0 - 7,000 7,001 - 16,000 16,001 - 32,000 OVER 32,000 3/4 Inch 33.27$ 0 - 10,000 10,001 - 24,000 24,001 - 48,000 OVER 48,000 1 inch 55.46$ 0 - 17,000 17,001 - 40,000 40,001 - 80,000 OVER 80,000 1.5 inch 110.92$ 0 - 35,000 35,001 - 80,000 80,001 - 160,000 OVER 160,000 2 inch 177.48$ 0 - 56,000 56,001 - 128,000 128,001 - 256,000 OVER 256,000 3 inch 354.93$ 0 - 112,000 112,001 - 256,000 256,001 - 512,000 OVER 512,000 4 inch 554.60$ 0 - 175,000 175,001 - 400,000 400,001 - 800,000 OVER 800,000 6 inch 1,109.19$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000 8 inch 1,774.71$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000 $2.92 Meter Size Base Rate Usage Rate: Per 1,000 gallons 5/8 Inch 22.20$ Fixed usage rate 3/4 Inch 33.27$ Fixed usage rate 1 inch 55.46$ Fixed usage rate 1.5 inch 110.92$ Fixed usage rate 2 inch 177.48$ Fixed usage rate 3 inch 354.93$ Fixed usage rate 4 inch 554.60$ Fixed usage rate 6 inch 1,109.19$ Fixed usage rate 8 inch 1,774.71$ Fixed usage rate $7.65 Meter Size Base Rate Usage Rate: Per 1,000 gallons 5/8 Inch 22.20$ Fixed usage rate 3/4 Inch 33.27$ Fixed usage rate 1 inch 55.46$ Fixed usage rate 1.5 inch 110.92$ Fixed usage rate 2 inch 177.48$ Fixed usage rate 3 inch 354.93$ Fixed usage rate 4 inch 554.60$ Fixed usage rate 6 inch 1,109.19$ Fixed usage rate 8 inch 1,774.71$ Fixed usage rate $2.35 Meter Size Base Rate Usage Rate: Per 1,000 gallons 5/8 Inch 14.62$ Fixed usage rate 3/4 Inch 21.93$ Fixed usage rate 1 inch 36.54$ Fixed usage rate 1.5 inch 73.08$ Fixed usage rate 2 inch 116.94$ Fixed usage rate 3 inch 233.86$ Fixed usage rate 4 inch 365.41$ Fixed usage rate 6 inch 730.83$ Fixed usage rate 8 inch 1,169.32$ Fixed usage rate $1.00 Fee Per 1,000 gallons $0.47 Fee: Per 1,000 gallons B-1 Reclaimed Water Residential & Irrigation uses Commercial (Buildings, Tenant Improvements) & Multi-Family uses (Apartments, Duplex, Triplex, Fourplex, Assisted Living) Construction Water uses All Uses Groundwater Preservation Fees for all uses Reclaimed Water (Turf only) Fees Potable Water Potable Water Potable Water plus applicable sales taxes. Potable Water Town of Oro Valley Water Utility Water Rates and Groundwater Preservation Fee Schedule Proposed Rates Effective July 6, 2024 The monthly water rate for the various user classifications is comprised of a monthly base rate, that varies with the meter size, plus the cooresponding monthly usage rate per 1,000 gallons plus the groundwater preservation fee per 1,000 gallons for both potable and reclaimed water TABLE FOR MONTHLY CHARGES & PERCENT INCREASE COMPARISON RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 5/8-INCH METER Tier Levels GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED BILL BILL INCREASE 0 21.14 - 21.14 22.20 - 22.20 1.06 5.0% 1,000 23.79 0.90 24.69 25.12 1.00 26.12 1.43 5.8% 2,000 26.44 1.80 28.24 28.04 2.00 30.04 1.80 6.4% 3,000 29.09 2.70 31.79 30.96 3.00 33.96 2.17 6.8% 4,000 31.74 3.60 35.34 33.88 4.00 37.88 2.54 7.2% 5,000 34.39 4.50 38.89 36.80 5.00 41.80 2.91 7.5% 6,000 37.04 5.40 42.44 39.72 6.00 45.72 3.28 7.7% 7,000 39.69 6.30 45.99 42.64 7.00 49.64 3.65 7.9% 8,000 43.57 7.20 50.77 47.49 8.00 55.49 4.72 9.3% 9,000 47.45 8.10 55.55 52.34 9.00 61.34 5.79 10.4% 10,000 51.33 9.00 60.33 57.19 10.00 67.19 6.86 11.4% 11,000 55.21 9.90 65.11 62.04 11.00 73.04 7.93 12.2% 12,000 59.09 10.80 69.89 66.89 12.00 78.89 9.00 12.9% 13,000 62.97 11.70 74.67 71.74 13.00 84.74 10.07 13.5% 14,000 66.85 12.60 79.45 76.59 14.00 90.59 11.14 14.0% 15,000 70.73 13.50 84.23 81.44 15.00 96.44 12.21 14.5% 16,000 74.61 14.40 89.01 86.29 16.00 102.29 13.28 14.9% 17,000 80.66 15.30 95.96 94.46 17.00 111.46 15.50 16.2% 18,000 86.71 16.20 102.91 102.63 18.00 120.63 17.72 17.2% 19,000 92.76 17.10 109.86 110.80 19.00 129.80 19.94 18.2% 20,000 98.81 18.00 116.81 118.97 20.00 138.97 22.16 19.0% 21,000 104.86 18.90 123.76 127.14 21.00 148.14 24.38 19.7% 22,000 110.91 19.80 130.71 135.31 22.00 157.31 26.60 20.4% 23,000 116.96 20.70 137.66 143.48 23.00 166.48 28.82 20.9% 24,000 123.01 21.60 144.61 151.65 24.00 175.65 31.04 21.5% 25,000 129.06 22.50 151.56 159.82 25.00 184.82 33.26 21.9% 26,000 135.11 23.40 158.51 167.99 26.00 193.99 35.48 22.4% 27,000 141.16 24.30 165.46 176.16 27.00 203.16 37.70 22.8% 28,000 147.21 25.20 172.41 184.33 28.00 212.33 39.92 23.2% 29,000 153.26 26.10 179.36 192.50 29.00 221.50 42.14 23.5% 30,000 159.31 27.00 186.31 200.67 30.00 230.67 44.36 23.8% 31,000 165.36 27.90 193.26 208.84 31.00 239.84 46.58 24.1% 32,000 171.41 28.80 200.21 217.01 32.00 249.01 48.80 24.4% 33,000 180.21 29.70 209.91 229.33 33.00 262.33 52.42 25.0% 34,000 189.01 30.60 219.61 241.65 34.00 275.65 56.04 25.5% 35,000 197.81 31.50 229.31 253.97 35.00 288.97 59.66 26.0% 36,000 206.61 32.40 239.01 266.29 36.00 302.29 63.28 26.5% 37,000 215.41 33.30 248.71 278.61 37.00 315.61 66.90 26.9% 38,000 224.21 34.20 258.41 290.93 38.00 328.93 70.52 27.3% 39,000 233.01 35.10 268.11 303.25 39.00 342.25 74.14 27.7% 40,000 241.81 36.00 277.81 315.57 40.00 355.57 77.76 28.0% 41,000 250.61 36.90 287.51 327.89 41.00 368.89 81.38 28.3% 42,000 259.41 37.80 297.21 340.21 42.00 382.21 85.00 28.6% 43,000 268.21 38.70 306.91 352.53 43.00 395.53 88.62 28.9% 44,000 277.01 39.60 316.61 364.85 44.00 408.85 92.24 29.1% 45,000 285.81 40.50 326.31 377.17 45.00 422.17 95.86 29.4% 46,000 294.61 41.40 336.01 389.49 46.00 435.49 99.48 29.6% 47,000 303.41 42.30 345.71 401.81 47.00 448.81 103.10 29.8% 48,000 312.21 43.20 355.41 414.13 48.00 462.13 106.72 30.0% 49,000 321.01 44.10 365.11 426.45 49.00 475.45 110.34 30.2% 50,000 329.81 45.00 374.81 438.77 50.00 488.77 113.96 30.4% B-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 3/4-INCH METER BASE RATE 33.27$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 10,000 GALLONS TIER 2 = 4.85$ FOR 10,001 - 24,000 GALLONS TIER 3 = 8.17$ FOR 24,001 - 48,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 48,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 31.69 - 31.69 33.27 - 33.27 1.58 5.0% 7,000 50.24 6.30 56.54 53.71 7.00 60.71 4.17 7.4% 11,000 62.07 9.90 71.97 67.32 11.00 78.32 6.35 8.8% 28,000 136.71 25.20 161.91 163.05 28.00 191.05 29.14 18.0% 50,000 275.31 45.00 320.31 351.09 50.00 401.09 80.78 25.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL CUSTOMERS WITH A 3/4-INCH METER BASE RATE 33.27$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 31.69 - 31.69 33.27 - 33.27 1.58 5.0% 7,000 50.24 6.30 56.54 53.71 7.00 60.71 4.17 7.4% 11,000 60.84 9.90 70.74 65.39 11.00 76.39 5.65 8.0% 28,000 105.89 25.20 131.09 115.03 28.00 143.03 11.94 9.1% 50,000 164.19 45.00 209.19 179.27 50.00 229.27 20.08 9.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 1-INCH METER BASE RATE 55.46$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 17,000 GALLONS TIER 2 = 4.85$ FOR 17,001 - 40,000 GALLONS TIER 3 = 8.17$ FOR 40,001 - 80,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 80,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 52.82 - 52.82 55.46 - 55.46 2.64 5.0% 17,000 97.87 15.30 113.17 105.10 17.00 122.10 8.93 7.9% 27,000 136.67 24.30 160.97 153.60 27.00 180.60 19.63 12.2% 38,000 179.35 34.20 213.55 206.95 38.00 244.95 31.40 14.7% 50,000 247.61 45.00 292.61 298.35 50.00 348.35 55.74 19.0% B-3 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL CUSTOMERS WITH A 1-INCH METER BASE RATE 55.46$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 52.82 - 52.82 55.46 - 55.46 2.64 5.0% 15,000 92.57 13.50 106.07 99.26 15.00 114.26 8.19 7.7% 27,000 124.37 24.30 148.67 134.30 27.00 161.30 12.63 8.5% 38,000 153.52 34.20 187.72 166.42 38.00 204.42 16.70 8.9% 50,000 185.32 45.00 230.32 201.46 50.00 251.46 21.14 9.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 1.5-INCH METER BASE RATE 110.92$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 35,000 GALLONS TIER 2 = 4.85$ FOR 35,001 - 80,000 GALLONS TIER 3 = 8.17$ FOR 80,001 - 160,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 160,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 105.64 - 105.64 110.92 - 110.92 5.28 5.0% 38,000 210.03 34.20 244.23 227.67 38.00 265.67 21.44 8.8% 64,000 310.91 57.60 368.51 353.77 57.60 411.37 42.86 11.6% 90,000 433.49 81.00 514.49 513.07 81.00 594.07 79.58 15.5% 125,000 645.24 112.50 757.74 799.02 112.50 911.52 153.78 20.3% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 1.5-INCH METER BASE RATE 110.92$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 105.64 - 105.64 110.92 - 110.92 5.28 5.0% 30,000 185.14 27.00 212.14 198.52 30.00 228.52 16.38 7.7% 64,000 275.24 57.60 332.84 297.80 64.00 361.80 28.96 8.7% 90,000 344.14 81.00 425.14 373.72 90.00 463.72 38.58 9.1% 125,000 436.89 112.50 549.39 475.92 125.00 600.92 51.53 9.4% B-4 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 2-INCH METER BASE RATE 177.48$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 56,000 GALLONS TIER 2 = 4.85$ FOR 56,001 - 128,000 GALLONS TIER 3 = 8.17$ FOR 128,001 - 256,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 256,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 169.03 - 169.03 177.48 - 177.48 8.45 5.0% 57,000 321.31 51.30 372.61 345.85 57.00 402.85 30.24 8.1% 130,000 608.89 117.00 725.89 706.54 130.00 836.54 110.65 15.2% 250,000 1,334.89 225.00 1,559.89 1,686.94 250.00 1,936.94 377.05 24.2% 325,000 1,978.39 292.50 2,270.89 2,586.04 325.00 2,911.04 640.15 28.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 2-INCH METER BASE RATE 177.48$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 169.03 - 169.03 177.48 - 177.48 8.45 5.0% 57,000 320.08 51.30 371.38 343.92 57.00 400.92 29.54 8.0% 128,000 508.23 115.20 623.43 551.24 128.00 679.24 55.81 9.0% 250,000 831.53 225.00 1,056.53 907.48 250.00 1,157.48 100.95 9.6% 325,000 1,030.28 292.50 1,322.78 1,126.48 325.00 1,451.48 128.70 9.7% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 3-INCH METER BASE RATE 354.93$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 112,000 GALLONS TIER 2 = 4.85$ FOR 112,001 - 256,000 GALLONS TIER 3 = 8.17$ FOR 256,001 - 512,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 512,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 338.03 - 338.03 354.93 - 354.93 16.90 5.0% 50,000 470.53 45.00 515.53 500.93 50.00 550.93 35.40 6.9% 150,000 782.27 135.00 917.27 866.27 150.00 1,016.27 99.00 10.8% 300,000 1,459.75 270.00 1,729.75 1,739.85 300.00 2,039.85 310.10 17.9% 500,000 2,669.75 450.00 3,119.75 3,373.85 500.00 3,873.85 754.10 24.2% B-5 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 3-INCH METER BASE RATE 354.93$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 338.03 - 338.03 354.93 - 354.93 16.90 5.0% 50,000 470.53 45.00 515.53 500.93 50.00 550.93 35.40 6.9% 150,000 735.53 135.00 870.53 792.93 150.00 942.93 72.40 8.3% 300,000 1,133.03 270.00 1,403.03 1,230.93 300.00 1,530.93 127.90 9.1% 500,000 1,663.03 450.00 2,113.03 1,814.93 500.00 2,314.93 201.90 9.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 4-INCH METER BASE RATE 554.60$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 175,000 GALLONS TIER 2 = 4.85$ FOR 175,001 - 400,000 GALLONS TIER 3 = 8.17$ FOR 400,001 - 800,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 800,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 528.19 - 528.19 554.60 - 554.60 26.41 5.0% 300,000 1,476.94 270.00 1,746.94 1,671.85 300.00 1,971.85 224.91 12.9% 550,000 2,772.44 495.00 3,267.44 3,382.35 550.00 3,932.35 664.91 20.3% 700,000 3,679.94 630.00 4,309.94 4,607.85 700.00 5,307.85 997.91 23.2% 850,000 4,724.94 765.00 5,489.94 6,040.85 850.00 6,890.85 1400.91 25.5% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 4-INCH METER BASE RATE 554.60$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 528.19 - 528.19 554.60 - 554.60 26.41 5.0% 300,000 1,323.19 270.00 1,593.19 1,430.60 300.00 1,730.60 137.41 8.6% 550,000 1,985.69 495.00 2,480.69 2,160.60 550.00 2,710.60 229.91 9.3% 700,000 2,383.19 630.00 3,013.19 2,598.60 700.00 3,298.60 285.41 9.5% 850,000 2,780.69 765.00 3,545.69 3,036.60 850.00 3,886.60 340.91 9.6% B-6 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 6-INCH METER BASE RATE 1,109.19$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 860,000 GALLONS TIER 2 = 4.85$ FOR 860,001 - 2,000,000 GALLONS TIER 3 = 8.17$ FOR 2,000,001 - 3,500,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 3,500,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 1,056.37 - 1,056.37 1,109.19 - 1,109.19 52.82 5.0% 425,000 2,182.62 382.50 2,565.12 2,350.19 425.00 2,775.19 210.07 8.2% 1,000,000 3,878.57 900.00 4,778.57 4,299.39 1,000.00 5,299.39 520.82 10.9% 1,500,000 5,818.57 1,350.00 7,168.57 6,724.39 1,500.00 8,224.39 1055.82 14.7% 2,000,000 7,758.57 1,800.00 9,558.57 9,149.39 2,000.00 11,149.39 1590.82 16.6% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 6-INCH METER BASE RATE 1,109.19$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 1,056.37 - 1,056.37 1,109.19 - 1,109.19 52.82 5.0% 425,000 2,182.62 382.50 2,565.12 2,350.19 425.00 2,775.19 210.07 8.2% 1,000,000 3,706.37 900.00 4,606.37 4,029.19 1,000.00 5,029.19 422.82 9.2% 1,500,000 5,031.37 1,350.00 6,381.37 5,489.19 1,500.00 6,989.19 607.82 9.5% 2,000,000 6,356.37 1,800.00 8,156.37 6,949.19 2,000.00 8,949.19 792.82 9.7% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8-INCH METER BASE RATE 1,774.71$ COMMODITY RATE: TIER 1 = 2.92$ FOR 0 - 860,000 GALLONS TIER 2 = 4.85$ FOR 860,001 - 2,000,000 GALLONS TIER 3 = 8.17$ FOR 2,000,001 - 3,500,000 GALLONS TIER 4 = 12.32$ FOR ALL USAGE OVER 3,500,000 GALLONS GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 1,690.20 - 1,690.20 1,774.71 - 1,774.71 84.51 5.0% 425,000 2,816.45 382.50 3,198.95 3,015.71 425.00 3,440.71 241.76 7.6% 1,000,000 4,512.40 900.00 5,412.40 4,964.91 1,000.00 5,964.91 552.51 10.2% 1,500,000 6,452.40 1,350.00 7,802.40 7,389.91 1,500.00 8,889.91 1087.51 13.9% 2,000,000 8,392.40 1,800.00 10,192.40 9,814.91 2,000.00 11,814.91 1622.51 15.9% (There are no active 8-inch potable meters in the OVWU system) B-7 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL AND MULTIFAMILY CUSTOMERS WITH A 8-INCH METER BASE RATE 1,774.71$ COMMODITY RATE: TIER 1 = 2.92$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 = N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 1,690.20 - 1,690.20 1,774.71 - 1,774.71 84.51 5.0% 425,000 2,816.45 382.50 3,198.95 3,015.71 425.00 3,440.71 241.76 7.6% 1,000,000 4,340.20 900.00 5,240.20 4,694.71 1,000.00 5,694.71 454.51 8.7% 1,500,000 5,665.20 1,350.00 7,015.20 6,154.71 1,500.00 7,654.71 639.51 9.1% 2,000,000 6,990.20 1,800.00 8,790.20 7,614.71 2,000.00 9,614.71 824.51 9.4% (There are no active 8-inch potable meters in the OVWU system) TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 1.5-INCH METER - RECLAIMED WATER USE BASE RATE 73.08$ COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 =N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 73.08 - 73.08 73.08 - 73.08 0.00 0.0% 50,000 190.58 23.50 214.08 190.58 23.50 214.08 0.00 0.0% 135,000 390.33 63.45 453.78 390.33 63.45 453.78 0.00 0.0% 200,000 543.08 94.00 637.08 543.08 94.00 637.08 0.00 0.0% 250,000 660.58 117.50 778.08 660.58 117.50 778.08 0.00 0.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 2-INCH METER - RECLAIMED WATER USE BASE RATE 116.94$ COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 =N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 116.94 - 116.94 116.94 - 116.94 0.00 0.0% 150,000 469.44 70.50 539.94 469.44 70.50 539.94 0.00 0.0% 240,000 680.94 112.80 793.74 680.94 112.80 793.74 0.00 0.0% 450,000 1,174.44 211.50 1,385.94 1,174.44 211.50 1,385.94 0.00 0.0% 600,000 1,526.94 282.00 1,808.94 1,526.94 282.00 1,808.94 0.00 0.0% B-8 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 3-INCH METER - RECLAIMED WATER USE BASE RATE 233.86$ COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 =N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 233.86 - 233.86 233.86 - 233.86 0.00 0.0% 20,000 280.86 9.40 290.26 280.86 9.40 290.26 0.00 0.0% 80,000 421.86 37.60 459.46 421.86 37.60 459.46 0.00 0.0% 100,000 468.86 47.00 515.86 468.86 47.00 515.86 0.00 0.0% 150,000 586.36 70.50 656.86 586.36 70.50 656.86 0.00 0.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 4-INCH METER - RECLAIMED WATER USE BASE RATE 365.41$ COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 =N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 365.41 - 365.41 365.41 - 365.41 0.00 0.0% 220,000 882.41 103.40 985.81 882.41 103.40 985.81 0.00 0.0% 300,000 1,070.41 141.00 1,211.41 1,070.41 141.00 1,211.41 0.00 0.0% 450,000 1,422.91 211.50 1,634.41 1,422.91 211.50 1,634.41 0.00 0.0% 600,000 1,775.41 282.00 2,057.41 1,775.41 282.00 2,057.41 0.00 0.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 6-INCH METER - RECLAIMED WATER USE BASE RATE 730.83$ COMMODITY RATE: TIER 1 = 2.35$ FOR ALL WATER USAGE TIER 2 = N/A TIER 3 =N/A TIER 4 = N/A GALLONS CURRENT CURRENT CURRENT PROPOSED PROPOSED PROPOSED TOTAL PERCENT USED IN WATER GPF MONTHLY WATER GPF MONTHLY MONTHLY INCREASED 1 MONTH BILL BILL INCREASE 0 730.83 - 730.83 730.83 - 730.83 0.00 0.0% 900,000 2,845.83 423.00 3,268.83 2,845.83 423.00 3,268.83 0.00 0.0% 5,000,000 12,480.83 2,350.00 14,830.83 12,480.83 2,350.00 14,830.83 0.00 0.0% 10,000,000 24,230.83 4,700.00 28,930.83 24,230.83 4,700.00 28,930.83 0.00 0.0% 15,000,000 35,980.83 7,050.00 43,030.83 35,980.83 7,050.00 43,030.83 0.00 0.0% 20,000,000 47,730.83 9,400.00 57,130.83 47,730.83 9,400.00 57,130.83 0.00 0.0% B-9 APPENDIX C 5-Year Capital Improvement Schedules C-1 Operating Fund C-2 Groundwater Preservation Fee C-3 Water Resource and System Development Impact Fee Fund C-1 C-2 C-3 APPENDIX D Assumptions for Proposed Financial Scenario D-1 Operating Fund D-4 Water Resource and System Development Impact Fee Fund PROPOSED FINANCIAL SCENARIO ASSUMPTIONS FOR THE WATER UTILITY’S OPERATING FUND The Operating Fund is the primary fund for the Water Utility. The sources of revenue are water sales, service- related charges and Groundwater Preservation Fees (GPF). Expenses for administration, operations, existing system improvements and debt service are accounted for in this fund. Beginning Cash Balance The beginning cash balance is estimated based on budgeted revenues, expenses and known cost over runs for FY 2023/24. Actual cash balances on the 6/30/23 balance sheet is added to budgeted revenues, less budgeted expenses and known unbudgeted expenses. Cash Reserve Requirement Mayor and Town Council Water Policies require the Utility to maintain cash reserves in the Operating Fund of not less than 20% of the combined total of the annual budgeted amounts for personnel, O&M and debt service. This specifically excludes expenses for capital projects, depreciation, amortization, and contingency. Growth Projections New Development growth projections for FY 2024-25 through FY 2028-29 were based on data provided by the Town’s New Development Permitting Manager and were updated with information from the Town’s Finance Department to be consistent with the Town’s financial forecasting. Connections FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 Single Family Residential 138 197 210 133 84 Irrigation 3 3 3 3 3 Water Sales and Water Use Consumption Trends The average monthly water consumption for a residential customer with a 5/8 -inch water meter in FY 2022-23 was 7,100 gallons per month. To account for the overall average continued decline in water consumption, this analysis assumes 7,000 gallons per month. Projected reclaimed deliveries are based on Water Utility Director estimates. Service-Related Revenues Service-related revenues are based on the proposed FY 2024-25 budget. Service-related revenues include billing for sewer fees on behalf of Pima County Wastewater and the Town’s Storm Water Department. Additionally, other service-related revenues include: late fees, reconnect fees, new service establishment fees, backflow permitting fees, engineering plan review fees and construction inspection fees. Groundwater Preservation Fees (GPF) GPF revenues are based on the water consumption for FY 2022-23. The GPF funds are dedicated to pay for water resources other than groundwater as it relates to debt service, capital costs, CAP delivery costs and water wheeling. D-1 PROPOSED FINANCIAL SCENARIO ASSUMPTIONS FOR THE WATER UTILITY’S OPERATING FUND (continued Interest Income Interest rates are projected at 3% annually over the 5-year pro-forma. The projected interest rate was provided by the Town’s Finance Department. Personnel No new employees were added during the projection period. Annual merit increases are projected to be 3% annually and health care costs are projected to increase by 3% annually. It is projected that the Arizona State Retirement System (ASRS) contribution is projected to increase 1% annually over the five-year projection period. Inflation Rates Inflation rates are projected at 3% annually over the 5-year pro-forma. O&M Potable Expenses These expenses are based on the Water Utility’s budget for FY 2023-24 plus 3% inflation. O&M CAP Wheeling Expenses - Potable This expense includes the fees charged by Tucson Water to wheel the Town’s CAP water through their recharge and recovery system in accordance with an IGA. The increases are projected to be 5.5% annually over the 5- year pro-forma. It is also assumed that the Utility will wheel 2,850 AF annually. O&M CAP Recharge Expenses - Potable This expense is based on the rate schedule adopted by CAP 6/1/23. The figures represent the annual expense to deliver the Utility’s entire allotment of CAP water (10,305 AF) for recharge. O&M Reclaimed Expenses Pursuant to the existing IGA, the reclaimed water is delivered on a non -interruptible basis at an interruptible rate. Inflationary increases of 3% are included annually. The Town delivers more reclaimed water than it is entitled to. To cover this shortfall a cost to purchase additional reclaimed water from Tucson Water has been included annually. Additionally, the O&M expenses include allocations for personnel, administrative costs and fleet service costs. The reclaimed cost allocation model was used to allocate these costs using a variety of methodologies. O&M CAP Capital Expenses This expense is paid for from the GPF funds and is based on 7,305 AF per the rate schedule adopted by CAP 6/1/23. D-2 PROPOSED FINANCIAL SCENARIO ASSUMPTIONS FOR THE WATER UTILITY’S OPERATING FUND (continued Capital Improvement Program (CIP) – Existing System Improvements The capital costs associated with Existing System Improvements CIP are primarily to ensure continued reliability and efficiency of the Utility’s water system. These costs are determined as part of an annual review of the water system. $10.1 million in capital costs for existing system improvements are included in the 5 -year projection period. Capital Improvement Program (CIP) – NWRRDS A portion of the capital costs associated with the NWRRDS CIP are paid for by GPF funds. The NWRRDS CAP delivery system will be capable of delivering up to an additional 4,000 acre-feet per year of CAP water into Oro Valley’s water service area. The 5-year pro-forma is based on Engineering cost estimates. Debt Service The following table identifies the existing debt service included in this pro forma: Bonds Type Description Amortization Schedule By 2014 Sr. Lien AMI Project WIFA 2015 Excise Tax Refunding (2005) Stifel & Nicolaus & Co. 2017 Excise Tax Refunding (2007) Stifel & Nicolaus & Co. 2018 Excise Tax Existing System CIP Stifel & Nicolaus & Co. 2021 Sr. Lien Refunding (WIFA & 2012) Stifel & Nicolaus & Co. New debt in the amount of $8 million is proposed in FY 2024/25 for the NWRRDS project. Repayment will be made with Groundwater Preservation Fees (GPF). Minimum Debt Service Coverage Requirement 1.30 debt service coverage ratio for Sr. Lien Bonds & all WIFA Loans D-3 PROPOSED FINANCIAL SCENARIO ASSUMPTIONS FOR THE WATER UTILITY’S WATER RESOURCE AND SYSTEM DEVELOPMENT IMPACT FEE (WRSDIF) FUND The WRSDIF fund accounts for development impact fees that are collected at the time a new water meter is purchased. This impact fee is intended to fund costs for water resources, the infrastructure to deliver those resources and any related debt including CAP capital infrastructure repayment related to new development. Beginning Cash Balance The beginning cash balance is estimated based on budgeted revenues, expenses and known cost over runs for FY 2023-24. Actual cash balances on the 6/30/23 balance sheet is added to budgeted revenues, less budgeted expenses. Growth Projections New Development growth projections for FY 2024-25 through FY 2028-29 were based on data provided by the Town’s New Development Permitting Manager and were updated with information from the Town’s Finance Department to be consistent with the Town’s financial forecasting. Service Units FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 Single Family Residential SU’s 138 197 210 133 84 Other SU’s 7.5 7.5 7.5 7.5 7.5 Interest Income Interest rates are projected at 3% annually over the 5-year pro-forma. O&M CAP Capital Expenses This expense is based on 3,000 AF per the rate schedule adopted by CAP on 6/1/23. Capital Improvement Program (CIP) – NWRRDS A portion of the capital costs associated with the NWRRDS CIP are paid for by the WRSDIF Impact fees. The NWRRDS CAP delivery system will be capable of delivering up to an additional 4,000 acre-feet per year of CAP water into Oro Valley’s water service area. The 5-year pro-forma is based on Engineering cost estimates. Debt Service The following table identifies the existing debt service included in this pro forma: Bonds Type Description Amortization Schedule By 2021 Sr. Lien Refunding (WIFA & 2012) Stifel & Nicolaus & Co. New debt in the amount of $12 million is proposed in FY 2024/25 for the NWRRDS project. Repayment will be made with WRSDIF funds. Debt Service Coverage 1.30 debt service coverage ratio for Sr. Lien Bonds D-4 APPENDIX E Development Impact Fee Schedule E-1 Water Resource and System Development Impact Fees Notice of Intent to Increase Water Rates FY 2024-25 By: Peter A. Abraham, P.E. March 6, 2024 Notice of Intent to Increase Water Rates 2 Adoption of NOI pursuant to A.R.S. § 9-511.01 Begins formal process to increase water rates Adoption of NOI does not increase or modify water rates Makes the 2024 Water Rates Analysis Report available for public review Placed in Town Clerk’s office Placed on Water Utility website Placed in Water Utility’s lobby Directs the Town Clerk to publish the resolution in a newspaper of general circulation at least 20 days prior to the public hearing Establishes a public hearing date for June 5, 2024 Rate Drivers 3 What is driving a water rate increase? Increasing water resource costs: CAP deliveries (20%), COT CAP wheeling costs (5.5%), O&M Costs (3%) Revenue shortfall in fiscal year 2022/23 ($843,000) Cash funding existing system improvements over the 5-year projection period ($10.1 M) Cash reserve requirements Utility must maintain an operating cash reserve requirement of 20% of personnel, O&M and debt Cash reserves and end of FY must exceed cash reserve requirement Water rate report is now available to the public Proposed Potable Water Rates and Fees Proposed Potable Water Base Rate Increase: Water base rates increase by meter size: 87% of customers have a 5/8-inch meter and will see a $1.06 per month increase in the base rate Proposed Potable Water Commodity Rate Increase: Commodity rates: The commodity rate is based on consumption tiers as shown to the right Commodity Tiers For 5/8-inch meter Per 1,000 gallons Current Proposed Increase Tier 1 0 - 7,000 $ 2.65 $ 2.92 $ 0.27 (10%) Tier 2 7,001 – 16,000 $ 3.88 $ 4.85 $ 0.97 (25%) Tier 3 16,001 – 32,000 $ 6.05 $ 8.17 $ 2.12 (35%) Tier 4 Over 32,000 $ 8.80 $ 12.32 $ 3.52 (40%) Meter Size Current Proposed Monthly (in inches)Potable Base Rates Potable Base Rates Increase 5/8 $ 21.14 $ 22.20 $ 1.06 (5%) 3/4 $ 31.69 $ 33.27 $ 1.58 (5%) 1 $ 52.82 $ 55.46 $ 2.64 (5%) 1.5 $ 105.64 $ 110.92 $ 5.28 (5%) 2 $ 169.03 $ 177.48 $ 8.45 (5%) 3 $ 338.03 $ 354.93 $ 16.90 (5%) 4 $ 528.19 $ 554.60 $ 26.41 (5%) 6 $1,056.37 $1,109.19 $ 52.82 (5%) 8 $1,690.20 $1,774.71 $ 84.51 (5%) Proposed Potable Water Commodity Rate Increase: Groundwater Preservation Fee: Increase from $0.90 to $1.00 per 1,000 gallons Potable Water Cost Comparisons 5 Monthly Water Bill Comparisons to Other Water Providers: 87% of Oro Valley Water Utility customers have a 5/8-inch meter and consume an average of 7,000 gallons per month These customers will see an increase to their monthly bill of $3.65 or 7.9% increase Water Provider Cost for 7,000 Gallons Cost for 15,000 Gallons Cost for 25,000 Gallons Cost for 40,000 Gallons Oro Valley Current $45.99 $84.23 $151.56 $277.81 Oro Valley Proposed $49.64 (7.9%)$96.44 (14.50%)$184.82 (22%)$355.57 (28%) Metro Water $56.05 $102.85 $175.90 $301.90 Marana Water $55.50 $104.56 $179.26 $319.81 Tucson Water $55.28 $136.25 $286.19 $585.48 Schedule 6 01/08/24 Commission made a recommendation on water rates 03/06/24 Present Notice of Intent to increase rates to Town Council 03/07/24 Publish public hearing date on Town website – 60 day notice 03/07/24 Publish Notice of Intent in newspaper – 20 day notice 06/05/24 Town Council to hold public hearing on proposed rate increase 07/06/24 New rates become effective – 30 days after adoption 7 Questions?    Town Council Regular Session 2. Meeting Date:03/06/2024   Requested by: Councilmember Nicolson and Vice Mayor Barrett  Submitted By:Mike Standish, Town Clerk's Office Department:Town Clerk's Office SUBJECT: DISCUSSION AND POSSIBLE ACTION REGARDING THE VISTOSO TRAILS NATURE PRESERVE RECOMMENDATION: N/A EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: This item was requested by Councilmember Nicolson and Vice Mayor Barrett. FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to... Attachments No file(s) attached.    Town Council Regular Session 1. Meeting Date:03/06/2024   Requested by: Bayer Vella, Community and Economic Development  Case Number:2301884 SUBJECT: PRESENTATION AND DISCUSSION REGARDING A POTENTIAL ZONING CODE AMENDMENT REGARDING VEHICLE STORAGE FACILITIES RECOMMENDATION: This item is for information and discussion purposes only.  EXECUTIVE SUMMARY: The purpose of this item is to discuss a possible zoning code amendment regarding vehicle storage facilities. The proposed amendment has two primary objectives:  Review vehicle storage as a Permitted Use or a Conditional Use in various zoning districts.  Evaluate associated development standards for vehicle storage facilities.  This code amendment was initiated by the Town Council during its July 19, 2023, Regular Session, to establish a Conditional Use Permit requirement for vehicle storage businesses and parking garages. A recording of the meeting is available online. Staff have occasionally received inquiries from residents regarding allowances to develop standalone vehicle storage facilities to store recreational and luxury vehicles. The Oro Valley Zoning Code defines a "vehicle" as:  "A device in, upon, or by which a person or property is or may be transported or drawn/pulled including self-propelled autonomous vehicles." Transportation devices, as defined in Town Code, encompass vehicle types beyond those typically associated with "vehicles" (e.g. personal vehicles, trucks, and recreational vehicles). Transportation devices also include enclosed trailers, utility trailers, and boats as shown in Figure 1. The various devices shown serve to highlight the different modes in which "a person or property is or may be transported" as such, these modes fall within the definition of a vehicle.       Figure 1: Examples of various vehicle types.   The Oro Valley Zoning Code defines vehicle storage facilities as:  "A facility whose primary purpose is the temporary storage of motor vehicles, including parking garages." Vehicle storage facilities are permitted by right in the zoning districts shown in Figure 2 when it is a primary use. A map illustrating the areas in the Town which allow vehicle storage by right is included as Attachment 1.       Figure 2: Vehicle Storage Facilities Permitted by Zoning Districts  In addition to evaluating Town Code, staff researched zoning code standards from twenty municipalities across the region, state, and nation to develop the proposed code amendment parameters. This study session item is intended to present the research findings and gather feedback on the following proposed amendments:  Require Conditional Use Permits for vehicle storage facilities in C-N, C-1, C-2, R-4, and R-4R zoning districts where it is currently a Permitted Use. 1. Modify allowances to enable vehicle storage facilities in T-P zoning districts as an  Ancillary Use. 2. Refine definitions and development standards for vehicle storage facilities. 3. This item is for discussion only. Staff is seeking feedback on the proposed code amendment, specifically the key topic areas listed above, prior to drafting code language.  BACKGROUND OR DETAILED INFORMATION: In July 2023, Town Council initiated a zoning code amendment to evaluate requiring a Conditional Use Permit (CUP) for vehicle storage businesses and parking garages. This code amendment does not directly correspond to specific General Plan action items, nor is it a pending project from the Town Council’s Strategic Leadership Plan.  Staff evaluated the following key topic areas relative to vehicle storage:  Require Conditional Use Permits for vehicle storage facilities in C-N, C-1, C-2, R-4, and R-4R zoning districts where it is currently a Permitted Use. 1. Modify allowances to enable vehicle storage facilities in T-P zoning districts as an  Ancillary Use. 2. Refine definitions and development standards for vehicle storage facilities. 3. Staff utilized the key areas as a framework to guide research efforts. Information was collected from professional resources and similar jurisdictions to gauge best practices. Research efforts also included an assessment of existing Oro Valley’s Zoning Code standards. A summary of existing code standards, research findings, and proposed amendments is provided below. A. EXISTING CODE STANDARDS I. Key Zoning Code Definitions Examining existing Zoning Code definitions related to vehicle storage was a cornerstone to address the key topic areas. The Zoning Code defines "vehicle storage facilities", "recreational vehicles", and "vehicles". While "parking garage" is not defined as a stand-alone term, it is included under the definition of vehicle storage facility (shown below in Figure 3).     Figure 3: Key Zoning Code definitions related to vehicle storage facilities.   Per Town Code, vehicles are defined as devices which transports a person or property. By definition, transportation types include recreational vehicles, cargo trailers, boats, and airplanes, illustrated below in Figure 4. These various modes fall within the definition of a "vehicle" per Town Code.      Figure 4: Examples of various transportation devices.   Research: Staff reviewed definitions used by other jurisdictions and found Oro Valley's definitions for "vehicle" and "recreation vehicles" to be consistent with similar terms used by other municipalities and the State. The definitions for “recreational vehicles” focused on the technical components of recreational vehicles, such as gross vehicle weight, design of chassis, and facilities for temporary occupancy.  Findings: Staff found the Town’s current Zoning Code definition for “recreational vehicles” provides a distinction between personal and recreational use and is not proposed to be revised as part of the amendment.  II. Permitted Uses and Limitations Vehicle storage facilities as a primary use are permitted by right in the Town’s commercial zoning districts as well as Townhouse Residential District (R-4) and Resort District (R-4R), as shown in Figure 5. Attachment 1 provides a map showing the areas where vehicle storage facilities are currently permitted.   Figure 5: Vehicle Storage Facilities Permitted by Zoning Districts  Research: Jurisdictions commonly restrict vehicle storage facilities and parking garages to commercial and industrial zoning districts. Vehicle storage facilities (i.e. parking garages and RV storage yards) are predominantly allowed as a Permitted use, while some jurisdictions require a CUP, as shown in Figure 6.    Figure 6: Vehicle Storage Facilities Permitted by Jurisdictions  Currently, Oro Valley requires a CUP for vehicle repair facilities and car rental agencies with more than ten (10) vehicles stored on site. Vehicle repair shops are subject to Section 25.1B.31, which restricts outside storage of trailers, trucks, and similar equipment. Car rental agencies with less than ten (10) vehicles must adhere to off-street parking standards in Section 27.7 and are subject to Section 25.1.B.30 which requires parking lots used to store vehicles to meet the landscape screening requirements in Section 27.6 .  Findings: Jurisdictions commonly designate vehicle storage facilities as a permitted use in commercial zoning districts. Vehicle storage facilities are typically a low-impact use when vehicles are adequately screened from public view. There are, however, locations where such facilities may not be appropriate and compatible with surrounding uses. The CUP process enables site specific analysis and compatibility via case-by-case customization of conditions for approval.   B. POTENTIAL ZONING AMENDMENTS Staff developed the proposed code amendments based on research findings and existing standards. The Staff developed the proposed code amendments based on research findings and existing standards. The objective of this study session is to gather feedback on the following potential zoning amendments listed below: Potential Amendment 1: Require Conditional Use Permits for vehicle storage facilities in C-N, C-1, C-2, R-4, and R-4R zoning districts where it is currently a Permitted Use. Discussion: Vehicle storage facilities as a primary use are currently permitted by right in C-N, C-1 and C-2 commercial zoning districts and in the R-4 Townhouse Residential and R-4R Resort zoning districts. Figure 7  illustrates the areas in the Town where vehicle storage is by right (also included as Attachment 1). The map is also available as Attachment 1. The areas where vehicle storage is permitted by right are predominantly located in areas typically associated with commercial uses, such as along Oracle Road and portions of Tangerine Road. Other areas to highlight are along the northern portions of La Canada Drive and La Cholla Boulevard which are typically associated with residential areas.    Figure 7: Zoning map for vehicle storage as a permitted use.  This potential amendment item is intended to ensure developments are a fit for the area, compatible with surrounding uses, and are consistent with existing land use intensities. Surrounding Southern Arizona jurisdictions restrict vehicle storage facilities to commercial zoning districts. Staff finds vehicle storage facilities are not compatible nor a fit in R-4 and R-4R zoning districts. However, removing or reducing entitlements requires  scrutiny that balances compatibility with legal considerations. Staff proposes to modify allowances for C-N, C-1, C-2, R-4, and R-4R from Permitted Use to Conditional Use.  Requiring a Conditional Use Permit (CUP) will allow the Town to regulate the placement and design of storage facilities to ensure compatibility with land uses and preserve the character of the surrounding community. This is not the case when permitted by right as the Zoning Code currently allows. Properties in these zoning districts have entitlements to develop standalone vehicle storage facilities provided plans are in compliance with Zoning Code requirements.  Currently, the Zoning Code does not stipulate limits for the number of vehicles stored on site. A survey of other jurisdictions found parking limits for vehicle storage is not a common practice. Limits may be established to tailor fit any given location through potential CUP conditions. The CUP process allows for a case-by-case review which can limit the size and placement of storage facilities. This is not the case when the use is permitted by right. Recommendation: Staff recommends requiring a CUP for vehicle storage facilities in all C-N, C-1, C-2, R-4, R-4R zoning districts, where it is currently a Permitted Use. Potential Amendment 2: Modify allowances to enable vehicle storage facilities in T-P zoning districts as an Ancillary Use.  Discussion: Ancillary Uses are another use type (in addition to Permitted Use and CUP) enabled by the Zoning Code and serve as a "...subordinate or secondary use to a primary use". For example, on-site parking of fleet vehicles for a Tech-Park research and development company would be considered "Ancillary" as a subordinate use to the primary use which is the office. The Zoning Code currently does not allow vehicle storage facilities as an Ancillary Use in any zoning district. Staff determined that there are occasions where vehicle storage may be a reasonable need in T-P zoning district. Recommendation: Staff recommends allowing vehicle storage facilities in T-P zoning districts as an Ancillary Use. These changes are outlined in orange in Figure 8 below.   Figure 8: Proposed changes to vehicle storage facility uses.   Potential Amendment 3: Refine definitions and development standards for vehicle storage facilities. Discussion: The proposed amendment aims to strengthen the existing code language for vehicle storage facilities. Development standards, such as screening requirements, are keystone zoning requirements to ensure compatibility with the surrounding area, preserve neighborhood character, and help to mitigate nuisances. Currently, vehicle storage must adhere to outdoor storage requirements outlined in Section 25.1.A.4, which states:   "All operations and storage, except as provided in subsection A.4.d of this section, outdoor displays, shall be conducted within a completely enclosed building or within an opaque barrier designed to match the main building on the site." The principal specifications for outdoor storage require that items are stored behind an "enclosed building" or stored behind an "opaque barrier" which is typically a masonry wall in application. Staff has consistently interpreted this provision to mean that whatever is being stored, regardless of height, must be entirely shielded from view. This provision should be made more clear so interpretation is not necessary. Currently, the Zoning Code does not provide development standards or requirements for storage of trailers, trucks, and vehicles. Vehicle storage requirements are addressed in Section 25.1.B.30  for car rental agencies and in Section 25.1B.31 for repair shops. It provides additional requirements regarding screening requirements, minimum distance from residential properties, and parking restrictions. The proposed code amendment provides an opportunity to clarify development standards for vehicle storage facilities, such as screening wall heights, in addition to the outdoor storage requirements listed in Section 25.1.A.4.  The requirement for a screening wall is a paramount development standard to mitigate the visual impact of stored vehicles. Figure 9 below shows a conceptual rendering of a screening wall of a formerly proposed vehicle storage facility in Town. Notably, the image illustrates the functionality of the screen wall as it serves to shield business operations from public view while maintaining the aesthetic qualities of the development architecture. Additionally, the screen wall conceals the vehicle types stored on site as such, mitigating impacts to surrounding properties regardless of transportation mode.      Figure 9: Conceptual rendering of screening wall for vehicle storage facility Life Storage Mercado Del Rio   Recommendation: Staff recommends clarifying the Zoning Code language for outdoor storage in Section 25.1.A.4 to specify requirements that apply to vehicle storage. Additionally, Staff also recommends requiring wall heights must extend to the height of the tallest vehicle that will be stored on site (e.g. passenger vehicles, RV's, etc.).  C. Planning and Zoning Commission The potential amendments were presented to the Planning and Zoning Commission on January 16, 2024, for discussion and feedback. A recording of the meeting is available online.  Comments and feedback from the Planning and Zoning Commission will be addressed by refining the potential amendment items to develop specific Zoning Code changes. Feedback focused on the benefits of allowing vehicle storage facilities by CUP rather than Permitted Use, associated development standards, and next steps for public involvement. Planning staff will begin drafting amendments to the Zoning Code once feedback is received from Town Council. D. Summary This item is being presented for discussion to obtain feedback from Town Council, specifically regarding the potential amendments listed below.   Require Conditional Use Permits for vehicle storage facilities C-N, C-1, C-2, R-4, and R-4R zoning districts where it is currently a Permitted Use. 1. Modify allowances to enable vehicle storage facilities in T-P zoning districts as an  Ancillary Use. 2. Refine definitions and development standards for vehicle storage facilities. 3. Planning Staff will utilize feedback to refine the potential amendments prior to drafting code language. Zoning Code changes will be presented at a public hearing to the Planning and Zoning Commission and ultimately to Town Council for consideration.  FISCAL IMPACT: N/A SUGGESTED MOTION: This item is for information and discussion purposes only. Attachments Attachment 1: Vehicle Storage Facilities Map  Staff Presentation  Study Session Proposed Code Amendment Vehicle Storage Facilities Town Council March 6, 2024 1 Purpose Town Council initiated Zoning Code Amendment Evaluate vehicle storage as a Conditional Use Permit (CUP) rather than a Permitted Use. Gather feedback on the proposed code amendment items: 1.Require CUP for vehicle storage facilities in C-N, C-1, C-2, R-4, and R-4R zoning districts. 2.Enable vehicle storage facilities in T-P zoning districts as an Ancillary Use. 3.Refine definitions and development standards. Discussion and feedback Photo: Arizona Self Storage, Oro Valley, AZ 2 Key Zoning Code Definitions Vehicle Storage Facilities: “a facility whose primary purpose is the temporary storage of motor vehicles, including parking garages.” Vehicles: “A device in, upon, or by which a person or property is or may be transported or drawn/pulled including self-propelled autonomous vehicles.” 3 Vehicle Storage Facilities Standalone vehicle storage facilities, as a primary use, do not exist in Town. Two (2) self-storage facilities offer vehicle storage as an Ancillary use. Photo: Arizona Self Storage, Oro Valley, AZ Self Storage Service (Primary Use) Vehicle Storage (Ancillary Use) 4 Existing Code Vehicle Storage Facilities and Parking Garages Permitted Uses by Zoning Districts Zoning District Permitted Use Commercial Commercial Neighborhood (C-N)P Commercial District 1 (C-1)P Commercial District 2 (C-2)P Multi-Family Residential Townhouse Residential District (R-4) P Resort District (R-4R)P 5 Tangerine Rd. Moore Rd. Naranja Dr. Magee Rd. Lambert Ln.La Canada Dr.Oracle Rd.Rancho Vistoso Blvd. Vehicle Storage By Right Town Boundary Permitted UseIna Rd. Research Permitted Use Jurisdictional Research –Commercial Districts Jurisdiction Permitted Use Permitted Use Conditional Use Permit Oro Valley Vehicle Storage Facility (including parking garages) P Buckeye Parking Structure P Buckeye Vehicle Storage C Fountain Hills Vehicle Storage C Sahuarita Vehicle Storage P Tucson Vehicle Storage P Chula Vista Recreation Vehicle Storage Yard C Irvine Vehicle Storage P Sonoma Recreational Storage P Existing Oro Valley Zoning Code Review of code standards for other jurisdictions: Oro Valley, AZ Pima County, AZ Marana, AZ Sahuarita, AZ Tucson, AZ Buckeye, AZ Cave Creek, AZ Flagstaff, AZ Fountain Hills, AZ Paradise Valley, AZ Chula Vista, CA Irvine, CA Maple Heights, OH Sonoma County, CA 6 Potential Amendment #1: Require Conditional Use Permits for vehicle storage facilities in C-N, C-1, C-2,R-4, and R-4R zoning districts. Existing Code: Permitted by right in zoning districts not typically associated with vehicle storage. Discussion: CUP process allows control over design and placement. Permitted use entitles code compliant developments. Staff Recommendation: Modify allowances for vehicle storage facilities as a Conditional Use. Vehicle Storage Facilities and Parking Garages Permitted Uses by Zoning Districts Zoning District Permitted Use Proposed Changes Non-Residential Districts Commercial Neighborhood (C-N)P C Commercial District 1 (C-1)P C Commercial District 2 (C-2)P C Multi-Family Residential Districts Townhouse Residential District (R-4) P C Resort District (R-4R)P C Potential Amendments 7 Potential Amendment #2: Enable vehicle storage facilities in T-P zoning districts as an Ancillary Use. Existing Code: Permitted use in commercial districts. Discussion: Industrial land use intensity allowed in Tech Park (T-P) consistent with commercial uses. Ancillary uses requires establishment of a primary use. Staff Recommendations: Allow vehicle storage facilities in T-P as an Ancillary use. Potential Code Amendments PARKING FLEET STORAGE COMMERCIAL OFFICES Existing Code: Vehicle storage currently follow Section 25.1.A.4 requirements for outdoor storage. Discussion: Development standards require effective transitions between land uses. Well designed screening reduces visual impacts and obscures vehicles stored on site. Staff Recommendation: Incorporate clear and specific requirements to achieve the following: Architectural treatment of walls to ensure compatible design Screen wall heights to reach maximum height of vehicles stored Potential Code Amendments Potential Amendment #3: Refine definitions and development standards. 9 Discussion and Feedback #1: Require Conditional Use Permits for vehicle storage facilities in C-N, C-1, C-2,R-4, and R-4R zoning districts. #2: Enable vehicle storage facilities in T-P zoning districts as an Ancillary Use. #3: Refine definitions and development standards. Vehicle Storage Facilities and Parking Garages Permitted Uses by Zoning Districts Zoning District Currently Permitted Proposed Changes Non-Residential Districts Commercial Neighborhood (C-N)P C Commercial District 1 (C-1)P C Commercial District 2 (C-2)P C Technological Park (T-P)A Multi-Family Residential Districts Townhouse Residential District (R-4) P C Resort District (R-4R)P C P –Permitted; C –Conditional Use Permit; A –Ancillary 10 11