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HomeMy WebLinkAboutPackets - Council Packets (1933)         AGENDA ORO VALLEY TOWN COUNCIL REGULAR AND STUDY SESSION MARCH 5, 2025 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 Spotlight on Youth   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.Recognition of outgoing Board and Commission Members   2.Presentation and possible discussion of the Town's FY 24/25 Quarterly Financial Update through December 2024   3.Presentation and possible discussion regarding the Town's preliminary five-year financial forecast through FY 2029/2030   CONSENT AGENDA  (Consideration and/or possible action)   A.Minutes - February 13 and February 19, 2025   B.Resolution No. (R)25-05, delegating authority to the Oro Valley Chief of Police to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund overtime and mileage under the Operation Stonegarden program   C.Resolution No. (R)25-06, delegating authority to the Oro Valley Chief of Police to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund equipment under the Operation Stonegarden program   D.Appointment to the Budget and Finance Commission (BFC)   REGULAR AGENDA   1.RESOLUTION NO. (R)25-07, PROVIDING NOTICE OF INTENT TO INCREASE THE POTABLE WATER BASE RATES AND INCREASE THE POTABLE WATER COMMODITY RATES FOR THE ORO VALLEY WATER UTILITY   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.DISCUSSION REGARDING COMMUNITY AND ECONOMIC DEVELOPMENT STAFF REPORT REGARDING ORO VALLEY RETAIL AND RESTAURANT GAP ANALYSIS   ADJOURNMENT OF STUDY SESSION   RESUME REGULAR SESSION   EXECUTIVE SESSION   1.Pursuant to A.R.S. 38-431.03 (A)(4) to discuss and consult with its representatives concerning contract negotiations for the acquisition of property   RESUME REGULAR SESSION   CALL TO ORDER   REGULAR AGENDA   2.APPROVAL OF ANY DIRECTION TO THE TOWN ATTORNEY AND/OR NECESSARY STAFF AS DISCUSSED IN EXECUTIVE SESSION PERTAINING TO CONTRACT NEGOTIATIONS FOR THE ACQUISITION OF PROPERTY   ADJOURNMENT   POSTED: 2/27/25 at 5:00 p.m. by dt The Mayor and Council may, at the discretion of the meeting chairperson, discuss any Agenda item. 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:03/05/2025   Recognition of outgoing Board and Commission Members Subject Recognition of outgoing Board and Commission Members Summary Budget and Finance Commission Gerald LeMay January 2023 - December 2024 Historic Preservation Commission Puntadeleste Bozeman December 2020  - January 2024 Joan Pliego September 2022 - March 2024 Karen Giuffre January 2024 - January 2024 Auvie Lee May 2021 - December 2024 Parks and Recreation Advisory Board Gary Temple January 2023 - December 2024 Antonia Landau January 2021 - December 2024 Stormwater Utility Commission Gary Mattson January 2021 - December 2024 Water Utility Commission Kay Lantow January 2023 - June 2024 Patricia Olson  March 2022 - December 2024   Attachments No file(s) attached.    Town Council Regular Session 2. Meeting Date:03/05/2025   Presentation and possible discussion of the Town's FY 24/25 Quarterly Financial Update through December 2024 Subject Presentation and possible discussion of the Town's FY 24/25 Quarterly Financial Update through December 2024 Summary Please reference the attachments to this agenda item. Attachments December 2024 Monthly Financial Report  Town Manager’s Office TOWN COUNCIL REPORT DATE: February 12, 2025 TO: Mayor and Council FROM: Jeff Wilkins, Town Manager David Gephart, Chief Financial Officer SUBJECT: December 2024 Financial Update This financial update is intended to provide an overview and status of revenues and expenditures for the Town’s selected funds through December 2024 for fiscal year 2024/25. Funds included in this financial update are the General Fund, Highway Fund, Community Center Fund and Capital Fund. Also included are the two enterprise funds, Water and Stormwater. Please note that all amounts are preliminary, un- audited and subject to change. Additionally, figures may not include any adjusting audit entries required at year-end. Please note the new format of the report. Pages 1-15 are the financial status reports for the funds. Appendix 1 and 2 provide further details on golf activity and contractor performance. Appendix 3 is the consolidated report of all Town funds. Appendix 4 is the General Fund sales tax collections. Appendix 5 is the General Fund state shared revenues. Appendix 6 is a breakdown of the Town’s outstanding debt service principal and interest payments. Appendix 7 is a summary of operating investment values and earnings by month. Appendix 8 lists the specific infrastructure projects that are eligible to receive funding from impact fees. General Fund Financial Status Fiscal Year to Date: December 2024 Revenues ` Amount Percent Local Sales Tax 13,315,962$ 12,813,938$ 28,708,825$ (15,894,887)$ 45% 27,374,126$ State Shared Revenues 11,237,689 10,117,909 20,432,937 (10,315,028) 50% 20,556,369 Licenses & Permits 969,704 925,527 1,673,022 (747,495) 55% 1,793,735 Grants 255,957 233,797 659,982 (426,185) 35% 567,929 Intergovernmental 710,135 400,602 1,981,555 (1,580,953) 20% 2,141,306 Charges for Service 1,510,151 1,483,599 2,966,467 (1,482,868) 50% 3,081,369 Other Revenue 681,859 988,895 684,000 304,895 145% 1,535,680 Total Revenues 28,681,457$ 26,964,266$ 57,106,788$ (30,142,522)$ 47% 57,050,514$ Uses Amount Percent Personnel Services 15,878,686$ 16,272,090$ 36,476,126$ 20,204,036$ 45% 35,507,892$ Operations and Maintenance 6,924,472 7,094,456 14,780,325 7,685,869 48% 14,380,325 Capital Outlay 173,398 88,139 531,600 443,461 17% 516,600 Transfers Out 7,136,644 5,458,073 9,403,341 3,945,269 58% 9,153,341 Total Uses 30,113,200$ 28,912,757$ 61,191,392$ 32,278,635$ 47% 59,558,158$ Change in Fund Balance Total Revenues 28,681,457$ 26,964,266$ 57,106,788$ 57,050,514$ 57,050,514$ Total Uses (30,113,200) (28,912,757) (61,191,392) (59,558,158) (59,558,158) Change in Fund Balance (1,431,743)$ (1,948,491)$ (4,084,604)$ (2,507,644)$ (2,507,644)$ Estimated Beginning Fund Balance 22,081,503$ Estimated Ending Fund Balance 17,996,899$ 19,573,859$ 19,573,859$ Note: The estimated ending fund balance exceeds the Town's 30% expenditure reserve policy by a margin of $4.3 million. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget FY 2024/25 Budget Year End Estimate Year End Estimate Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget FY 2023/24 Actuals FY 2024/25 Actuals Page 1 of 15 General Fund Financial Status Fiscal Year to Date: December 2024 Local Sales Tax Revenue Amount Percent Construction 2,971,796$ 2,214,393$ 5,875,681$ (3,661,288)$ 38% 4,528,787$ Utilities 2,129,829 2,235,783 4,097,824 (1,862,041) 55% 4,223,963 Retail 4,354,157 4,431,208 9,447,680 (5,016,471) 47% 9,238,141 Remote Seller 945,258 885,636 1,914,724 (1,029,088) 46% 1,908,116 Bed Tax 881,403 954,090 2,464,858 (1,510,768) 39% 2,501,844 Restaurant & Bar 1,253,794 1,283,468 2,726,271 (1,442,803) 47% 2,839,341 Other 598,714 642,439 1,465,987 (823,548) 44% 1,474,287 Cable Franchise 181,011 166,920 715,800 (548,880) 23% 659,647 Local Sales Tax Total 13,315,962$ 12,813,938$ 28,708,825$ (15,894,887)$ 45% 27,374,126$ State Shared Revenue Amount Percent State Income Tax 6,389,741$ 5,138,550$ 10,276,631$ (5,138,081)$ 50% 10,276,631$ State Sales Tax 3,553,767 3,585,804 7,300,876 (3,715,072) 49% 7,347,547 Vehicle License Tax 1,157,987 1,255,378 2,520,803 (1,265,425) 50% 2,642,901 Smart and Safe 136,194 138,177 334,627 (196,450) 41% 289,289 State Shared Total 11,237,689$ 10,117,909$ 20,432,937$ (10,315,028)$ 50% 20,556,369$ Total local sales tax revenues are performing lower than expected primarily due to construction sales tax. Residential home construction has slowed compared to the prior year, as anticipated. Consequently, the year-end revenue estimate has been adjusted downward to reflect reduced year-to-date commercial and residential construction activity. Although aggregate retail and remote seller sales have outperformed the prior year, they are currently tracking below the original forecasts. Restaurant/bar and utility revenues are better than originally anticipated. Bed tax is expected to slightly exceed the original forecast due to payment of back taxes from the prior year. Please refer to Appendix 4 for a detailed breakdown of General Fund local sales tax collections. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget State shared income tax revenues are expected to align with the budget, as they are calculated based on actual tax collections from the previous two years. State shared sales tax and vehicle license tax revenues are trending slightly above budget. Revenues from the state retail excise tax on recreational marijuana ("Smart and Safe" revenues) are currently tracking below budget projections based on actual collections. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Year End Estimate $5.1 $3.6 $1.3 $0.1 $0 $2 $4 $6 $8 $10 $12 State Income Tax State Sales Tax Vehicle License Tax Smart and SafeMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget $2.2 $2.2 $4.4 $0.9 $1.0 $1.3 $0.6 $0.2$0 $2 $4 $6 $8 $10 Millions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 2 of 15 General Fund Financial Status Fiscal Year to Date: December 2024 Licenses & Permits Revenue Amount Percent Business Licenses & Permits 117,882$ 131,172$ 200,200$ (69,028)$ 66% 250,000$ Residential Building Permits 599,602 491,291 951,806 (460,515) 52% 983,879 Commercial Building Permits 172,044 182,822 360,856 (178,034) 51% 360,856 Other Building Permits and Fees 80,177 120,243 160,160 (39,917) 75% 199,000 Licenses & Permits Total 969,704$ 925,527$ 1,673,022$ (747,495)$ 55% 1,793,735$ Grants Revenue Amount Percent Federal grants 178,600$ 198,951$ 509,415$ (310,464)$ 39% 498,171$ State Grants 77,357 34,846 150,567 (115,721) 23% 69,758 Grants Total 255,957$ 233,797$ 659,982$ (426,185)$ 35% 567,929$ Licenses & permit revenues are trending greater than budget. A total of 60 Single Family Residential (SFR) permits have been issued through December (95 budgeted for the year). Other building permit and fee revenues are exceeding expectations, primarily due to higher-than-anticipated grading permit fees. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Grant revenues are trending lower than expected as some grants are not expected to fully utilize in the current year. A significant portion of the budgeted grants are allocated to the Police Department. These grants can fluctuate based on factors such as officer scheduling, overtime, and the timing of reimbursements and awards from grant programs. About $75,000 of budgeted state grants is related to school resource officer reimbursements for Leman Academy. FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate FY 2023/24 Actuals $0.1 $0.5 $0.2 $0.1 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 Business Licenses & Permits Residential Building Permits Commercial Building Permits Other Building Permits and FeesMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget $0.2 $0.0 $0.0 $0.2 $0.4 $0.6 Federal grants State GrantsMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 3 of 15 General Fund Financial Status Fiscal Year to Date: December 2024 Intergovernmental Revenue Amount Percent School Resource Officers 79,585$ 77,436$ 90,000$ (12,564)$ 86% 249,751$ RTA Reimbursements 630,550 323,166 1,886,000 (1,562,834) 17% 1,886,000 PC Library District Reimburse - - 5,555 (5,555) - 5,555 Intergovernmental Total 710,135$ 400,602$ 1,981,555$ (1,580,953)$ 20% 2,141,306$ Charges for Service Revenue Amount Percent Enterprise Funds Cost Allocation 915,732$ 850,880$ 1,701,759$ (850,880)$ 50% 1,701,759$ Recreation Fees 408,559 448,118 856,640 (408,522) 52% 982,540 Development Fees 49,168 41,403 92,100 (50,697) 45% 88,080 Court Fees 61,300 70,145 155,000 (84,855) 45% 140,000 Other 75,392 73,053 160,968 (87,915) 45% 168,990 Charges for Service Total 1,510,151$ 1,483,599$ 2,966,467$ (1,482,868)$ 50% 3,081,369$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Collections for this revenue category typically lag throughout the year. RTA reimbursements from the Regional Transportation Authority for Sun Shuttle Dial-a-Ride operations in Oro Valley will vary based on ridership. RTA reimbursements recorded through December are for only two months as RTA is behind in paying invoices. A new agreement effective January 2025 between the Town and Amphitheater School District to provide three additional School Resource Officers (SROs) will generate revenue exceeding budget projections. These payments are based on actual hours worked at the schools, and as such, they are limited to the school year. Cost allocation charges to the Town’s enterprise funds for services provided, as well as Parks & Recreation fees, make up the bulk of this revenue category. The enterprise funds cost allocation is the budget amount simply spread out equally over 12 months. Recreation fees are trending greater than budget. $0.1 $0.3 $0.0 $0.0 $0.5 $1.0 $1.5 $2.0 School Resource Officers RTA Reimbursements PC Library District ReimburseMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget $0.9 $0.4 $0.0 $0.1 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 Enterprise Funds Cost Allocation Recreation Fees Development Fees Court Fees OtherMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 4 of 15 General Fund Financial Status Fiscal Year to Date: December 2024 Other Revenue Amount Percent Fines 26,975$ 33,334$ 55,000$ (21,666)$ 61% 68,000$ Interest Earnings 309,850 420,465 400,000 20,465 105% 750,000 Miscellaneous 345,034 535,095 229,000 306,095 234% 717,680 Other Revenue Total 681,859$ 988,895$ 684,000$ 304,895$ 145% 1,535,680$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Interest earnings have already exceeded budget through December. Miscellaneous revenue exceeded budget due to a one-time rebate received from the Arizona Municipal Risk Retention Pool (AMRRP). $0.0 $0.4 $0.5 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Fines Interest Earnings MiscellaneousMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 5 of 15 General Fund Financial Status Fiscal Year to Date: December 2024 Expenditures by Department Amount Percent Clerk 187,455$ 254,270$ 564,954$ 310,684$ 45% 512,940$ Community & Econ. Dev. 1,546,245 1,661,659 4,289,037 2,627,378 39% 4,042,094 Council 123,402 134,003 241,102 107,099 56% 226,102 Finance 382,982 409,082 867,767 458,685 47% 866,093 Non-Departmental 1,093,983 1,478,720 3,048,603 1,569,883 49% 3,048,603 Human Resources 279,994 310,802 764,005 453,203 41% 715,497 Information Technology 3,457,668 3,293,047 6,022,838 2,729,791 55% 5,844,489 Legal 487,310 511,721 1,175,969 664,248 44% 1,122,062 Town Manager 674,062 758,902 1,742,926 984,024 44% 1,695,413 Parks & Recreation 2,038,699 2,202,222 4,782,096 2,579,874 46% 4,699,058 Police 9,349,946 9,171,985 20,220,736 11,048,751 45% 19,939,917 Public Works 2,924,382 2,810,744 6,944,467 4,133,723 40% 6,652,735 Town Court 430,428 457,527 1,123,551 666,024 41% 1,039,815 Total Department Expenditures 22,976,556$ 23,454,684$ 51,788,051$ 28,333,367$ 45% 50,404,817$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate $0.3 $1.7 $0.1 $0.4 $1.5 $0.3 $3.3 $0.5 $0.8 $2.2 $9.2 $2.8 $0.5 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Millions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Non‐Departmental:Actual expenditures through December exceed the prior year's levels primarily because of two factors: 1) A shift in accounting practices for  General Fund insurance premiums, which are now fully recorded in Non‐Departmental rather than allocated across departments. 2) Increased vehicle replacement reserves due to growth in the fleet and rising vehicle prices. Departments are currently operating within budget, and personnel cost savings are projected due to vacancies, turnover, and variations in employee benefit  selections. Please note that Council and IT typically have significant upfront costs at the beginning of the year. Page 6 of 15 Highway Fund Financial Status Fiscal Year to Date: December 2024 Sources ` Amount Percent Licenses & Permits 10,710$ 21,232$ 25,000$ (3,769)$ 85% 37,000$ Highway User Revenue 2,051,193 2,056,452 4,283,146 (2,226,694) 48% 4,288,907 Interest Earnings 101,199 49,732 150,000 (100,268) 33% 100,000 Miscellaneous 12,568 2,835 3,000 (165) 95% 3,231 Transfers In - 2,000,000 4,000,000 (2,000,000) 50% 4,000,000 Total Sources 2,175,670$ 4,130,250$ 8,461,146$ (4,330,896)$ 49% 8,429,138$ Expenditures Amount Percent Personnel 579,523$ 604,295$ 1,333,798$ 729,503$ 45% 1,322,820$ O&M 419,324 500,478 1,306,505 806,027 38% 1,256,505 Capital Outlays 2,624,343 1,994,848 5,456,000 3,461,152 37% 5,451,000 Total Expenditures 3,623,190$ 3,099,621$ 8,096,303$ 4,996,682$ 38% 8,030,325$ Change in Fund Balance Total Sources 2,175,670$ 4,130,250$ 8,461,146$ 8,429,138$ Total Expenditures (3,623,190) (3,099,621) (8,096,303) (8,030,325) Change in Fund Balance (1,447,520)$ 1,030,629$ 364,843$ 398,813$ Estimated Beginning Fund Balance 606,047$ Estimated Ending Fund Balance 1,004,860$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Year End Estimate Revenues: Highway User Revenue is trending slightly greater than budget. License and permits are projected to exceed budget due to right-of-way (road) permits. As interest earnings are trending below budget, the year-end estimate has been adjusted accordingly. HURF monies are invested independently and are not commingled with any other Town funds. Therefore, interest earnings are lower than other funds due to a smaller principal balance. Miscellaneous revenue is projected to exceed budget due to insurance recoveries. The planned transfers in of $4 million are from the Capital Fund for road projects. These are recorded evenly over four quarters. Expenditures: Personnel savings are anticipated due to benefit and overtime trends. Operational and maintenance (O&M) savings are projected in street and traffic signal maintenance. Budgeted capital outlays consist of the Town's annual pavement preservation program as well as several capital improvement projects and equipment. Pavement preservation road work began in October and is still underway. $5,000 savings in capital due to the F450 dump bed coming in under budget. Page 7 of 15 Community Center Fund Financial Status Fiscal Year to Date: December 2024 Revenues Amount Percent Local Sales Tax 1,785,176$ 1,807,862$ 3,879,440$ (2,071,578)$ 47% 3,859,524$ Contracted Operating Revenues 2,461,549 2,603,487 5,240,575 (2,637,088) 50% 5,647,950 Town Operating Revenues 594,181 652,793 1,386,052 (733,259) 47% 1,628,464 Other Revenues 26,358 5,324 179,332 (174,008) 3% 167,982 Total Revenues 4,867,264$ 5,069,466$ 10,685,399$ (5,615,933)$ 47% 11,303,920$ Uses Amount Percent Contracted Operating Expenditures 2,796,347$ 2,886,865$ 5,343,893$ 2,457,028$ 54% 5,605,517$ Town Operating Expenditures 833,663 1,044,279 2,204,790 1,160,511 47% 2,286,106 Capital Outlay 735,636 621,249 1,534,749 913,500 40% 1,534,749 Transfers Out 1,717,203 1,717,149 1,717,149 - 100% 1,717,149 Total Uses 6,082,848$ 6,269,542$ 10,800,581$ 4,531,039$ 58% 11,143,521$ Change in Fund Balance Total Revenues 4,867,264$ 5,069,466$ 10,685,399$ 11,303,920$ Total Uses (6,082,848) (6,269,542) (10,800,581) (11,143,521) Change in Fund Balance (1,215,585)$ (1,200,077)$ (115,182)$ 160,399$ Estimated Beginning Fund Balance 1,815,118$ Estimated Ending Fund Balance 1,975,516$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2023/24 Actuals FY 2024/25 Actuals Year End Estimate FY 2024/25 Budget Actual Vs. Budget FY 2024/25 Budget Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Page 8 of 15 Community Center Fund Financial Status Fiscal Year to Date: December 2024 Local Sales Tax Revenue Amount Percent Retail 1,088,539$ 1,107,802$ 2,361,920$ (1,254,118)$ 47% 2,309,535$ Remote Seller 236,315 221,409 478,681 (257,272)$ 46% 477,029 Restaurant & Bar 313,449 320,867 681,568 (360,701) 47% 709,835 Other 146,873 157,784 357,271 (199,487) 44% 363,124 Local Sales Tax Total 1,785,176$ 1,807,862$ 3,879,440$ (2,071,578)$ 47% 3,859,524$ Contracted Operating Revenue Amount Percent Golf Revenue, Trail & Cart Fees 1,186,472$ 1,198,378$ 2,572,302$ (1,373,924)$ 47% 2,905,200$ Member Dues 732,018 838,131 1,501,560 (663,429) 56%1,566,500 Food & Beverage 354,097 377,499 771,858 (394,359) 49%782,750 Merchandise & Other 188,962 189,478 394,855 (205,377) 48% 393,500 Contracted Revenue Total 2,461,549$ 2,603,487$ 5,240,575$ (2,637,088)$ 50% 5,647,950$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2023/24 Actuals FY 2024/25 Actuals Total local sales tax revenues are performing lower than expected primarily due to retail and remote seller sales tax. Although aggregate retail and remote seller sales have outperformed the prior year, they are currently trending slightly below initial projections. Restaurant/bar revenues are performing slightly better than originally anticipated. While other sales tax revenue appears to be falling short of projections through December, we anticipate increased revenue from hotel taxes during the peak travel season. Golf revenues are projected to exceed budget. Through December, 47,390 rounds of golf had been played which is up 8.4% from the prior year and 9.8% greater than budget. Please refer to Appendix 3 for or a more in-depth analysis of golf revenues, expenses, and historical comparisons Actual Vs. Budget Year End Estimate Year End Estimate Note: Estimated sales tax collections on golf operations for FY 2024/25 is $145,079. FY 2024/25 Budget FY 2024/25 Budget Actual Vs. Budget $1.2 $0.8 $0.4 $0.2 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Golf Revenue, Trail & Cart Fees Member Dues Food & Beverage Merchandise & OtherMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget $1.1 $0.2 $0.3 $0.2 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Retail Remote Seller Restaurant & Bar OtherMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 9 of 15 Community Center Fund Financial Status Fiscal Year to Date: December 2024 Town Operating Revenue Amount Percent Daily Drop-Ins 38,443$ 34,369$ 76,000$ (41,631)$ 45% 74,142$ Member Dues 431,457 496,971 832,038 (335,067) 60% 1,086,032 Recreation Programs 76,509 73,531 388,850 (315,319) 19% 379,127 Facility Rental Income 47,772 47,922 89,164 (41,242) 54% 89,164 Town Operating Revenue Total 594,181$ 652,793$ 1,386,052$ (733,259)$ 47% 1,628,464$ Other Revenue Amount Percent Interest Income 21,277$ 2,961$ 16,682$ (13,721)$ 18% 3,000 HOA Contributions - - 159,050 (159,050) - 159,050 Miscellaneous 5,081 2,363 3,600 (1,237) 66% 3,738 Other Revenue Total 26,358$ 5,324$ 179,332$ (174,008)$ 3% 165,788$ Town operating revenues are performing better than expected. Member dues have increased by approximately 15% compared to the prior year, and total memberships have risen by about 14%. We estimate a 21% budget surplus based on these figures. Recreation program revenues are conservatively projected to fall short of budget targets based on trends through December. However, the majority of these revenues are generated in April, making accurate forecasting challenging at this time. FY 2023/24 Actuals FY 2024/25 Actuals FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate Year End Estimate Interest income is lower than the prior year due to a temporary negative cash balance resulting from debt service transfers. HOA contributions are typically posted in February. This is the final year of agreed upon annual contributions to golf from HOAs. FY 2024/25 Budget Actual Vs. Budget $0.0 $0.5 $0.1 $0.0 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 Daily Drop-Ins Member Dues Recreation Programs Facility Rental IncomeMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget $0.0 $0.0 $0.0 $0.0 $0.1 $0.2 Interest Income HOA Contributions MiscellaneousMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 10 of 15 Community Center Fund Financial Status Fiscal Year to Date: December 2024 Contracted Operating Expenditures Amount Percent Personnel 898,404$ 950,281$ 1,839,522$ 889,241$ 52% 1,922,000$ Food & Beverage 331,069 355,344 701,378 346,034 51% 723,352 Operations & Maintenance 1,485,533 1,499,900 2,640,332 1,140,432 57% 2,787,460 Equipment Leases 81,341 81,341 162,661 81,320 50% 172,705 Contracted Expenditures Total 2,796,347$ 2,886,865$ 5,343,893$ 2,457,028$ 54% 5,605,517$ Contracted operating expenditures are currently exceeding projections, primarily due to increased utility costs (water) and higher labor costs for general operations and maintenance. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Year End Estimate Actual Vs. Budget $1.0 $0.4 $1.5 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Personnel Food & Beverage Operations & Maintenance Equipment LeasesMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 11 of 15 Community Center Fund Financial Status Fiscal Year to Date: December 2024 Town Operating Expenditures Amount Percent Personnel 541,221$ 611,479$ 1,222,583$ 611,104 50% 1,372,465$ Operations & Maintenance 292,442 432,799 982,207 549,408 44% 913,641 Town Operating Expenditures Total 833,663$ 1,044,279$ 2,204,790$ 1,160,511$ 47% 2,286,106$ FY25 Revised Budget Community Center Flat Roof Surface Replacement 104,344 CRC Golf Maintenance Sewer Connection 75,000 CRC Restaurant Cooler/Freezer Modernization & Floor Repair 35,405 Golf Conquistador Lake Dredging 80,000 Golf John Deere Tractor Replacement 125,000 Pusch Ridge Golf Bridge Replacement 400,000 Pusch Ridge Tennis Bleachers and ADA Accessibility 200,000 Reelmaster Mower Replacement 105,000 Vistoso Trails Nature Preserve Site Improvements 200,000 VTNP Maintenance Facility Roof Repair and Security 210,000 1,534,749 List of FY25 Capital Projects: Year End Estimate Town operating personnel expenditures are trending higher than expected. Savings are anticipated in contracted personnel and building repair and maintenance. FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget $0.6 $0.4 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Personnel Operations & MaintenanceMillions FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Page 12 of 15 Capital Fund Financial Status Fiscal Year to Date: December 2024 Sources ` Amount Percent Federal Grants -$ 1,000,000$ 1,000,000$ -$ 100% RTA Reimbursements 44,000 - - - na Vehicle Reserves 446,270 466,745 933,490 (466,745) 50% Interest Earnings 387,572 308,034 348,382 (40,348) 88% Miscellaneous 47,467 3,722 115,000 (111,278) 3% Transfers In from General Fund 5,000,000 3,569,894 7,139,787 (3,569,894) 50% Total Sources 5,925,310$ 5,348,395$ 9,536,659$ (4,188,264)$ 56% Uses Amount Percent Personnel 129,366$ -$ -$ -$ na O&M 2,278 61,403 37,000 (24,403) 166% Capital Outlays 8,601,061 2,465,827 8,316,569 5,850,742 30% Transfers Out - 2,000,000 6,174,530 4,174,530 32% Total Uses 8,732,704$ 4,527,229$ 14,528,099$ 10,000,870$ 31% Change in Fund Balance Total Sources 5,925,310$ 5,348,395$ 9,536,659$ Total Uses (8,732,704) (4,527,229) (14,528,099) Change in Fund Balance (2,807,394)$ 821,166$ (4,991,440)$ Estimated Beginning Fund Balance 16,677,730$ Estimated Ending Fund Balance 11,686,290$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Sources: State grants: Arizona State Parks granted $1 million for Naranja Park's pump track and skatepark expected to be received this year. Transfers in from the General Fund are to fund CIP projects are made based on the budget and occur quarterly. A yearly reserve is set aside for vehicle replacement, calculated based on the purchase price and estimated lifespan of Town-owned vehicles. This reserve is spread out over 12 months and charged to the general fund each month. Uses: O&M costs are from the purchase of smaller, non-capitalized equipment used in the Steam Pump Ranch - Solar Lighting CIP project. The budget includes $4 million in transfers to the Highway Fund for capital improvement projects, which are recorded evenly over four quarters. Additionally, $2.2 million is allocated to the Grants Fund. Of this, $2 million is earmarked for the Vistoso Trails Nature Preserve and $174,530 is for a 20% match for transit vehicles funded by 80% grants. These grant transfers are recorded at the end of the year and may adjust based on the actual grant awards. Page 13 of 15 Water Utility Fund Financial Status Fiscal Year to Date: December 2024 Sources ` Amount Percent Water Sales 9,117,748$ 9,675,426$ 18,000,000$ (8,324,574)$ 54% 17,781,054$ Charges For Services 1,771,989 1,753,853 3,424,000 (1,670,147) 51% 3,400,000 Interest Earnings 150,380 149,119 100,000 49,119 149% 300,000 Miscellaneous 13,214 29,585 - 29,585 - 48,000 Other Financing Sources - - 8,000,000 (8,000,000) - 8,000,000 Total Sources 11,053,331$ 11,607,984$ 29,524,000$ (17,916,016)$ 39% 29,529,054$ Uses Amount Percent Personnel 1,679,815$ 1,638,284$ 3,992,428$ 2,354,144$ 41% 3,739,348$ O&M 4,571,857 4,951,555 11,198,284 6,246,729 44% 11,160,487 Capital Outlays 607,080 698,456 1,785,330 1,086,874 39% 1,901,058 Debt Service 3,300,830 3,116,988 3,391,568 274,580 92% 3,391,568 Transfers Out 2,308 2,333 6,862,333 6,860,000 0% 8,002,333 Total Uses 10,161,891$ 10,407,616$ 27,229,943$ 16,822,327$ 38% 28,194,794$ Note: Excludes non-cash outlays for depreciation & amortization Change in Fund Balance Total Sources 11,053,331$ 11,607,984$ 29,524,000$ 29,529,054$ Total Uses (10,161,891) (10,407,616) (27,229,943) (28,194,794) Change in Fund Balance 891,441$ 1,200,368$ 2,294,057$ 1,334,260$ Estimated Beginning Fund Balance 9,354,336$ Estimated Ending Fund Balance 10,688,596$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Year End Estimate Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Sources: Water sales are projected to be about 1.2% below budget due to current water consumption trends. Charges for service are projected to be 0.7% under budget, primarily due to lower than anticipated revenue from the groundwater preservation fee, which is tied to water consumption. Interest earnings are expected to exceed budget by $200,000. The budget for other financing sources consists of proceeds from an anticipated $8 million loan. Uses: Personnel is trending under budget due to various vacancies in Water Operations. Operational and maintenance (O&M) savings are projected in outside professional services and equipment repair. Capital outlay is projected to exceed budget due to a higher-than-anticipated number of meter replacements. Debt Service: The full annual principal payment for debt service is recorded at the start of the year. Interest payments are made twice yearly, in January and June. For a complete breakdown of outstanding debt issuances, please refer to Appendix 6. Transfers out are primarily to the Water Resource Impact Fee fund to fund the NWRRDS capital projects and represents 40% of groundwater preservation fees. This transfer is recorded at the end of the fiscal year and may vary based on revenue collections. There is also a small transfer of $2,333 to the Debt Service Fund for debt service. Page 14 of 15 Stormwater Utility Fund Financial Status Fiscal Year to Date: December 2024 Revenues ` Amount Percent Charges For Services 758,109$ 764,014$ 1,518,500$ (754,486)$ 50% 1,527,949$ Grants - - 210,000 (210,000) - 210,000 Interest Earnings 12,248 21,476 19,000 2,476 113% 40,000 Total Revenues 770,357$ 785,489$ 1,747,500$ (962,011)$ 45% 1,777,949$ Expenses Amount Percent Personnel 432,734$ 445,681$ 1,018,770$ 573,089$ 44% 965,603$ O&M 131,443 150,039 425,834 275,795 35% 384,543 Capital Outlays 50,700 - 735,000 735,000 - 735,000 Total Expenses 614,876$ 595,721$ 2,179,604$ 1,583,883$ 27% 2,085,146$ Note: Excludes non-cash outlays for depreciation Change in Fund Balance Total Revenues 770,357$ 785,489$ 1,747,500$ 1,777,949$ Total Expenses (614,876) (595,721) (2,179,604) (2,085,146) Change in Fund Balance 155,481$ 189,769$ (432,104)$ (307,197)$ Estimated Beginning Fund Balance 1,062,883$ Estimated Ending Fund Balance 755,687$ FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Year End Estimate Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Year End Estimate FY 2023/24 Actuals FY 2024/25 Actuals FY 2024/25 Budget Actual Vs. Budget Revenues: Stormwater utility fee revenue is projected to exceed budget slightly by about $9,000. Interest earnings are expected to exceed budget by $21,000. Grants budget consists of a FEMA grant for the Sierra Wash at Via Mandarina capital project. Expenses: Personnel savings are projected due to a current vacancy and the recent turnover in the division manager position. Operational and maintenance (O&M) savings are projected across various operating costs, including vehicle and equipment repair and maintenance, field supplies, and gasoline. Budgeted capital expenditures consist of general culvert cleaning and infrastructure maintenance ($70,000) as well as two CIP projects: Sierra Wash at Via Mandarina Drainage Improvements ($365,000) and Oro Valley Country Club Drainage and Pavement Improvement ($300,000). Page 15 of 15 APPENDIX 1 Budget Last Year Budget Last Year Actual Budget Variance Last Year Variance Actual Budget Variance Last Year Variance Rounds 4,317 3,425 892 4,203 114 Rounds ‐ Member 21,410 20,230 1,180 20,901 509 648 525 123 483 165 Rounds ‐ Outing 3,804 3,475 329 3,432 372 5,882 4,900 982 5,741 141 Rounds ‐ Public 22,176 19,450 2,726 19,373 2,803 ================================================================================ =============================================================================== 10,847 8,850 1,997 10,427 420 Total Rounds 47,390 43,155 4,235 43,706 3,684 Revenue 267,278 192,350 74,928 223,686 43,592 Green Fees 990,623 806,850 183,773 794,756 195,867 36,780 32,300 4,480 35,322 1,458 Cart Fees 184,673 161,150 23,523 164,440 20,233 4,054 3,900 154 3,755 299 Driving Range 23,082 19,650 3,432 17,929 5,152 0 0 0 0 0 Golf Cards/Passes 0 0 0 0 0 35,843 36,910 (1,067)37,118 (1,274)Pro Shop Sales 136,279 121,020 15,259 120,252 16,028 41,992 28,875 13,117 30,754 11,238 Food (Food & Soft Drinks) 191,721 171,900 19,821 175,459 16,262 39,413 29,250 10,163 32,710 6,703 Beverages (Alcohol) 172,825 168,850 3,975 168,557 4,268 4,454 1,000 3,454 1,877 2,577 Other Food & Beverage Revenue 12,952 7,000 5,952 10,081 2,872 9,480 4,525 4,955 5,912 3,568 Other Golf Revenues (Club Rent, Handic 38,267 19,125 19,142 33,138 5,129 1,840 1,500 340 1,810 30 Clinic / School Revenue 11,515 13,500 (1,985)13,658 (2,143) 157,947 126,500 31,447 146,732 11,215 Dues Income ‐ Monthly Dues 838,131 728,500 109,631 727,589 110,542 0 4,000 (4,000)0 0 Initiation Fee Income / Annual Member 0 7,000 (7,000)4,429 (4,429) 9,999 2,000 7,999 18,548 (8,549)Miscellaneous Income and Discounts 3,418 11,500 (8,082)21,915 (18,497) ============== ================================================================ ========================================================================== 609,081 463,110 145,971 538,223 70,858 Total Revenue 2,603,487 2,236,045 367,442 2,252,203 351,284 Cost of Sales 27,115 26,311 (804)32,611 5,496 COGS ‐ Pro Shop 97,706 85,874 (11,832)89,680 (8,025) 12,491 8,475 (4,016)12,703 212 COGS ‐ Food 58,261 51,536 (6,725)62,867 4,605 2,162 1,608 (555)2,889 727 COGS ‐ Non‐Alcoholic Beverages 12,340 8,550 (3,790)9,740 (2,600) 10,549 8,775 (1,774)9,715 (833)COGS ‐ Alcohol 48,912 50,654 1,743 47,258 (1,653) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 52,317 45,169 (7,148)57,918 5,602 Total Cost of Sales 217,219 196,615 (20,604)209,545 (7,673) ============== ================================================================ ========================================================================== 556,764 417,942 138,823 480,305 76,459 GROSS INCOME 2,386,268 2,039,430 346,838 2,042,658 343,611 Labor 42,979 36,182 (6,797)36,124 (6,855)Golf Operation Labor 225,498 202,792 (22,706)207,484 (18,014) 16,678 16,087 (591)15,335 (1,344)General and Administrative 79,098 76,522 (2,576)68,827 (10,272) 78,650 68,461 (10,189)80,789 2,139 Maintenance and Landscaping 458,084 419,606 (38,478)443,518 (14,566) 33,700 25,006 (8,694)23,674 (10,026)F&B 178,441 149,534 (28,907)165,316 (13,125) 8,425 10,286 1,861 9,979 1,553 Sales and Marketing 46,862 45,216 (1,646)45,720 (1,142) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 180,433 156,022 (24,411)165,900 (14,533)Total Direct Labor 987,983 893,670 (94,313)930,864 (57,119) 15,813 12,311 (3,502)14,240 (1,573)Total Payroll Taxes 77,873 72,898 (4,975)74,548 (3,325) 11,672 13,666 1,994 15,506 3,834 Total Medical/Health Benefits 66,426 65,996 (430)65,575 (850) 3,077 1,916 (1,161)2,306 (771)Total Workmans Comp 17,269 11,496 (5,773)13,472 (3,798) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 30,562 27,893 (2,669)32,052 1,490 Total Payroll Burden 161,568 150,390 (11,178)153,595 (7,973) ============== ================================================================ ========================================================================== 210,995 183,915 (27,080)197,953 (13,043)Total Labor 1,149,551 1,044,060 (105,491)1,084,459 (65,092) Other Operational Expenses 7,221 5,360 (1,861)4,591 (2,629)Golf Ops 47,060 36,810 (10,250)33,792 (13,268) 19,761 15,935 (3,826)15,115 (4,647)G&A 86,796 72,750 (14,046)57,702 (29,094) 25,014 26,625 1,611 33,342 8,328 Maintenance 375,231 421,885 46,654 396,445 21,214 4,153 2,920 (1,233)4,066 (87)F&B 36,561 31,345 (5,216)25,149 (11,412) 4,319 3,200 (1,119)3,432 (888)Sales and Marketing 15,488 18,309 2,821 26,792 11,304 13,259 13,259 0 13,259 0 Golf Cart Leases 79,553 79,554 1 79,553 0 298 296 (2)298 0 Equipment Leases 1,789 1,777 (12)1,789 0 60,018 35,455 (24,563)74,466 14,448 Utilities ‐ Maintenance 679,110 614,230 (64,880)688,397 9,287 16,346 16,350 4 19,582 3,236 Utilities ‐ G&A 97,418 104,600 7,182 109,372 11,953 10,824 10,930 106 10,612 (212)Management Fees 64,946 65,580 634 63,672 (1,273) 5,877 5,600 (277)2,748 (3,129)Insurance ‐ P&C 36,145 33,600 (2,545)19,681 (16,463) ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 167,090 135,930 (31,160)181,510 14,420 Total Other Operational Expenses 1,520,096 1,480,440 (39,656)1,502,343 (17,753) ============== ================================================================ ========================================================================== 378,085 319,845 (58,240)379,462 1,377 Total Expenses 2,669,647 2,524,499 (145,148)2,586,802 (82,845) ============== ================================================================ ========================================================================== 178,679 98,096 80,583 100,843 77,836 EBITDAR (283,378) (485,069)201,691 (544,144)260,766 ============== ================================================================ ========================================================================== 178,679 98,096 80,583 100,843 77,836 EBITDA (283,378) (485,069)201,691 (544,144)260,766 ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 000(30,164) (30,164)Total Interest Expense 0 0 0 (209,346) (209,346) ============== ================================================================ ========================================================================== 178,679 98,096 80,583 131,007 47,672 Net Income (283,378) (485,069)201,691 (334,798)51,420 El Conquistador Golf Club For the Month Ending December 31st, 2024 December YTD APPENDIX 2Operating:Through DecBudgetCumulativeFY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY2024 FY2025 FY 2025 ActualsRevenue36 Hole 500,158     1,883,452  1,798,304  2,171,484  2,367,136  2,593,395  3,522,083     3,674,489     3,856,880     4,724,718     2,052,630     4,015,000     29,144,729      Pusch Ridge‐              105,370     99,134       59,726       106,184     98,316        ‐                 380,375        414,225        528,346        173,358        479,025        1,965,034        F&B ‐ Overlook‐              606,171     708,594     745,766     671,582     554,336     448,782        671,479        725,222        766,679        377,499        746,550        6,276,110        Total Revenue500,158        2,594,993     2,606,032     2,976,976     3,144,902     3,246,047     3,970,865     4,726,343     4,996,327     6,019,743     2,603,487     5,240,575     37,385,873      Expenses36 Hole 1,112,252  3,588,714  3,936,889  3,817,932  3,771,706  3,891,341  3,915,216     3,740,982     3,929,757     4,263,007     2,265,703     4,183,688     38,233,498      Pusch Ridge‐              253,513     256,769     236,160     230,196     287,112      ‐                 319,702        390,959        478,320        265,819        458,827        2,718,550        F&B ‐ Overlook‐              861,740     823,383     841,866     785,499     701,538     440,382        630,509        596,910        684,037        355,344        701,378        6,721,207        Total Expenses1,112,252     4,703,967     5,017,041     4,895,958     4,787,401     4,879,991     4,355,598     4,691,193     4,917,626     5,425,364     2,886,865     5,343,893     47,673,256      Profit/(Loss)36 Hole (612,094)       (1,705,262)    (2,138,585)    (1,646,448)    (1,404,570)    (1,297,946)    (393,133)       (66,493)         (72,877)         461,711        (213,073)       (168,688)       (9,088,770)      Pusch Ridge‐                 (148,143)       (157,635)       (176,434)       (124,012)       (188,796)        ‐                 60,673          23,266          50,026          (92,461)         20,198          (753,516)          F&B ‐ Overlook‐                 (255,569)       (114,789)       (96,100)         (113,917)       (147,202)       8,400             40,970          128,312        82,642          22,155          45,172          (445,098)          Total Operating Profit/(Loss)(612,094)       (2,108,974)    (2,411,009)    (1,918,982)    (1,642,499)    (1,633,944)    (384,733)       35,150          78,701          594,379        (283,378)       (103,318)       (10,287,383)    Capital Investments45,116          47,909          29,464          ‐                      ‐                     131,035        2,828,061     4,619,904     2,184,848     502,472        835,000 10,388,809      Initial purchase (1)300,000        350,000        350,000        1,000,000        Notes: (1) $1,000,000 original purchase of courses and community center1/2 cent sales tax 506,710        2,030,750     2,199,466     2,330,941     2,463,034     2,584,916     2,947,420     3,535,507     3,707,578     3,792,744     1,807,862     3,726,016     27,906,928      HOA contributions‐                  ‐                  ‐                  ‐                  ‐                  ‐                 125,000        159,050        159,050        159,050         ‐                 159,050        602,150           POST AGREEMENTPRE AGREEMENTTown of Oro ValleyGolf AnalysisAPPENDIX 2Page 1 OF 2 APPENDIX 2Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunFY 2023Gross Income 218,180     210,232     258,241     252,747     499,632     394,901     472,032     541,889     636,010     523,324     315,175     231,708     Expenses 306,974     296,210     432,727     576,529     322,700     297,856     310,847     307,918     355,497     313,621     429,007     558,232     Net Income/(Loss) (88,794)     (85,978)     (174,487)   (323,782)   176,932     97,044       161,185     233,971     280,512     209,703     (113,832)   (326,524)   FY 2024Gross Income 213,698     225,040     295,419     332,783     495,412     480,305     525,109     589,339     694,275     586,473     430,577     294,092     Expenses 406,558     333,614     420,523     454,504     412,959     349,298     308,213     291,616     334,623     326,900     398,960     530,376     Net Income/(Loss) (192,860)   (108,573)   (125,103)   (121,721)   82,453       131,007     216,896     297,723     359,652     259,573     31,617       (236,284)   FY 2025Gross Income 263,005     299,163     297,857     375,363     594,117     556,764     Expenses 411,466     416,806     442,887     488,946     531,458     378,085     Net Income/(Loss) (148,461)   (117,643)   (145,030)   (113,583)   62,659       178,679      ‐              ‐              ‐              ‐              ‐              ‐             Town of Oro ValleyGolf Analysis ‐ Contractor Financials ‐ 200,000 400,000 600,000 800,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Gross Income by Month ‐Total Golf OperationsFY 2023FY 2024FY 2025 ‐ 200,000 400,000 600,000 800,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Total Expenses by Month ‐Total Golf OperationsFY 2023FY 2024FY 2025 (400,000) (200,000) ‐ 200,000 400,000Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunComparison of Net Income/(Loss) by Month ‐Total Golf OperationsFY 2023FY 2024FY 2025APPENDIX 2Page 2 of 2 APPENDIX 3Consolidated Year-to-Date Financial Report through December 2024FY 2024/2025FundFY 24/25Est. Beginning BalanceRevenueOther Fin Sources/Transfers InTotal In Personnel O&M CapitalDebt ServiceOther Fin Uses/ Transfers OutTotal OutFund Balance Through December 2024General Fund 22,081,503 26,964,266 26,964,266 16,272,090 7,094,456 88,139 5,458,073 28,912,757 20,133,012 Highway Fund 606,047 2,130,250 2,000,000 4,130,250 604,295 500,478 1,994,848 3,099,621 1,636,676 Grants and Contributions Fund (185,555) 247,309 247,309 15,517 150,000 87,250 252,767 (191,013) Seizure & Forfeiture - Justice/State 331,063 7,418 7,418 - 338,481 Community Center Fund 1,815,118 5,069,466 5,069,466 611,479 3,319,665 621,249 1,717,149 6,269,542 615,041 Municipal Debt Service Fund 326,002 64,160 3,650,379 3,714,539 9,051 3,395,245 3,404,297 636,244 Water Resource System & Dev. Impact Fee Fund 14,427,924 688,468 688,468 81,000 8,332,597 53,166 8,466,763 6,649,629 Townwide Roadway Dev Impact Fee Fund 2,550,696 381,118 381,118 3,055 3,055 2,928,759 Parks & Recreation Impact Fee Fund 185,297 164,571 164,571 - 349,868 Police Impact Fee Fund 73,057 74,430 74,430 42,718 42,718 104,769 Capital Fund 16,677,730 1,778,502 3,569,894 5,348,395 - 61,403 2,465,827 2,000,000 4,527,229 17,498,896 PAG/RTA Fund 430,485 25,054 25,054 30,642 30,642 424,897 Water Utility 9,354,336 11,607,984 - 11,607,984 1,638,284 4,951,555 698,456 3,116,988 2,333 10,407,616 10,554,704 Stormwater Utility 1,062,883 785,489 785,489 445,681 150,039 - 595,721 1,252,652 Benefit Self Insurance Fund 3,404,005 2,292,042 2,292,042 1,754,436 1,754,436 3,941,611 Recreation In-Lieu Fee Fund 17,976 33,056 33,056 - 51,032 Total 73,158,566 52,313,582 9,220,273 61,533,855 19,587,347 18,102,724 14,291,421 6,565,399 9,220,273 67,767,164 66,925,257 Note: The Grants and Contributions Fund currently shows a negative balance, primarily due to a timing difference in grant disbursements and expected reimbursements. This situation is temporary and is expected to be resolved as anticipated funding is received throughout the remainder of the fiscal year. APPENDIX 4General Fund Local Sales Tax Collections FY 2024/25JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALConstruction Sales Tax427,032 291,729 371,199 324,860 545,601 253,973 2,214,393 Utility Sales Tax306,838 399,701 417,156 405,901 370,322 335,865 2,235,783 Retail Sales Tax750,336 715,116 684,389 714,418 739,186 827,763 4,431,208 Remote Seller Sales Tax131,633 141,042 139,202 140,153 150,391 183,215 885,636 Bed Tax107,778 180,045 136,688 120,312 177,934 231,333 954,090 Restaurant & Bar Sales Tax217,007 191,436 200,970 229,592 214,851 229,614 1,283,468 All Other Local Sales Tax *95,050 111,599 95,492 97,497 104,248 138,553 642,439 Monthly Total 2,035,673$ 2,030,668$ 2,045,096$ 2,032,733$ 2,302,532$ 2,200,315$ 12,647,017$ Cumulative Total2,035,673$ 4,066,341$ 6,111,437$ 8,144,170$ 10,446,702$ 12,647,017$ Monthly variance(64,697)$ (236,208)$ (51,407)$ (113,889)$ 81,336$ (103,069)$ Cumulative variance(64,697)$ (300,905)$ (352,312)$ (466,200)$ (384,865)$ (487,934)$ FY 2023/24JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALConstruction Sales Tax 566,321 609,737 391,196 422,231 488,917 493,394 486,229 411,515 164,695 578,910 513,988 397,105 5,524,238 Utility Sales Tax 250,515 368,788 435,027 373,297 365,463 336,739 321,251 411,797 336,202 217,994 338,593 260,175 4,015,841 Retail Sales Tax 728,452 730,517 682,418 725,728 645,288 841,754 1,049,364 772,676 735,897 833,289 774,387 762,947 9,282,717 Remote Seller Sales Tax 131,471 138,602 128,741 129,290 237,669 179,485 185,936 146,170 154,687 150,204 147,819 154,547 1,884,621 Bed Tax 144,726 137,921 139,535 141,666 163,605 153,950 115,408 326,484 83,195 279,300 195,470 162,019 2,043,280 Restaurant & Bar Sales Tax 192,259 193,105 215,297 223,296 212,172 217,665 234,122 232,257 227,823 298,144 260,586 229,695 2,736,422 All Other Local Sales Tax *86,626 88,207 104,287 131,114 108,083 80,397 67,352 177,516 70,480 154,827 124,334 98,840 1,292,063 Monthly Total 2,100,370$ 2,266,876$ 2,096,503$ 2,146,622$ 2,221,197$ 2,303,384$ 2,459,664$ 2,478,415$ 1,772,979$ 2,512,668$ 2,355,178$ 2,065,327$ 26,779,181$ Cumulative Total2,100,370$ 4,367,246$ 6,463,748$ 8,610,370$ 10,831,567$ 13,134,951$ 15,594,615$ 18,073,030$ 19,846,008$ 22,358,676$ 24,713,854$ 26,779,181$ *Does not include cable franchise fees or sales tax audit revenues APPENDIX 5General Fund State Shared RevenuesFY 2024/25JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALState Shared Income Tax 856,425 856,425 856,425 856,425 856,425 856,425 5,138,550 State Shared Sales Tax 593,796 582,212 575,094 597,416 614,349 622,937 3,585,804 County Auto Lieu 237,795 215,615 204,204 224,993 189,831 182,939 1,255,378 Smart and Safe- -- --138,177 138,177 Monthly Total 1,688,016$ 1,654,252$ 1,635,723$ 1,678,834$ 1,660,605$ 1,800,479$ 10,117,909$ Cumulative Total 1,688,016$ 3,342,268$ 4,977,991$ 6,656,825$ 8,317,430$ 10,117,909$ Monthly variance (151,985)$ (229,616)$ (189,309)$ (190,136)$ (175,547)$ (183,187)$ Cumulative variance (151,985)$ (381,601)$ (570,909)$ (761,046)$ (936,593)$ (1,119,780)$ FY 2023/24JULAUGSEPOCTNOVDECJANFEBMARAPRMAYJUNTOTALState Shared Income Tax 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 1,064,957 12,779,482 State Shared Sales Tax 585,790 598,642 580,255 602,020 587,629 599,429 695,594 581,121 577,773 652,448 617,138 604,061 7,281,900 County Auto Lieu 189,254 220,268 179,819 201,993 183,567 183,086 222,892 194,548 235,310 214,074 219,675 194,493 2,438,980 Smart and Safe- -- --136,194 - -- --148,944 285,138 Monthly Total 1,840,001$ 1,883,868$ 1,825,032$ 1,868,970$ 1,836,152$ 1,983,666$ 1,983,443$ 1,840,626$ 1,878,040$ 1,931,479$ 1,901,769$ 2,012,454$ 22,785,500$ Cumulative Total 1,840,001$ 3,723,869$ 5,548,900$ 7,417,870$ 9,254,023$ 11,237,689$ 13,221,132$ 15,061,758$ 16,939,798$ 18,871,277$ 20,773,046$ 22,785,500$ APPENDIX 6Debt Service ExpenseAdopted Forecast Forecast Forecast Forecast Forecast Forecast Forecast Final Payment 2024/25 2025/26 2026/27 2027/28 2028/29 2030-2034 2035-2039 2040-2043DateMunicipal Debt Service FundExcise Tax Revenue Bonds- - - 2010 CREBS 191,318 186,370 176,066 170,437 - - - - 20282012 Revenue Bonds 226,718 224,631 227,147 224,125 - - - - 20282015a Refunding Excise Tax (1) 306,079 304,379 - - - - - - 20262016 Excise Tax 172,224 172,968 172,635 172,236 172,760 516,654 - - 20322017a Refunding Excise Tax (2) 138,657 138,645 138,626 - - - - - 20272018a Excise Tax Revenue Obligations (3) 171,718 171,515 171,446 171,502 171,429 855,649 - - 20342021 Parks & Rec Excise Tax 1,544,925 1,543,300 1,544,800 1,539,425 1,542,050 7,693,700 7,684,600 4,599,500 20422021 Pension Obligation Bonds 1,268,715 1,271,262 1,266,350 1,264,118 1,264,461 6,313,500 6,298,141 2039Total Municipal Debt Service Fund4,020,354 4,013,070 3,697,070 3,541,843 3,150,700 15,379,503 13,982,741 4,599,500 Community Center FundContracts PayableLeased Fitness Equipment 20,374 7,668 - - - - - - 2026Financed Fitness Equipment 30,126 22,677 7,559 - - - - - 2027Golf Carts 162,661 130,867 76,339 - - - - - 2027Total Community Center Fund213,161 161,212 83,898 - - - - - WRSDIF FundExcise Tax Revenue Bonds2021a Excise Tax Revenue Obligations (4) 55,711 56,550 56,693 56,295 34,889 202955,711 56,550 56,693 56,295 34,889 - - - Water Utility FundExcise Tax Revenue Bonds2015b Refunding Revenue Bonds (1) 149,356 148,500 - - - - - - 20262017b Refunding Revenue Bonds (2) 1,620,250 1,619,650 1,619,032 - - - - - 20272018b Excise Tax Revenue Obligation (3) 509,310 508,532 508,144 508,118 507,710 2,530,976 - - 20342021b Excise Tax Revenue Obligations (4) 740,667 751,828 753,730 748,434 463,845 111,139 - - 2030Water Revenue LoansWIFA Loan, 2014 371,985 376,299 376,178 376,054 375,926 - - - 2029Total Water Utility Fund3,391,568 3,404,809 3,257,084 1,632,606 1,347,481 2,642,115 - - TOTAL DEBT SERVICE - ALL FUNDS7,680,794 7,635,641 7,094,745 5,230,744 4,533,070 18,029,978 13,982,741 4,599,500 (1) Series 2015 for municpal operation facilities debt service is split between General Fund excise tax revenue (67%) and water revenue (33%.)(2) Series 2017 debt service is split between General Fund excise tax revenue (8%) and water revenue (92%.)(3) Series 2018 for water infrastucture and police evidence and substation facility. Debt service is split between General Fund excise tax revenue (25%) and water revenue (75%.)(4) Series 2021 debt service is split between the Water Utility Fund (93%) and the Water Impact fee Fund (7%.) APPENDIX 7Town of Oro ValleyOperating Investment SummaryFiscal Year 2024/25JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNLGIPEnding Market Value3,180,476$ 3,442,323$ 3,896,068$ 3,495,246$ 3,479,412$ 7,779,571$ Investment Income16,989$ 15,807$ 13,771$ 14,795$ 16,950$ 23,753$ 1-Month Yield5.42% 5.32% 5.04% 4.84% 4.65% 4.51%PFM Asset ManagementClosing Market Value55,564,717$ 54,718,509$ 53,177,796$ 50,876,284$ 49,493,292$ 48,491,572$ Investment Income242,494$ 212,354$ 138,428$ 115,743$ 214,420$ 122,153$ Annualized Yield to Maturity at Cost4.01% 3.98% 4.11% 4.20% 4.24% 4.29%Wells Fargo SweepEnding Balance3,651,439$ 4,348,204$ 2,832,971$ 3,463,068$ 5,557,936$ 3,919,949$ Investment Income18,152$ 12,122$ 15,630$ 11,743$ 11,590$ 13,504$ 7-Day Simple Yield5.19% 5.17% 4.80% 4.72% 4.52% 4.36%Total Ending Balance62,396,632$ 62,509,037$ 59,906,835$ 57,834,599$ 58,530,640$ 60,191,093$ Total Investment Income277,635$ 240,283$ 167,829$ 142,281$ 242,960$ 159,409$ APPENDIX 8 Town of Oro Valley - Development Impact Fee Fund Projects Parks and Recreation Facilities Description Cost Completed? Skate Park $1,500,000 Yes Playground and Parking Lot $1,700,000 Yes Multiuse Fields (lighted) $1,200,000 Yes Dog Park $150,000 Yes Developed Park Land $927,694 Park Amenities $2,501,696 Police Police Substation Debt $1,198,500 Police Vehicles $846,050 Street Facilities La Cholla Blvd, Tangerine Rd-Lambert Ln - Road Widening $1,700,000 Yes Shannon Rd, Tangerine Rd-Naranja Dr - New Road $1,000,000 Lambert Ln. .5 mi E of Shannon-Rancho Sonora - Road Widening $1,000,000 Rancho Vistoso & Woodburne - Intersection Improvement $750,000 Oracle Rd & Rams Field Intersection - Intersection Improvement $750,000 Moore Rd La Cholla Blvd - Intersection Improvement $900,000 Moore Rd - Extension E of Rancho Vistoso Blvd - New Road & Intersection $1,026,840 Yes Moore Rd & La Canada Dr Intersection - Intersection Improvement $1,200,000 Yes Glover Rd Multi Use Path - Multi-modal facility $150,000 Yes Glover Rd south half widening - Road Widening $500,000 Yes Water Facilities Water Supply Steam Pump D-Zone Well $1,500,000 Program Management Support Services (P) $1,050,000 Yes Well Improvement Analysis and Recovery Permits (P) $150,000 Yes Well Drilling and Testing (P) $300,000 Yes Construction Permitting, Drilling, Development and Testing (P) $1,500,000 Yes Well Equipment Design and Site Improvements (P) $1,800,000 Storage Palisades C-Zone Storage Tank and Pipeline $4,250,000 Pressure Zone G Storage Expansion $8,000,000 Pressure Zone G, H and I Storage Expansion $4,000,000 Forebay Design (P)$99,231 Forebay Reservoir Construction (P) $900,000 Shannon Rd Forebay Reservoir And Booster Station Prop (Ind.) $240,000 Yes Forebay Reservoir Booster Station Design (Ind.) $90,000 Yes Shannon Rd Forebay Reservoir and Booster Station Design (Ind.) $180,000 Yes Booster Station Construction Forebay Res. (Ind.) $300,000 Yes Shannon Road Forebay Res. Construction (Ind.) $840,000 Yes Shannon Road Forebay Res. Construction (Ind.) $540,000 Yes Arizona municipalities can charge development fees to cover the cost of infrastructure improvements needed to support new development. These fees are one-time payments used to fund projects like building new roads, parks, or water facilities. The amount of the fee is determined by an Infrastructure Improvements Plan (IIP) and land use assumptions. Importantly, development fees can only be used for building new infrastructure or paying off debt for growth-related projects. They cannot be used for ongoing maintenance, repairs, or addressing existing problems. The Town's IIP includes public services for parks and recreation facilities, police facilities, street facilities, and water facilities. Below is a list of identified IIP projects use in the latest impact fee study to calculate the development fees. These are projects that would be eligible to be funded by development fees as outlined in ARS § 9-463.05 (T)(7)(a). APPENDIX 8 Page 1 of 2 APPENDIX 8 Water Facilities Continued Description Cost Completed? Distribution Moore Road F-Zone Interconnect $750,000 Water Plant 14 Booster Capacity Expansion $250,000 Pipeline Design (Recovery Water & Transmission) (P) $660,692 Pipeline Construction (P) $4,320,000 Pipeline Route Study and Preliminary Design (Ind.) $120,000 Yes Pipeline Easement Acquisition (Ind.) $450,000 Yes Pipeline Design (Ind.) $600,000 Yes Pipeline Construction NWRRDS to La Canada Res. (Ind.) $5,880,000 Interconnect to Tangerine Rd. (Ind.) $270,000 Interconnect to Lambert Lane (Ind.) $510,000 Yes APPENDIX 8 Page 2 of 2    Town Council Regular Session 3. Meeting Date:03/05/2025   PRESENTATION AND POSSIBLE DISCUSSION REGARDING THE TOWN'S PRELIMINARY FIVE-YEAR FINANCIAL FORECAST THROUGH FY 2029/2030 Subject Presentation and possible discussion regarding the Town's preliminary five-year financial forecast through FY 2029/2030 Summary The Town's adopted financial policies provide "as a part of the annual Town budget preparation cycle, the Finance Department shall prepare a minimum five-year financial forecast of projected revenues and expenditures to measure the financial sustainability of the Town's operations and service levels." As such, staff will present the five-year financial forecast through FY 2029/30 for the General Fund, Highway Fund, Capital Fund and Community Center Fund. The forecast assumptions were compiled by referencing several sources of data, including the University of Arizona, Joint Legislative Budget Committee (JLBC), State Finance Advisory Committee, Arizona Department of Revenue, and the Arizona Department of Transportation. Staff also incorporated Town historical trend data and professional judgment into formulation of this forecast. Attachments Town of Oro Valley Five-Year Forecast FY26  Staff Presentation  TOWN OF ORO VALLEY - SELECT FUNDS FIVE YEAR FINANCIAL FORECAST FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast GENERAL FUND Revenue 57,050,514 58,038,171 59,061,206 59,743,721 62,273,440 63,303,033 Inflows 57,050,514 58,038,171 59,061,206 59,743,721 62,273,440 63,303,033 Personnel 35,507,892 37,065,963 37,974,699 39,003,607 40,052,350 41,118,849 O&M 14,380,325 15,283,232 15,905,309 16,413,790 17,099,034 17,663,722 Capital 516,600 520,784 373,168 385,743 398,515 412,490 Transfers Out 9,156,345 8,878,038 4,393,071 3,475,592 4,199,514 3,614,439 Outflows 59,561,162 61,748,017 58,646,247 59,278,731 61,749,412 62,809,501 Beginning Fund Balance 22,081,503 19,570,855 15,861,009 16,275,969 16,740,958 17,264,987 Ending Fund Balance 19,570,855 15,861,009 16,275,969 16,740,958 17,264,987 17,758,518 HIGHWAY FUND Revenue 4,429,138 4,597,718 4,698,495 4,901,704 5,040,706 5,189,297 Transfers In 4,000,000 2,000,000 4,000,000 3,000,000 3,000,000 1,000,000 Inflows 8,429,138 6,597,718 8,698,495 7,901,704 8,040,706 6,189,297 Personnel 1,322,820 1,361,984 1,389,299 1,417,162 1,445,585 1,474,579 O&M 1,256,505 1,228,817 1,212,601 1,247,398 1,283,239 1,320,155 Capital 5,451,000 4,425,000 6,376,800 5,512,500 5,269,315 3,189,000 Outflows 8,030,325 7,015,801 8,978,699 8,177,060 7,998,139 5,983,734 Beginning Fund Balance 606,047 1,004,860 586,777 306,572 31,216 73,783 Ending Fund Balance 1,004,860 586,777 306,572 31,216 73,783 279,345 CAPITAL FUND Revenue 2,396,872 1,428,361 1,498,873 1,469,847 1,460,738 1,460,917 Transfers In 7,139,787 6,586,855 2,409,162 1,631,107 2,639,802 2,052,351 Inflows 9,536,659 8,015,215 3,908,036 3,100,954 4,100,541 3,513,268 O&M 61,403 61,703 62,012 62,330 62,658 62,658 Capital 8,316,569 1,730,000 8,383,500 4,029,800 3,069,500 4,076,000 Transfers Out 6,174,530 2,113,600 4,117,008 3,120,518 3,124,134 1,127,858 Outflows 14,552,502 3,905,303 12,562,520 7,212,649 6,256,292 5,266,516 Beginning Fund Balance 16,677,730 11,661,887 15,771,799 7,117,315 3,005,620 849,869 Ending Fund Balance 11,661,887 15,771,799 7,117,315 3,005,620 849,869 (903,380) COMMUNITY CENTER FUND Revenue 11,303,920 11,287,272 11,603,799 11,969,137 12,342,243 12,699,106 Inflows 11,303,920 11,287,272 11,603,799 11,969,137 12,342,243 12,699,106 Personnel 1,372,465 1,313,143 1,351,323 1,390,625 1,431,081 1,472,725 O&M 6,517,994 6,676,004 6,820,368 6,942,976 7,069,872 7,199,623 Capital 1,534,749 3,012,500 665,000 1,065,000 1,225,000 3,630,000 Transfers Out 1,716,268 1,716,268 1,711,661 1,714,810 1,709,757 1,708,502 Outflows 11,141,476 12,717,915 10,548,352 11,113,411 11,435,710 14,010,850 Beginning Fund Balance 1,815,118 1,977,562 546,919 1,602,367 2,458,093 3,364,625 Ending Fund Balance 1,977,562 546,919 1,602,367 2,458,093 3,364,625 2,052,881 Page 1 of 15 Town of Oro ValleyFive-Year ForecastFY 23/24 ActualFY 24/25 ForecastFY 25/26 ForecastFY 26/27 ForecastFY 27/28 ForecastFY 28/29 ForecastFY 29/30 ForecastSOURCESTaxes27,494,515$ 27,374,127$ 28,843,700$ 29,212,673$ 28,246,535$ 29,984,031$ 30,051,345$ State Shared Revenue22,785,500 20,556,368 20,349,270 21,492,689 22,471,164 23,468,909 24,512,119 Charges for Services2,971,4483,081,369 3,060,191 3,146,660 3,230,556 3,328,830 3,420,663Licenses & Permits2,122,5031,793,735 2,153,498 1,598,946 2,143,430 1,797,258 1,581,526Intergovernmental2,027,1412,141,306 2,000,471 2,019,575 2,038,871 2,058,360 2,078,043Grants448,272 567,929 650,003 657,190 664,493 671,912 679,451 Miscellaneous594,658 717,680 274,857 277,605 280,381 283,185 286,017 Fines61,640 68,000 68,680 69,367 70,060 70,761 71,469 Interest Income716,939 750,000 637,500 586,500 598,230 610,195 622,398 Total Sources59,222,615 57,050,514 58,038,171 59,061,206 59,743,721 62,273,440 63,303,033 USESPersonnel34,847,443 35,507,892 37,065,963 37,974,699 39,003,607 40,052,350 41,118,849 O&M13,508,142 14,380,325 15,283,232 15,905,309 16,413,790 17,099,034 17,663,722 Capital Outlay180,402 516,600 520,784 373,168 385,743 398,515 412,490 Transfers Out12,274,644 9,156,345 8,878,038 4,393,071 3,475,592 4,199,514 3,614,439Total Uses60,810,631 59,561,162 61,748,017 58,646,247 59,278,731 61,749,412 62,809,501 Surplus/(Use of Fund Balance)(1,588,016) (2,510,648) (3,709,846) 414,959464,990524,028493,532Beginning Fund Balance23,798,492 22,081,503 19,570,855 15,861,009 16,275,969 16,740,958 17,264,987 Ending Fund Balance22,210,476$ 19,570,855$ 15,861,009$ 16,275,969$ 16,740,958$ 17,264,987$ 17,758,518$ Reserve as % of Expenditures45.8%38.8%30.0%30.0%30.0%30.0%30.0%GENERAL FUNDPage 2 of 15 19,570,855 15,861,009 16,275,969 16,740,958 17,264,987 17,758,518  $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000FY 24/25ForecastFY 25/26ForecastFY 26/27ForecastFY 27/28ForecastFY 28/29ForecastFY 29/30ForecastGeneral FundSources, Uses and Fund BalanceFund BalanceSourcesUsesRequired ReservePage 3 of 15 Sources Assumptions Local Sales Taxes 1. Estimated revenues from development at the Oro Valley Marketplace of about $2.2 million 2. Slow economic growth with no major economic downturns in the five-year outlook 3. General decline in construction sales tax due to reduced available land area for new development 4. Hotel/bed tax 1% growth, plus assumed revenue from OV Marketplace beginning in FY 25/26 5. Conservative levels of one-time, non-specific commercial development plus identified commercial construction 6. 2-5% growth per year in retail, restaurant/bar, utility and other categories State Shared Revenues 1. State shared revenue forecasts are from the AZ State revenue forecast (JLBC). Smart&Safe based on forecast from ADOT. 2. State shared income tax revenue reduction in FY25/26 due to implementation of the 2.5% individual flat income tax, growth of 7.2% and 5% thereafter Charges for Services 1.3% growth rate in charges for services to enterprise funds 2.3-4% growth rate for Parks & Recreation related revenues 3.Development revenues tied to projected permitting activity Licenses & Permits 1.Two years of declining SFR permits, a slight increase in years 3 and 4 due to development, and a subsequent decline 2.Conservative commercial permitting activity forecast, with specific permitting for the Oro Valley Marketplace ($957,000) 3. Slowing revenues and activity in outer years attributable to reduced available land area for new development Intergovernmental 1.School resource officer funding kept flat at $90,000 2. 1% growth in RTA transit reimbursement revenue Grant Revenues/Fines 1.Police grant revenues assumed at 1% growth per year 2. Fine revenues 1% growth per year Miscellaneous 1.Consists primarily of in-lieu bed tax income; 1% growth per year Interest Income 1. Based on anticipated fund balance GENERAL FUND FORECAST ASSUMPTIONS 497 199 148 114 107 97 142 130 92 FY 21/22 Actual FY 22/23 Actual FY 23/24 Actual FY 24/25 Forecasted FY 25/26 Forecasted FY 26/27 Forecasted FY 27/28 Forecasted FY 28/29 Forecasted FY 29/30 Forecasted SFR Building Permit Forecast Category FY 25/26  Forecast %  growth FY 26/27  Forecast %  growth FY 27/28  Forecast %  growth FY 28/29  Forecast %  growth FY 29/30  Forecast %  growth Retail 9,550,515   2.5%9,816,082   2.8%10,060,928  2.5%10,339,099  2.8%10,760,139  4.1% Construction 5,086,266   ‐18.0%4,836,158   ‐4.9%3,263,387  ‐32.5%4,354,469   33.4%3,584,667  ‐17.7% Utility 4,316,890   2.2%4,403,228   2.0%4,491,292  2.0%4,581,118   2.0%4,672,740  2.0% Restaurant 2,981,309   5.0%3,130,374   5.0%3,286,893  5.0%3,451,237   5.0%3,623,799  5.0% Bed Tax 2,771,122   1.0%2,801,271   1.1%2,831,782  1.1%2,862,639   1.1%2,893,853  1.1% Other 3,522,651   4.4%3,646,721   3.5%3,769,985  3.4%3,872,808   2.7%4,013,684  3.6% Cable Franchise Fee 653,051    ‐1.0%646,520    ‐1.0%640,055   ‐1.0%633,654    ‐1.0%627,318     ‐1.0% Total 28,881,803  ‐0.4%29,280,354  1.4%28,344,321  ‐3.2%30,095,024  6.2%30,176,200  0.3% Category FY 25/26  Forecast %  growth FY 26/27  Forecast %  growth FY 27/28  Forecast %  growth FY 28/29  Forecast %  growth FY 29/30  Forecast %  growth State Income Tax 9,612,595    ‐6.5%10,304,431  7.2%10,815,968  5.0%11,356,766  5.0%11,924,604  5.0% State Sales Tax 7,619,735    3.7%7,938,683  4.2%8,274,361    4.2%8,605,336  4.0%8,949,549  4.0% County Auto Lieu 2,782,116    5.3%2,891,312  3.9%3,001,813    3.8%3,109,705  3.6%3,224,122  3.7% Smart and Safe 334,825     15.7%358,263   7.0%379,022     5.8%397,103    4.8%413,844   4.2% Total 20,349,270  ‐9.8%21,492,689  5.6%22,471,164  4.6%23,468,909  4.4%24,512,119  4.4% Page 4 of 15 GENERAL FUND FORECAST ASSUMPTIONS Uses Assumptions Salaries and Benefits 1. Police step increases included each year; pay adjustments included at 3.0% per year 2. Public safety pension rates kept flat at 16.22% plus additional contributions of $1,600,000 per year 3. Health insurance premiums increase 2% per year 4. Capacity for one new position annually in years 1 and 2 and , two new positions in years 3-5 Operations & Maintenance 1. Forecast assumes no new initiatives or changes to service levels 2. Gas prices assumed to remain stable throughout the forecast period and grow 1% annually 3. Capital outlay reflects operating capital 4. 3-4% annual growth in O&M costs CIP Funding 1.Shown as transfer out to Capital Fund 2. Annual amounts equal to 5% of projected sales tax collections, plus any remaining fund balance over the 30% reserve policy Transfers Out 1. Transfers to debt service, Capital Fund and Grants Fund Page 5 of 15 Town of Oro ValleyFive-Year ForecastFY 23/24 ActualFY 24/25 ForecastFY 25/26 ForecastFY 26/27 ForecastFY 27/28 ForecastFY 28/29 ForecastFY 29/30 ForecastSOURCESState Shared Revenue4,221,036$ 4,288,907$ 4,457,715$ 4,597,681$ 4,839,086$ 4,991,599$ 5,124,674$ Licenses & Permits25,86937,000 37,740 38,117 38,499 38,884 39,272 Interest Income185,013 100,000 99,000 59,400 20,790 6,861 21,954 Miscellaneous14,7153,231 3,263 3,296 3,329 3,362 3,396 Transfers from Capital Fund1,500,000 4,000,000 2,000,000 4,000,000 3,000,000 3,000,000 1,000,000 Total Sources5,946,633 8,429,138 6,597,718 8,698,495 7,901,704 8,040,706 6,189,297 USESPersonnel1,241,700 1,322,820 1,361,984 1,389,299 1,417,162 1,445,585 1,474,579O&M1,052,092 1,256,505 1,228,817 1,212,601 1,247,398 1,283,239 1,320,155Capital Outlay3,921,615 5,451,000 4,425,000 6,376,800 5,512,500 5,269,315 3,189,000Total Uses6,215,407 8,030,325 7,015,801 8,978,699 8,177,060 7,998,139 5,983,734 Surplus/(Use of Fund Balance) (268,774) 398,813 (418,083) (280,205) (275,356) 42,567 205,563Beginning Fund Balance878,932606,047 1,004,860 586,777 306,57231,21673,783 Ending Fund Balance610,158$ 1,004,860$ 586,777$ 306,572$ 31,216$ 73,783$ 279,345$ HIGHWAY FUNDPage 6 of 15 1,004,860 586,777 306,572 31,216 73,783 279,345  $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000FY 24/25ForecastFY 25/26ForecastFY 26/27ForecastFY 27/28ForecastFY 28/29ForecastFY 29/30ForecastHighway FundSources, Uses and Fund BalanceFund BalanceSourcesUsesPage 7 of 15 Sources Assumptions Highway User Tax 1. Highway user revenues grow 2.9-3.4% per year per ADOT forecast 2. Forecast assumes no changes in state allocation of funds to cities and towns Miscellaneous 1. Low growth; minimal amount based on current trend Interest Income 1. Subject to economic conditions and based on anticipated fund balance Transfers In 1. Transfers from Capital Fund of $13 million over five years to fund needed roadway projects Uses Assumptions Salaries and Benefits 1. Assumptions similar to General Fund for pay and benefit adjustments 2. No new positions assumed over forecast period Operations & Maintenance 1. Assumes no changes to service levels, 3-4% annual growth rate Capital Outlay 1. Per 10-year CIP program; Capital Fund subsidizes projects in years when HURF revenues are not sufficient to cover costs 2. Three bridge deck repair projects are not in this forecast: First Avenue Bridge Deck Repair ($2.7 million), Rancho Vistoso Blvd Bridge Deck Repair ($4.1 million), Tangerine Rd. Bridge Deck Repair over Big Wash ($1.7 million). Applying for outside funding Pavement Preservation 1. Assumes no significant increase in lane miles. $3.1 million base with 0.5% increases each year HIGHWAY FUND FORECAST ASSUMPTIONS FY 25/26  Forecast %  growth FY 26/27  Forecast %  growth FY 27/28  Forecast %  growth FY 28/29  Forecast %  growth FY 29/30  Forecast %  growth Pavement Preservation 3,090,000  26.0%3,106,000  0.5%3,122,000  0.5%3,138,000  0.5%3,154,000  0.5% Page 8 of 15 Town of Oro ValleyFive-Year ForecastFY 23/24 ActualFY 24/25 ForecastFY 25/26 ForecastFY 26/27 ForecastFY 27/28 ForecastFY 28/29 ForecastFY 29/30 ForecastSOURCESGrants420,000$ 1,000,000$ -$ -$ -$ -$ -$ Interest Income716,598 348,382 351,866 383,534 314,498 264,178 221,910 Miscellaneous247,745 115,000 115,000 115,000 115,000 115,000 115,000 Vehicle Reserves892,540 933,490 961,495 1,000,340 1,040,350 1,081,560 1,124,007 Transfers from General Fund10,000,000 7,139,787 6,586,855 2,409,162 1,631,107 2,639,802 2,052,351 Total Sources12,276,883 9,536,659 8,015,215 3,908,036 3,100,954 4,100,541 3,513,268 USESPersonnel278,321- - - - - - O&M102,004 61,403 61,703 62,012 62,330 62,658 62,658 Capital Outlay18,199,379 8,316,569 1,730,000 8,383,500 4,029,800 3,069,500 4,076,000Transfers to Highway Fund1,500,000 4,000,000 2,000,000 4,000,000 3,000,000 3,000,000 1,000,000 Transfers to Grants Fund- 2,174,530 113,600 117,008 120,518 124,134 127,858 Total Uses20,079,704 14,552,502 3,905,303 12,562,520 7,212,649 6,256,292 5,266,517 Surplus/(Use of Fund Balance)(7,802,821) (5,015,843) 4,109,912 (8,654,484) (4,111,694) (2,155,751) (1,753,249)Beginning Fund Balance24,550,288 16,677,730 11,661,887 15,771,799 7,117,315 3,005,620 849,869 Ending Fund Balance16,747,467$ 11,661,887$ 15,771,799$ 7,117,315$ 3,005,620$ 849,869$ (903,380)$ CAPITAL FUNDPage 9 of 15 11,661,887 15,771,799 7,117,315 3,005,620 849,869 (903,380) $(2,000,000) $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000FY 24/25ForecastFY 25/26ForecastFY 26/27ForecastFY 27/28ForecastFY 28/29ForecastFY 29/30ForecastCapital FundSources, Uses and Fund BalanceFund BalanceSourcesUsesPage 10 of 15 Sources Assumptions Vehicle Reserves 1. General Fund is charged the replacement value of new, non-enterprise fund vehicles over the useful life 2. One new patrol vehicle annually at $100,000 each Miscellaneous 1.Reflects vehicle sales and insurance recoveries; assumed flat Interest Income 1. Subject to economic conditions and based on anticipated fund balance Transfers In 1.Transfers from General Fund consist excess General Fund reserves, per adopted financial policies Uses Assumptions Capital Outlay 1.Capital outlay reflects 10-year CIP program 2.Forecast also includes capacity for new vehicles 3.Assuming a cash contribution of $5,000,000 towards Police Facility in FY 26/27; No debt issuance assumed. Transfers Out 1. Transfers to the Highway Fund subsidize HURF revenue as needed for roadway projects ($13 million) 2. Transfers to the Grant Fund for local match of grant funded transit vehicles CAPITAL FUND FORECAST ASSUMPTIONS Page 11 of 15 Town of Oro ValleyFive-Year ForecastFY 23/24 ActualFY 24/25 ForecastFY 25/26 ForecastFY 26/27 ForecastFY 27/28 ForecastFY 28/29 ForecastFY 29/30 ForecastSOURCESTaxes3,803,267$ 3,859,523$ 3,972,920$ 4,090,255$ 4,211,856$ 4,335,221$ 4,462,690$ Charges for Services6,563,012 7,280,153 7,289,853 7,501,869 7,720,451 7,945,810 8,178,166 Interest Income35,000 3,000 22,500 9,675 34,830 59,211 56,250 Miscellaneous159,050 161,244 2,000 2,000 2,000 2,000 2,000 Total Sources10,560,329 11,303,920 11,287,272 11,603,799 11,969,137 12,342,243 12,699,106 USESPersonnel1,187,609 1,372,465 1,313,143 1,351,323 1,390,625 1,431,081 1,472,725 O&M5,718,086 6,294,789 6,443,871 6,581,270 6,696,706 6,816,214 6,938,355 Capital Outlay1,659,167 1,534,749 3,012,500 665,000 1,065,000 1,225,000 3,630,000 Debt Service (Leases)197,119 223,205 232,133 239,097 246,270 253,658 261,268 Transfers to Debt Service1,717,149 1,716,268 1,716,268 1,711,661 1,714,810 1,709,757 1,708,502 Total Uses10,479,130 11,141,476 12,717,915 10,548,352 11,113,411 11,435,710 14,010,850 Surplus/(Use of Fund Balance)81,199 162,444 (1,430,643) 1,055,448 855,726 906,533 (1,311,744) Beginning Fund Balance1,008,233 1,815,118 1,977,562 546,919 1,602,367 2,458,093 3,364,625 Ending Fund Balance1,089,432$ 1,977,562$ 546,919$ 1,602,367$ 2,458,093$ 3,364,625$ 2,052,881$ COMMUNITY CENTER FUNDPage 12 of 15 1,977,562 546,919 1,602,367 2,458,093 3,364,625 2,052,881  $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000FY 24/25ForecastFY 25/26ForecastFY 26/27ForecastFY 27/28ForecastFY 28/29ForecastFY 29/30ForecastCommunity Center FundSources, Uses and Fund BalanceFund BalanceSourcesUsesPage 13 of 15 Sources Assumptions Local Sales Taxes 1. Categories mirror General Fund forecast, where appropriate 2. Modest economic growth with no major economic downturns in the five-year outlook 3. 2.5-5% growth per year in retail, restaurant/bar, utility and other categories Charges for Services 1.2% growth rate for CRC membership dues, recreation programs and daily drop-ins. 2 No fee increases assumed. Golf Revenues 36-Hole Golf 1. Assumption of a 36-hole operation for FY26 and beyond, outside of overseeding closures 2. Golf rounds stay flat to 1% increase 3. 3.5% greens fee revenue YOY growth from increased public green fee rates 4. 3% dues revenue increase YOY 3. 1-2% increase in remaining revenue categories Pusch Ridge Golf 1. 3.5% increase in green fee revenue YOY from increased public green fee rates 2. Golf rounds stay flat to 1% increase 3. 2.0-2.5% increase in pro shop sales, food/bev and alcohol sales YOY 4. 3.5% dues increase YOY 5. 1-2% increase in all other revenue lines Food & Beverage 1. No major closures or interruption of The Overlook restaurant 2. 3% revenue increase YOY Interest Income 1. Subject to economic conditions and based on anticipated fund balance Miscellaneous 1.Forecast assumes HOA contributions end after FY 24/25, upon completion of five-year contracts. $2,000 assumed annually for insurance recoveries, sale of assets, and special events. COMMUNITY CENTER FUND FORECAST ASSUMPTIONS Category FY 25/26  Forecast %  growth FY 26/27  Forecast %  growth FY 27/28  Forecast %  growth FY 28/29  Forecast %  growth FY 29/30 Forecast %  growth Retail 2,367,274 2.5%2,426,456 2.5%2,487,117 2.5%2,549,295 2.5%2,613,027 2.5% Restaurant & Bar 745,327     5.0%782,593     5.0%821,723     5.0%862,809     5.0%905,950     5.0% Hotel 216,684     1.0%218,851     1.0%221,039     1.0%223,250     1.0%225,482     1.0% Remote Seller 488,955     2.5%501,179     2.5%513,708     2.5%526,551     2.5%539,714     2.5% Other 154,680     4.1%161,177     4.2%168,269     4.4%173,317     3.0%178,516     3.0% Total 3,972,920 9.0%4,090,255 3.0%4,211,856 3.0%4,335,221 2.9%4,462,690 2.9% Page 14 of 15 COMMUNITY CENTER FUND FORECAST ASSUMPTIONS Uses Assumptions Salaries and Benefits 1. Assumptions similar to General Fund for pay and benefit adjustments Operations & Maintenance 1. 3-4% growth in O&M costs 2. Full staffing levels Golf operations 1. Golf operating model remains same through FY29/30 2. 36 hole - 6% lease expense increase for FY27. Cart lease will need to be renewed in November 2026. 3. 2-2.5% labor increase at 36 hole and Pusch Ridge, 3% YOY increase for food and Beverage ; no significant staff additions expected 4. 3% cost of goods sold expense YOY increase for Food & Beverage 5. 3% labor expense YOY increase 6. 2% annual increase in material costs for Food&Beverage Capital Outlay 1.Capital outlay per 10-year CIP program 2.$100,000 annually for building improvements and equipment 3. Vistoso Trails Nature Preserve maintenance at $200,000 per year through FY29, $100,000 annually thereafter Transfers to Debt Service 1. Debt service on the 2022 Parks and Recreation bonds and the 2016 Community Center energy efficiency bonds Page 15 of 15 Five-Year Financial Forecast March 5, 2025 OVERVIEW General Fund, Highway Fund, Capital Fund, and Community Center Fund Snapshot based upon known current information Serves as planning document for future budgets Forecast is updated annually as part of the budget process Sources: University of Arizona, Joint Legislative Budget Committee, AZ Department of Transportation, as well as the knowledge, expertise and professional judgment by Town management and staff OVERVIEW (continued) Forecast shows a reduction in the excess amount that operating revenues exceed operating expenditures in the General Fund State shared revenues decline in FY 24/25 and FY25/26 causing total General Fund revenue decline through FY 26/27 Street maintenance and road capital project increases GENERAL FUND SOURCES -ASSUMPTIONS Assumes no major economic downturns Continued growth of 1-5% in most local sales tax categories No new tax categories are included Construction sales tax reflect general decline due to reduced available land for new development Conservative commercial permitting activity forecast Single family residential permits State shared revenues Shared Income tax expected to decline in FY25/26 due to rate cap of 2.5%. FY 23/24 Actual FY 24/25 Forecasted FY 25/26 Forecasted FY 26/27 Forecasted FY 27/28 Forecasted FY 28/29 Forecasted FY 29/30 Forecasted 148 114 107 97 142 130 92 GENERAL FUND SOURCES -FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast SOURCES Taxes 27,494,515$ 27,374,127$ 28,843,700$ 29,212,673$ 28,246,535$ 29,984,031$ 30,051,345$ State Shared Revenue 22,785,500 20,556,368 20,349,270 21,492,689 22,471,164 23,468,909 24,512,119 Charges for Services 2,971,448 3,081,369 3,060,191 3,146,660 3,230,556 3,328,830 3,420,663 Licenses & Permits 2,122,503 1,793,735 2,153,498 1,598,946 2,143,430 1,797,258 1,581,526 Intergovernmental 2,027,141 2,141,306 2,000,471 2,019,575 2,038,871 2,058,360 2,078,043 Grants 448,272 567,929 650,003 657,190 664,493 671,912 679,451 Miscellaneous 594,658 717,680 274,857 277,605 280,381 283,185 286,017 Fines 61,640 68,000 68,680 69,367 70,060 70,761 71,469 Interest Income 716,939 750,000 637,500 586,500 598,230 610,195 622,398 Total Sources 59,222,615 57,050,514 58,038,171 59,061,206 59,743,721 62,273,440 63,303,033 GENERAL FUND GENERAL FUND SOURCES -FORECAST GENERAL FUND USES -ASSUMPTIONS Employee pay adjustments and Police step increases included in all years of forecast Very modest capacity for new FTEs Continued capacity for normal increases in employee-related personnel costs (ERE) Continuation of elevated PSPRS payments O&M assumes current service levels Transfers for CIP projects assumed at 5% of sales tax collections per Town Council financial policies, plus all fund balance over 30% reserve excluding contingency GENERAL FUND USES -FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast USES Personnel 34,847,443 35,507,892 37,065,963 37,974,699 39,003,607 40,052,350 41,118,849 O&M 13,508,142 14,380,325 15,283,232 15,905,309 16,413,790 17,099,034 17,663,722 Capital Outlay 180,402 516,600 520,784 373,168 385,743 398,515 412,490 Transfers Out 12,274,644 9,156,345 8,878,038 4,393,071 3,475,592 4,199,514 3,614,439 Total Uses 60,810,631 59,561,162 61,748,017 58,646,247 59,278,731 61,749,412 62,809,501 Surplus/(Use of Fund Balance)(1,588,016) (2,510,648) (3,709,846) 414,959 464,990 524,028 493,532 Beginning Fund Balance 23,798,492 22,081,503 19,570,855 15,861,009 16,275,969 16,740,958 17,264,987 Ending Fund Balance 22,210,476$ 19,570,855$ 15,861,009$ 16,275,969$ 16,740,958$ 17,264,987$ 17,758,518$ Reserve as % of Expenditures 45.8%38.8%30.0%30.0%30.0%30.0%30.0% GENERAL FUND GENERAL FUND USES -FORECAST GENERAL FUND FORECAST GENERAL FUND FORECAST HIGHWAY FUND SOURCES -ASSUMPTIONS Arizona Department of Transportation forecasts moderate growth, 2.9 -3.4%, in highway user gas tax (HURF) revenues Other revenue sources assume modest and incremental growth Transfers in from the Capital Fund supplement HURF revenues for roadway projects identified in the ten-year CIP La Cañada Bridge Deck Repair -$1.7 million in FY 25/26 Rancho Vistoso Bridge Deck Repair (eastbound) -$750,000 in FY 26/27 First Avenue mill/overlay -$1.7 million in FY 27/28 Rancho Vistoso Blvd mill/overlay -$2 million in FY 28/29 Annual pavement preservation program -$3.0-$3.2 million per year HIGHWAY FUND SOURCES -FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast SOURCES State Shared Revenue 4,221,036$ 4,288,907$ 4,457,715$ 4,597,681$ 4,839,086$ 4,991,599$ 5,124,674$ Licenses & Permits 25,869 37,000 37,740 38,117 38,499 38,884 39,272 Interest Income 185,013 100,000 99,000 59,400 20,790 6,861 21,954 Miscellaneous 14,715 3,231 3,263 3,296 3,329 3,362 3,396 Transfers from Capital Fund 1,500,000 4,000,000 2,000,000 4,000,000 3,000,000 3,000,000 1,000,000 Total Sources 5,946,633 8,429,138 6,597,718 8,698,495 7,901,704 8,040,706 6,189,297 HIGHWAY FUND HIGHWAY FUND USES -ASSUMPTIONS Personnel and O&M figures reflect similar assumptions to General Fund Pavement preservation funding is included at $3.0 –$3.2 million per year Capital outlay reflects ten-year, tentative CIP schedule HIGHWAY FUND USES -FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast USES Personnel 1,241,700 1,322,820 1,361,984 1,389,299 1,417,162 1,445,585 1,474,579 O&M 1,052,092 1,256,505 1,228,817 1,212,601 1,247,398 1,283,239 1,320,155 Capital Outlay 3,921,615 5,451,000 4,425,000 6,376,800 5,512,500 5,269,315 3,189,000 Total Uses 6,215,407 8,030,325 7,015,801 8,978,699 8,177,060 7,998,139 5,983,734 Surplus/(Use of Fund Balanc (268,774)398,813 (418,083)(280,205)(275,356)42,567 205,563 Beginning Fund Balance 878,932 606,047 1,004,860 586,777 306,572 31,216 73,783 Ending Fund Balance 610,158$ 1,004,860$ 586,777$ 306,572$ 31,216$ 73,783$ 279,345$ HIGHWAY FUND HIGHWAY FUND FORECAST HIGHWAY FUND FORECAST CAPITAL FUND SOURCES -ASSUMPTIONS Capital Fund is supported by General Fund transfers, vehicle reserves for fleet replacements, bond proceeds and grants Miscellaneous revenues, including sale of assets and insurance recoveries held steady in the forecast Non-enterprise fund vehicle reserves charged to General Fund based on replacement cost of each vehicle over useful life and includes 10% cost inflation Transfers annually from the General Fund reflect 5% of sales tax and excess fund balance over 30% reserve CAPITAL FUND SOURCES - FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast SOURCES Grants 420,000$ 1,000,000$ -$ -$ -$ -$ -$ Interest Income 716,598 348,382 351,866 383,534 314,498 264,178 221,910 Miscellaneous 247,745 115,000 115,000 115,000 115,000 115,000 115,000 Vehicle Reserves 892,540 933,490 961,495 1,000,340 1,040,350 1,081,560 1,124,007 Transfers from General Fund 10,000,000 7,139,787 6,586,855 2,409,162 1,631,107 2,639,802 2,052,351 Total Sources 12,276,883 9,536,659 8,015,215 3,908,036 3,100,954 4,100,541 3,513,268 CAPITAL FUND CAPITAL FUND USES - ASSUMPTIONS Capital outlay reflects ten-year, tentative CIP schedule Includes $5,000,000 cash contribution towards police facility in FY26/27; no debt issuance New vehicle purchases (in addition to replacements) assumed at one patrol vehicle annually 3% inflation for vehicle replacements Transfers out to the Highway Fund for roadway CIP projects CAPITAL FUND USES - FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast USES Personnel 278,321 - - - - - - O&M 102,004 61,403 61,703 62,012 62,330 62,658 62,658 Capital Outlay 18,199,379 8,316,569 1,730,000 8,383,500 4,029,800 3,069,500 4,076,000 Transfers to Highway Fund 1,500,000 4,000,000 2,000,000 4,000,000 3,000,000 3,000,000 1,000,000 Transfers to Grants Fund - 2,174,530 113,600 117,008 120,518 124,134 127,858 Total Uses 20,079,704 14,552,502 3,905,303 12,562,520 7,212,649 6,256,292 5,266,517 Surplus/(Use of Fund Balance)(7,802,821)(5,015,843)4,109,912 (8,654,484)(4,111,694)(2,155,751)(1,753,249) Beginning Fund Balance 24,550,288 16,677,730 11,661,887 15,771,799 7,117,315 3,005,620 849,869 Ending Fund Balance 16,747,467$ 11,661,887$ 15,771,799$ 7,117,315$ 3,005,620$ 849,869$ (903,380)$ CAPITAL FUND CAPITAL FUND FORECAST CAPITAL FUND FORECAST COMMUNITY CENTER FUND SOURCES - ASSUMPTIONS Local sales tax figures follow same growth as General Fund for relevant categories Conservative 1% growth for Parks & Recreation related revenues to account for potential discretionary spending decreases as result of inflation Golf rounds stay flat – 1% increase HOA contributions end after FY 24/25, upon completion of five-year contracts COMMUNITY CENTER FUND SOURCES - FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast SOURCES Taxes 3,803,267$ 3,859,523$ 3,972,920$ 4,090,255$ 4,211,856$ 4,335,221$ 4,462,690$ Charges for Services 6,563,012 7,280,153 7,289,853 7,501,869 7,720,451 7,945,810 8,178,166 Interest Income 35,000 3,000 22,500 9,675 34,830 59,211 56,250 Miscellaneous 159,050 161,244 2,000 2,000 2,000 2,000 2,000 Total Sources 10,560,329 11,303,920 11,287,272 11,603,799 11,969,137 12,342,243 12,699,106 COMMUNITY CENTER FUND COMMUNITY CENTER FUND USES - ASSUMPTIONS Personnel and O&M figures reflect similar assumptions to General Fund Capital outlay reflects ten-year, tentative CIP schedule Vistoso Trails Nature Preserve maintenance at $200,000 per year through FY29, $100,000 annually thereafter $100,000 annually for building improvements and minor assets (non-CIP) Debt service transfers for Parks and Recreation bonds and energy efficiency bonds COMMUNITY CENTER FUND USES – FORECAST Town of Oro Valley Five-Year Forecast FY 23/24 Actual FY 24/25 Forecast FY 25/26 Forecast FY 26/27 Forecast FY 27/28 Forecast FY 28/29 Forecast FY 29/30 Forecast USES Personnel 1,187,609 1,372,465 1,313,143 1,351,323 1,390,625 1,431,081 1,472,725 O&M 5,718,086 6,294,789 6,443,871 6,581,270 6,696,706 6,816,214 6,938,355 Capital Outlay 1,659,167 1,534,749 3,012,500 665,000 1,065,000 1,225,000 3,630,000 Debt Service (Leases)197,119 223,205 232,133 239,097 246,270 253,658 261,268 Transfers to Debt Service 1,717,149 1,716,268 1,716,268 1,711,661 1,714,810 1,709,757 1,708,502 Total Uses 10,479,130 11,141,476 12,717,915 10,548,352 11,113,411 11,435,710 14,010,850 Surplus/(Use of Fund Balance)81,199 162,444 (1,430,643) 1,055,448 855,726 906,533 (1,311,744) Beginning Fund Balance 1,008,233 1,815,118 1,977,562 546,919 1,602,367 2,458,093 3,364,625 Ending Fund Balance 1,089,432$ 1,977,562$ 546,919$ 1,602,367$ 2,458,093$ 3,364,625$ 2,052,881$ COMMUNITY CENTER FUND COMMUNITY CENTER FUND FORECAST COMMUNITY CENTER FUND FORECAST TOTAL NON-ENTERPRISE DEBT SERVICE DUE BY YEAR 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Questions?    Town Council Regular Session A. Meeting Date:03/05/2025   Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Minutes - February 13 and February 19, 2025 RECOMMENDATION: Staff recommend 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 13 and February 19, 2025 minutes.  Attachments 2-13-25 Draft Minutes  2-19-25 Draft Mintues  D R A F T   AGENDA ORO VALLEY TOWN COUNCIL STUDY SESSION FEBRUARY 13, 2025 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 8:30 a.m.   ROLL CALL Present: Joseph C. Winfield, Mayor Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Mary Murphy, Councilmember Elizabeth Robb, Councilmember Absent:Melanie Barrett, Vice Mayor Josh Nicolson, Councilmember PLEDGE OF ALLEGIANCE    Mayor Winfield led the audience in the Pledge of Allegiance. Vice Mayor Barrett joined the meeting at 8:32 a.m.   STUDY SESSION AGENDA   PRESENTATION AND DISCUSSION REGARDING PROJECTS, STRATEGIES AND GUIDING PRINCIPLES FOR THE 2025/2027 TOWN COUNCIL STRATEGIC PLAN       Mayor Winfield provided opening remarks for the Study Session and thanked all those who were involved with preperations for the meeting. Councilmember Nicolson joined the meeting at 8:45 a.m.. Town Manager Jeff Wilkins provided a brief overview of the Study Session regarding the 2025/2027 Town Council Strategic Plan. Facilitator Mike Letcher, of the Bridge Group LLC, introduced himself and gave an overview of the Study Session format. 2/13/25 Minutes, Oro Valley Town Council Study Session 1 Town Manager Jeff Wilkins provided an overview of the Strategic Plan Accomplishments for fiscal year's 23/24 through 24/25. Mr. Letcher continued the overview of the Study Session and presented the proposed updated Strategic Plan format. Discussion ensued amongst Council, staff and Mr. Letcher regarding the proposed updated Strategic Plan format. Mr. Letcher continued the presentation regarding the Strategic Projects and Initiatives with a focus on the following areas: Economic Vitality Culture and Recreation Discussion ensued amongst Council, staff and Mr. Letcher throughout the presentation regarding Economic Vitality and Culture and Recreation. Mayor Winfield recessed the meeting at 10:50 a.m. Mayor Winfield reconvened the meeting at 11:01 a.m. Mr. Letcher continued the presenation regarding Strategic Projects and Initiatives and included the following focus areas: Public Safety Infrastructure and Town Assets Discussion ensued amongst Council, staff and Mr. Letcher throughout the presentation regarding Public Safety and Infrastructure and Town Assets. Mayor Winfield recessed the meeting at 12:04 p.m. Mayor Winfield reconvened the meeting at 12:30 p.m. Mr. Letcher continued the presentation regarding the Strategic Projects and Initiatives and included the following focus areas: Land Use and Design Effective and Efficient Government Financial Stability Discussion ensued amongst Council, staff and Mr. Letcher throughout the presentation regarding Land Use and Design, Effective and Efficient Government, and Financial Stability. Mayor Winfield recessed the meeting at 1:26 p.m. Mayor Winfield reconvened the meeting at 1:44 p.m. Mr. Letcher continued the presentation to review and discuss the proposed focus areas and guiding principles. Discussion ensued amongst Council, staff and Mr. Letcher regarding the focus areas and guiding principles. Council provided comments and direction to staff regarding the proposed focus areas and guiding principles. Closing remarks were provided by Mayor Winfield and Town Manager Jeff Wilkins.   2/13/25 Minutes, Oro Valley Town Council Study Session 2          ADJOURNMENT    Mayor Winfield adjourned the meeting at 3:02 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 13th day of February 2025. I further certify that the meeting was duly called and held and that a quorum was present. ____________________________________________ Michael Standish, CMC Town Clerk     2/13/25 Minutes, Oro Valley Town Council Study Session 3 D R A F T   MINUTES ORO VALLEY TOWN COUNCIL REGULAR SESSION FEBRUARY 19, 2025 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 5:00 PM   CALL TO ORDER    Mayor Winfield called the meeting to order at 5:01 p.m.   ROLL CALL Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice-Mayor Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Mary Murphy, Councilmember Josh Nicolson, Councilmember Elizabeth Robb, Councilmember EXECUTIVE SESSION   1.Pursuant to Arizona Revised Statutes §38-431.03 (A)(3) and (A)(4), to obtain legal advice regarding the Oro Valley Church of the Nazarene (OVCN) application for additional height regarding the applicant's appeal of the Planning & Zoning Commission's denial of the OVCN height request on January 14, 2025       Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to go into Executive Session at 5:02 p.m., pursuant to Arizona Revised Statutes §38-431.03 (A)(3) and (A)(4), to obtain legal advice regarding the Oro Valley Church of the Nazarene (OVCN) application for additional height regarding the applicant's appeal of the Planning & Zoning Commission's denial of the OVCN height request on January 14, 2025  Vote: 7 - 0 Carried    Mayor Winfield announced that the following stafff would be joining Council in Excutive Session: Town Manager Jeff Wilkins, Town Attorney Jonathan Rothschild, Legal Services Director Tobin Sidles, Community and Economic Development Director Paul Melcher, Planning Manager Bayer Vella, and the Town Clerk Mike Standish.   RESUME REGULAR SESSION AT OR AFTER 6:00 PM 2/19/25 Minutes, Oro Valley Town Council Regular Session 1   CALL TO ORDER    Mayor Winfield resumed the Regular Session at 6:01 p.m.   ROLL CALL    Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice-Mayor Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Mary Murphy, Councilmember Josh Nicolson, Councilmember Elizabeth Robb, 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.   MAYOR AND COUNCIL REPORTS ON CURRENT EVENTS    Councilmember Greene reported that he had attended the Catalina Chapter of the Boy Scouts of America , where 40 young men had received thier Eagle Scout award. Councilmember Jones-Ivey encouraged citizens to volunteer and participate in Amphi School Districts Project Graduation's upcoming events and fundraisers. Councilmember Jones-Ivey encouraged citizens to attend the Jose Samaniego Memorial Archery Shoot and BBQ Challenge which would be held at Naranja Park on March 1, 2025. Mayor Winfield had proclaimed the week of February 17-23, 2025, as Tucson Navy week in Oro Valley. Mayor Winfield also attended a special ceremony at the Arizona Heroes Memorial where Vietnam Veterans and three Gold Star Families were recognized. Representatives of the Gold Star Families were also presented a plaque in honor of their fallen service member. Mayor Winfield encouraged citizens to visit the Arizona Heroes Memorial.   2/19/25 Minutes, Oro Valley Town Council Regular Session 2          TOWN MANAGER'S REPORT ON CURRENT EVENTS    Town Manager Jeff Wilkins reported the following: A Fire Safety and Wild Fire Management Open House would be held in March. More details to come. Visit Golder Ranch Fire District's website for homeowner guides on various fire tips. OV Path Forward update Oro Valley Public Art Tours update Oro Valley business update Oro Valley Concert Series update Oro Valley Hiking Series update Upcoming Oro Valley Events   ORDER OF BUSINESS:    Mayor Winfield reviewed the order of business and stated the order would stand as posted.   INFORMATIONAL ITEMS    There were no informational items.   CALL TO AUDIENCE    Oro Valley resident Richard Furash voiced his concerns regarding the FY2026/2027 Strategic Plan session and process. Oro Valley resident Anthony Ferrara spoke regarding the Arizona State Swimming Championships which would be held at the Oro Valley Aquatic Center. Oro Valley resident Diane Hall voiced her concerns regading Oro Valley Short Term Rental Units. Mayor Winfield requested that Town Manager Jeff Wilkins follow up with Ms. Hall to address her concerns.   PRESENTATIONS   1.Presentation and possible discussion regarding OV Trails Connect, the Town's Trail Master Plan project       Oro Valley Planner Alexandra Chavez presented the OV Trails Connect, the Town's Trail Master Plan project and included the following: Purpose Background and Project Importance OV Trails Connect Project Focus OV Trails Connect Brand Development Project Milestones - Phase 1 through Phase 4 2/19/25 Minutes, Oro Valley Town Council Regular Session 3 Preliminary Mapping and Analysis Preliminary Takeaways - Pedestrian Preliminary Takeaways - Cycling Engaging Oro Valley Residents and Regional Partners Coordinating plans with Regional Partners Hearing From Trails Stakeholder Group Community Outreach Efforts Next Steps Discussion ensued amongst Council and staff regarding the OV Trails Connect, the Town's Trail Master Plan Project.   CONSENT AGENDA   A.Minutes - January 22, and February 5, 2025      B.Appointments to the Budget and Finance Commission (BFC) and the Historic Preservation Commission (HPC)      C.Resolution No. (R)25-03, approving the Agenda Committee assignment for the period of March 1, 2025 to May 31, 2025      D.Resolution No. (R)25-04, authorizing and approving a school resource officer agreement between Amphitheater Unified School District and the Town of Oro Valley for the assignment of three (3) Town of Oro Valley Police Officers to act as school resource officers (SRO) for the District      E.Authorization to reallocate existing equipment funding to purchase a crack seal applicator/melter machine in lieu of a class 8 tandem axle dump truck       Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to approve Consent items (A) through (E).  Vote: 7 - 0 Carried   REGULAR AGENDA   1.PUBLIC HEARING: DISCUSSION AND POSSIBLE ACTION REGARDING AN APPEAL OF THE PLANNING AND ZONING COMMISSION DENIAL OF THE APPLICANT’S REQUEST FOR INCREASED BUILDING HEIGHT ALLOWANCES WITHIN PRIVATE SCHOOL ZONING FOR A PROPOSED NEW SANCTUARY BUILDING SITUATED NORTHEAST OF THE CALLE CONCORDIA AND CALLE BUENA VISTA INTERSECTION       Mayor Winfield provided information regarding a request for continuance, received from John Gillespie of Rose Law Group, representing the Oro Valley Church of the Nazarene. Mr. Gillespie presented his case to Council regarding the request for continuance for item #1.    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to continue 2/19/25 Minutes, Oro Valley Town Council Regular Session 4  Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to continue the Oro Valley Church of the Nazarene appeal for a period of six weeks, on April 2, 2025. Discussison ensued amongst Council, staff, and Mr. Gillespie regarding the request for continuance.    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to continue the Oro Valley Church of the Nazarene appeal for a period of six weeks, on April 2, 2025.  Vote: 7 - 0 Carried    Mayor Winfield recessed the meeting at 6:47 p.m. Mayor Winfield reconvened the meeting at 6:57 p.m.   2.PUBLIC HEARING: ORDINANCE NO. (O)25-02, DISCUSSION AND POSSIBLE ACTION TO AMEND ORO VALLEY TOWN CODE 11-3-4 TO ADD MUSETTE DRIVE (IN NARANJA PARK) TO THE LIST OF STREETS FOR POLICE ENFORCEMENT PURPOSES AND SETTING A SPEED LIMIT       Mayor Winfield opened the public hearing. No comments were received. Mayor Winfield closed the public hearing. Vice Mayor Barrett provided information as to why this item had been requested.    Motion by Vice-Mayor Melanie Barrett, seconded by Councilmember Harry Greene to approve Ordinance No. (O)25-02, adding Musette Drive to the Oro Valley Town Code, amending Oro Valley Town Code 11-3-4 to reflect this addition, and establishing a speed limit for Musette Drive of 20 miles per hour. Discussion ensued amongst Council and staff regarding item #2.    Motion by Vice-Mayor Melanie Barrett, seconded by Councilmember Harry Greene to approve Ordinance No. (O)25-02, adding Musette Drive to the Oro Valley Town Code, amending Oro Valley Town Code 11-3-4 to reflect this addition, and establishing a speed limit for Musette Drive of 20 miles per hour.  Vote: 7 - 0 Carried   FUTURE AGENDA ITEMS    No future agenda items were requested.   ADJOURNMENT    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Mary Murphy to adjourn the meeting at 7:04 p.m.  Vote: 7 - 0 Carried   2/19/25 Minutes, Oro Valley Town Council Regular Session 5     _______________________________________________ Michelle Stine, MMC, CPM Deputy Town Clerk I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley, Arizona held on the 19th day of February 2025. I further certify that the meeting was called and held and that a quorum was present. _______________________________________________ Mike Standish, CMC Town Clerk 2/19/25 Minutes, Oro Valley Town Council Regular Session 6    Town Council Regular Session B. Meeting Date:03/05/2025   Requested by: Zach Young Submitted By:Catherine Hendrix, Police Department Department:Police Department SUBJECT: Resolution No. (R)25-05, delegating authority to the Oro Valley Chief of Police to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund overtime and mileage under the Operation Stonegarden program RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: For several years, the Arizona Department of Homeland Security (AZDOHS) has partnered with the Town of Oro Valley Police Department (OVPD), providing funding for Operation Stonegarden to include overtime and mileage, as well as the purchase of critical equipment. On January 24, 2025, OVPD was provided a notice awarding the funding for overtime and mileage. OVPD wishes to enter into a subgrantee agreement with AZDOHS to fund overtime and mileage for officers to be deployed under the Operation Stonegarden program. BACKGROUND OR DETAILED INFORMATION: The grant application was made in order to work in a regional partnership with other local law enforcement agencies and the U.S. Border Patrol Tucson Sector to reduce crime and improve the quality of life for the residents and visitors of Oro Valley. This grant will use targeted deployments of officers and canine units to impact the flow of smugglers engaged in human trafficking and illegal contraband, as well as possible terrorists who intend to cause harm or commit crimes against this nation. FISCAL IMPACT: The capacity exists in the current FY 24/25 budget, and it is requested in the FY 25/26 budget to accept this grant award for a total of $221,163. SUGGESTED MOTION: I MOVE to (approve or deny) Resolution No. (R)25-05, delegating authority to the Oro Valley Police Chief to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund overtime and mileage under the Operation Stonegarden program. Attachments (R)25-05 Stonegarden OT & Mileage  Stonegarden OT & Mileage Agreement  RESOLUTION NO. (R)25-05 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, DELEGATING AUTHORITY TO THE ORO VALLEY CHIEF OF POLICE TO SIGN AND ENTER A SUBGRANTEE AGREEMENT BETWEEN THE TOWN OF ORO VALLEY AND THE ARIZONA DEPARTMENT OF HOMELAND SECURITY TO FUND OVERTIME AND MILEAGE UNDER THE OPERATION STONEGARDEN PROGRAM; 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, the Arizona Department of Homeland Security (AZDOHS) requires participating jurisdictions to enter into a Subgrantee Agreement to receive the funds granted under the Operation Stonegarden Program; and WHEREAS, the Town of Oro Valley’s allocation under the grant is a maximum of $221,163 which will be used to fund overtime and mileage under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection; and WHEREAS, it is in the best interest of the Town of Oro Valley to delegate authority to the Oro Valley Chief of Police to enter the Subgrantee Agreement (attached hereto as Exhibit “A” and incorporated herein by this reference) in order to receive funds which will be used to fund overtime and mileage under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection. NOW THEREFORE BE IT RESOLVED by the Mayor and Town Council of the Town of Oro Valley, Arizona, that: SECTION 1. Authority is delegated to the Oro Valley Chief of Police to enter the Subgrantee Agreement between the Town of Oro Valley, for the benefit of the Oro Valley Police Department, and the Arizona Department of Homeland Security, attached hereto as Exhibit “A” and incorporated herein by this reference, to fund overtime and mileage under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection. SECTION 2. 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 3. 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. SECTION 4. If any section, subsection, sentence, clause, phrase or portion of this Resolution, or the Subgrantee Agreement attached hereto as Exhibit “A” 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. PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona, this 5th day of March, 2025. TOWN OF ORO VALLEY, ARIZONA ______________________________ Joseph C. Winfield, Mayor ATTEST: APPROVED AS TO FORM: Michael Standish, Town Clerk Tobin Sidles, Legal Services Director Date: Date: EXHIBIT “A” 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 1 SUBRECIPIENT AGREEMENT OPERATION STONEGARDEN GRANT PROGRAM OVERTIME-MILEAGE 24-AZDOHS-OPSG-___________ (Enter Subrecipient Agreement number above (e.g., 240XXX-XX) Between The Arizona Department of Homeland Security And (Enter the name of the Subrecipient Agency above) UEI Number___________ (Enter the UEI number above) WHEREAS, ARS 41-4254 makes AZDOHS responsible for administering the funds covered by this agreement (“Agreement”), the parties hereby agree to the following terms: 1.Purpose of Agreement This Agreement is to specify the rights and responsibilities of AZDOHS in administering the distribution of homeland security grant funds to Subrecipient, and to specify the rights and responsibilities of Subrecipient as the recipient of these funds. 2.Period of Performance This Agreement shall become effective on February 1, 2025 and shall terminate on March 31, 2026 (the “Period of Performance”). The obligations of the Subrecipient as described herein will survive termination of this agreement. 3.Description of Services The Subrecipient shall provide the services for AZDOHS as set forth in writing in Subrecipient’s grant application titled: “OPSG OVERTIME-MILEAGE” and funded at $_____________ (as may have been modified by the award letter). (Enter funded award amount above) 4.Financing and Fiscal Responsibility Under US Department of Homeland Security (“USDHS”) grant EMW-2024-SS-05080 and Catalog of Federal Domestic Assistance (“CFDA”) #97.067, AZDOHS shall provide up to $_____________ to Subrecipient under this Agreement. Payment to Subrecipient must be on a reimbursement basis only, conditioned upon Subrecipient providing AZDOHS with proof of payment and applicable, accurate and complete reimbursement documents, as deemed necessary by AZDOHS. A list of acceptable documentation is at www.azdohs.gov. Payments are contingent on Subrecipient performing all its obligations under this Agreement. Subrecipient may use the funds provided under this Agreement only as provided in the application and award documentation. If Subrecipient does not complete all its obligations, Subrecipient must immediately reimburse all previously-provided funds to AZDOHS. If Subrecipient completes its obligations at a lower than the budgeted cost, the amount reimbursed to Subrecipient will be only the amount actually spent by Subrecipient in accordance with the approved application. For any expenditure disallowed after or otherwise by AZDOHS, or the State or Federal government, Subrecipient must immediately reimburse such funds to AZDOHS. Page 2 5.Reporting Requirements Subrecipient must submit quarterly programmatic reports to AZDOHS as follows: January 15 (for the period from October 1– December 31) April 15 (for the period from January 1 – March 31) July 15 (for the period from April 1 – June 30) October 15 (for the period from July 1 – September 30) Subrecipient must use the Quarterly Programmatic Report form (https://azdohs.gov/grant- program-forms) for these reports. Subrecipient must provide detailed information on the status of completion of the planned activities in the approved application satisfactory to AZDOHS in its sole discretion. Failure to adequately provide such information will result in the Quarterly Programmatic Report being rejected by AZDOHS and resubmission will be required. If the program has been fully completed so that there will be no further updates, then the quarterly report for the quarter in which the program was completed will be the final report; the report should be marked as “final” and must include all pertinent information regarding the program as determined solely by AZDOHS. Final Quarterly Programmatic Report: The final quarterly programmatic report is due no more than 15 calendar days after the end of the performance period. Subrecipient may submit a final quarterly report prior to the end of the performance period if the scope of the project has been fully completed and implemented. The Property Control Form is due with the final quarterly report (if applicable). 6. Reimbursements Subrecipient must provide AZDOHS with requests for reimbursement as frequently as monthly but not less than quarterly; submissions must be made via US Mail, delivery service (FedEx, UPS, etc.) or in person; submissions via fax or by any electronic means will not be accepted. Reimbursement requests shall be submitted with the Reimbursement Form provided by AZDOHS staff. AZDOHS has the right to require Subrecipient to provide any documentation and/or information AZDOHS deems necessary to process submissions. Reimbursement requests are only required when expenses have been incurred. The Subrecipient shall submit a final reimbursement request, marked as such, for expenses received and invoiced prior to the end of the period of performance. The final reimbursement must be received by AZDOHS no more than 45 calendar days after the end of the period of performance. Requests for reimbursement received by AZDOHS later than 45 calendar days after the end of the period of performance will not be paid. Subrecipients will only be reimbursed for expenses that have been obligated, expended and received within the authorized Period of Performance as identified in Paragraph 2 of this Agreement. Subrecipients are not authorized to obligate or expend funds prior to the start date of the Period of Performance. Any expenses obligated or expended prior to the Period of Performance start date will be deemed unallowable and will not be reimbursed. Any expenses/services that occur beyond the Period of Performance (e.g. cell phone service) will be deemed unallowable and will not be reimbursed. 7.Environmental Planning and Historic Preservation Subrecipient must comply with Federal, State and Local environmental and historical preservation (EHP) regulations, laws and Executive Orders as applicable. See https://www.fema.gov/media-library-data/1533321728657- 592e122ade85743d1760fd4747241776/GPD_EHP_Policy_Final Amendment_GPD_final_508.pdf and https://azdohs.gov/environmental-and-historic-preservation-ehp. Subrecipients proposing programs with potential environmental impact must participate in the USDHS/Federal Emergency Management Agency (FEMA) EHP review process. Subrecipient must complete the EHP review 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 3 process before funds will be released by AZDOHS. If Subrecipient engages in ground disturbing activities, Subrecipient must monitor ground disturbance. If archeological resources are discovered, Subrecipient must immediately (a) cease construction and (b) notify FEMA, AZDOHS, and the Arizona State Historic Preservation Office. AZDOHS/DHS/FEMA will not fund or reimburse projects that are initiated without the required EHP review. 8.Procurement (including Noncompetitive Procurement) Subrecipient must comply with its procurement rules/policies, all Federal procurement rules/policies, and all Arizona Procurement Code provisions and rules, the most restrictive of which will apply. Subrecipient must not enter into a noncompetitive procurement unless AZDOHS grants prior written approval via the Noncompetitive Procurement Request form at https://azdohs.gov/grant-program -forms. 9.Property Control Subrecipient must safeguard and maintain control and accountability for all property/equipment purchased under this Agreement, and Subrecipient must assure that it is used only for purposed authorized under this Agreement and maintained as provided in 2 CFR 200.313. Such property/equipment shall be used by Subrecipient in the program for which it was acquired as long as needed, whether or not the program continues to be supported by Federal grant funds. Subrecipient must immediately investigate and report to AZDOHS any loss, damage, or theft. Subrecipient must replace any property/equipment lost, damaged or stolen at Subrecipient’s expense, and must immediately submit an updated Property Control Form (https://azdohs.gov/grant-program-forms) to AZDOHS. “Nonexpendable Property/Equipment” is property that has a continuing use, is not consumed in use, has an expected life of one year or more, costs $5,000 or more per unit, and does not become a fixture or lose its identity as a component of other equipment/systems, while a “Capital Asset” is personal or real property or a fixture costing $5,000 or more per unit with an expected life of one year or more. Subrecipient is solely responsible for the proper maintenance of all Nonexpendable Property/Equipment and Capital Assets acquired under this Agreement Subrecipient must take a physical inventory of all such Nonexpendable Property/Equipment and Capital Assets and reconcile the results with the Property Control Form at least once every two years. Subrecipient must maintain a control system to prevent loss, damage, or theft of such Nonexpendable Property/Equipment and Capital Assets, and Subrecipient must immediately report any loss, damage, or theft to AZDOHS. A Property Control Form (if applicable) shall be maintained for the entire scope of the program or project for which property was acquired through the end of its useful life and/or disposition. All Nonexpendable Property and Capital Assets must be included on the Property Control Form. The Subrecipient, if applicable, shall provide AZDOHS a copy of the Property Control Form with the final quarterly programmatic report. The Property Control Form can be located at https://azdohs.gov/grant-program-forms. The Subrecipient agrees to be subject to equipment monitoring and auditing by state or federal authorized representatives to verify information. When Subrecipient is no longer using Nonexpendable Property/Equipment and/or Capital Assets acquired under this Agreement on the program, Subrecipient must immediately submit an updated Property Control Form to AZDOHS, and any disposition must be in compliance with AZDOHS Disposition Guidance (https://azdohs.gov/grant-program-forms) and 2 CFR Part 200, including specifically 2 CFR 200.313. If Subrecipient seeks disposition of such Nonexpendable Property/Equipment or Capital Assets for any reason other than theft, destruction, or loss, Subrecipient must submit an Equipment Disposition Request Form (https://azdohs.gov/grant- program-forms) to AZDOHS and receive approval from AZDOHS prior to disposition. Subrecipient must update the Property Control Form and provide a copy to AZDOHS within 45 calendar days after disposition. Per 2 CFR 200.333(c), Subrecipient must retain all records relating to such Nonexpendable Property/Equipment and Capital Assets for 3 years after disposition. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 4 10.Training and Exercise All training and/or exercise events must be included in Subrecipient’s application. Alternate/additional training/exercise requests must be approved in advance by AZDOHS. Subrecipient must submit a Project Modification Request Form (https://azdohs.gov/grant-program-forms) for review and approval by AZDOHS prior to scheduling alternate/additional training/exercise events. For those projects that are managed by DEMA, alternate/additional training requests must be approved in advance by DEMA and AZDOHS using the Pre-approval form (https://dema.az.gov/emergency-management/preparedness/training). All exercises must comply with FEMA Homeland Security Exercise and Evaluation Program (https://www.fema.gov/emergency-managers/national-preparedness/exercises/hseep; “HSEEP”) guidance. Subrecipient will (a) Submit an exercise summary and attendance/sign-in roster; and (b)Email the After Action Report/Improvement Plan to the local County Emergency Manager, AZDOHS, and the DEMA Exercise Branch, within 90 days of completion of an exercise or as prescribed by HSEEP. 11.Consultants/Trainers/Training Providers Invoices for consultants/trainers/training providers must include: a description of services; dates of services; number of hours for services performed; rate charged; and the total cost of services. Rates must be within the prevailing rates; must be consistent with Subrecipient’s procurement policies and 2 CFR Part 200; and shall not exceed $650 per day per consultant/trainer/training provider unless AZDOHS grants prior written approval. This includes internal personnel hired on backfill/overtime to deliver training. Subrecipient will not be reimbursed costs other than travel, lodging, meals, and incidentals on travel days for consultants/trainers/training providers, at rates not to exceed State rates, and itemized receipts are required. See Travel Costs below, at Paragraph 12. 12.Travel Costs All grant funds expended for travel, lodging, meals and incidentals are subject to the standards of Subrecipient’s policies and procedures, and the State of Arizona Accounting Manual (https://gao.az.gov/publications/saam), which Subrecipient must apply uniformly to both Federally financed and its other activities. AZDOHS will reimburse at the most restrictive allowability and rates. At no time will Subrecipient’s reimbursements exceed the State rates established by the Arizona Department of Administration: https://gao.az.gov/travel. 13. Contractors/Subcontractors Subrecipient may enter into written subcontract(s) in accordance with 2 CFR Part 200 and the NOFO. No subcontract that the Subrecipient enters into relieves Subrecipient of any responsibilities under this Agreement. Subrecipient must give AZDOHS immediate notice in writing of any action filed or claim made against Subrecipient by any subcontractor or vendor. 14.Allowable Costs The allowability of costs incurred under this Agreement shall be determined by AZDOHS in its sole discretion and in accordance with the general principles and standards set forth in the CFR, FEMA Authorized Equipment List (https://www.fema.gov/grants/tools/authorized-equipment-list), and guidance documents (i.e. NOFO, Preparedness Grants Manual, Information Bulletins). Subrecipient’s use of grant funds for indirect costs must be in accordance with 2 CFR Part 200 and the NOFO. Subrecipient must apply to AZDOHS for its written approval of indirect costs prior to expenditure. Subrecipient may not expend grant funds for Management and Administrative costs for administering such funds without prior written approval of AZDOHS. 15.Amendments Any change in this Agreement including but not limited to the Description of Services, Period of Performance and budget described herein, whether by modification or supplementation, must be accomplished by a formal Agreement amendment signed and approved by and between the duly authorized representatives of the Subrecipient and the AZDOHS. Any such amendment shall specify: 1) an effective date; 2) any increases or decreases in the amount of the Subrecipient’s reimbursement, if applicable; 3) be titled as an “Amendment,” and 4) be signed by the parties identified in the preceding paragraph. The 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 5 Subrecipient expressly and explicitly understands and agrees that no other method of communication, including any other document, correspondence, act, or oral communication by or from any person, shall be used or construed as an amendment or modification or supplementation to this Agreement. 16.Audit/Monitoring a.Subrecipient must comply with the record-keeping and other requirements of ARS 35-214 and 35-215, and shall ensure that its contractors and subcontractors at all tiers also comply. b. Under 31 USC 7501-7507and 2 CFR 200.501, Subrecipient will be subject to audit per 2 CFR Part 200, if Subrecipient expended $750,000 or more in Federal awards in its previous fiscal year. If Subrecipient has met or exceeded this threshold, Subrecipient must submit to AZDOHS a copy of Subrecipient’s single audit or program specific audit report for the previous fiscal year (and for subsequent fiscal years that fall within the Period of Performance) annually, within 9 months of Subrecipient’s fiscal year end. Subrecipients not subject to this requirement must submit to AZDOHS via audits@azdohs.gov a statement that they do not meet the threshold and therefore do not have to complete a single audit or program specific audit. c.Failure of Subrecipient to comply with any requirements resulting from an audit will suspend reimbursement by AZDOHS to Subrecipient and Subrecipient will not be eligible for any new award, until Subrecipient is in complete compliance. AZDOHS will monitor Subrecipient to ensure that program goals, objectives, performance requirements, timelines, planned objectives, budgets, and all other related program criteria are being met. Subrecipient must comply with applicable provisions governing USDHS access to records, accounts, documents, information, facilities, and staff and must require any contractors, successors, transferees, and assignees to comply with these same provisions. Subrecipient must cooperate with any review or investigation conducted by USDHS and/or AZDOHS. Subrecipient must give USDHS and AZDOHS access to and the right to copy records, accounts, and other documents and sources of information related to the grant and permit access to facilities, personnel, and other individuals and information as deemed necessary by USDHS or AZDOHS. Subrecipient must submit timely, complete, and accurate reports to the appropriate USDHS and AZDOHS officials and maintain appropriate backup documentation. Subrecipient must comply with all reporting, data collection, and evaluation requirements prescribed by law or in program guidance. 17.Notice of Funding Opportunity (NOFO) Subrecipient must comply with the Notice of Funding Opportunity (NOFO). The terms of the NOFO are hereby incorporated into this Agreement. 18.National Incident Management System Subrecipient must remain in compliance with National Incident Management System implementation initiatives as provided in the NOFO. 19.Communications Equipment All Land Mobile Radio equipment purchased must comply with: (a) P25 (Project 25) standards (https://www.cisa.gov/safecom); (b) SAFECOM Guidance (https://www.cisa.gov/safecom); (c) Land Mobile Radio Minimum Equipment Standards as approved by the Statewide Interoperability Executive Committee (https://www.azdps.gov/services/government/swic); and (d) Arizona's State Interoperable Priority Programming Guide (https://www.azdps.gov/services/government/swic). 20.Nonsupplanting Agreement Subrecipient must not use funds received under this Agreement to supplant Federal, State, Tribal or Local funds or other resources, and may be required to document this. If a position created by this Agreement is filled from within, the resulting vacancy 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 6 must be filled within 30 days, and if not, Subrecipient must stop charging the grant for the new position; upon filling the vacancy, Subrecipient may resume charging for the position. A cost allocable to a particular Federal award provided for in 2 CFR Part 200 Subpart E may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal award(s), or any other reason. However, Subrecipient from may shift costs allowable under two or more Federal awards if allowed by Federal statute, regulation, or the terms of the Federal award(s). 21.E-Verify Subrecipient must comply with all State and Federal immigration laws and regulations relating to its employees and to employees of any contractor or subcontractor retained through Subrecipient to provide goods or services related to this Agreement, including but not limited to ARS 23-214(A) and ARS 41-4401. A breach of this obligation is a material breach of this Agreement and Subrecipient may be subject to penalties to be determined at AZDOHS’s discretion, up to and including termination of this Agreement. AZDOHS will have the right to inspect the papers of any Subrecipient employee who works on this Agreement, and to those of any employee of any contractor or subcontractor retained through Subrecipient. 22.Research and Development Subrecipient may not use funds obtained under this Agreement for research/development. 23.Funds Management Subrecipient must maintain funds received under this Agreement in separate accounts and cannot mix these funds with funds from other sources. Subrecipient must manage funds according to all applicable Federal regulations, including 2 CFR Part 200 and specifically 2 CFR 200.302. Subrecipient must maintain the following business systems: •Financial Management •Procurement •Personnel •Property •Travel To be adequate, a business system must be 1) complete and in writing; and 2) consistently followed – Subrecipient must apply it in all circumstances, regardless of funding source. 24.Reporting of Matters Related to Recipient Integrity and Performance If the total of Subrecipient’s currently active grants, cooperative agreements, and procurement contracts from all Federal assistance offices exceeds $10,000,000 at any time during the Period of Performance, Subrecipient must comply with Appendix XII to 2 CFR Part 200. 25.Nondiscrimination Subrecipient must comply with the following that apply to this Federally- funded program: a.29 USC 794, which bars discrimination against qualified handicapped individuals solely by reason of the handicap; b.42 USC 2000d et seq., 6 CFR Part 21, and 44 CFR Part 7, which bar discrimination on grounds of race, color, or national origin (which requires Subrecipient to take reasonable steps to provide accommodation to persons with Limited English Proficiency; Subrecipient must refer to the USDHS Guidance at https://www.dhs.gov/guidance-published-help- department-supported-organizations-provide-meaningful-access-people-limited and the resources at http://www.lep.gov); c.All State and Federal equal opportunity and non-discrimination requirements and conditions of employment, including but not limited to Arizona Executive Order 2009-9 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 7 (https://azgovernor.gov/governor/executive-order/2020-09) and 42 USC 12101-12213 (which bar discriminating on the basis of disability; d.42 USC 6101 et seq., which prohibits discrimination on the basis of age; e.The equal treatment policies and requirements contained in 6 CFR Part 19 and other applicable statutes, regulations, and guidance governing faith-based organizations; f.20 USC 1681 et seq. and 6 CFR Part 17 and 44 CFR Part 19, which bars discrimination on the basis of sex; and g.42 USC 3601 et seq. and 24 CFR Part 100, which prohibit discrimination in the sale, rental, financing, and advertising of dwellings, or in the provision of related services, on the basis of race, color, national origin, religion, disability, familial status, and sex. 26.Intellectual Property Subrecipient must affix the copyright notices required by 17 USC 401 and 402 and include an acknowledgement of Government sponsorship (including award number) to any work first produced under this Agreement. Unless otherwise provided by law, Subrecipient is subject to 35 USC 200-212 and is subject to the specific requirements governing the development, reporting, and disposition of rights to inventions and patents resulting from financial assistance awards that are in 37 CFR Part 401, including specifically 37 CFR 401.14. Subrecipient must obtain USDHS’s approval prior to using the USDHS seal(s), logos, crests or reproductions of flags or likenesses of USDHS agency officials. Subrecipient agrees that USDHS and AZDOHS have a royalty-free, non-exclusive, and irrevocable license to reproduce, publish, or otherwise use, and authorize others to use: (a) the copyright in any work developed under an award or sub-award; and (b) any rights of copyright to which Subrecipient purchases ownership with Federal support. Subrecipient must acknowledge its use of Federal funding when issuing statements, press releases, requests for proposals, bid invitations, and other documents describing programs funded in whole or in part with Federal funds. Subrecipient must not advertise or publish information for commercial benefit concerning this Agreement without the prior written approval of AZDOHS. 27.Activities Conducted Abroad Subrecipient must ensure that program activities carried on outside the United States are coordinated as necessary with appropriate government authorities and that appropriate licenses, permits, or approvals are obtained. 28. Federal Debt Status Subrecipient must not be delinquent on any Federal obligations, including but not limited to payroll and other taxes, audit disallowances, and benefit overpayments. See OMB Circular A-129 (https://fiscal.treasury.gov/files/dms/circ-a129-upd- 0113.pdf). 29.Required Use of American Iron, Steel, Manufactured Products, and Construction Materials Subrecipients must comply with the Office of Management and Budget (OMB), Memorandum M-22-11 (https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf), which provides Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure. 30.Compliance with Certain Federal Statutes, Regulations, and Requirements a.Subrecipient must comply with the 31 USC 3729-3733, which prohibits the submission of false or fraudulent claims for payment to the Federal government; 31 USC 3801-3812 detail the remedies for false or fraudulent claims made. b.Subrecipient must comply with 42 USC 6201 et seq., which contain policies relating to energy efficiency that are defined in the State energy conservation plan issued 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 8 c.Subrecipient must comply with the drug-free workplace requirements in 2 CFR Part 3001 and 41 USC 8101-8106. d.Subrecipient is prohibited from acquiring certain Chinese and Russian telecommunications equipment, systems, and services as provided in FEMA Policy #405-143- 1(https://www.fema.gov/sites/default/files/documents/fema_policy-405-143-1-prohibition- covered-services-equipment-gpd.pdf) ; 2 C.F.R. sections 200.216, 200.327, 200.471 and Appendix II to 2 C.F.R. Part 200; 48 CFR 4.2100 et seq.; 48 CFR 52.204-25; 48 CFR 52.212- 3; 48 C.F.R. 204.2100 et seq.; and 48 C.F.R. 252.204-7018 1. e.If grant funds are used for construction, Subrecipient and its contractors and subcontractors at all tiers must comply with the Davis-Bacon Act (40 USC 3141 et seq.). Subrecipients must obtain AZDOHS’ written approval before using Homeland Security Grant Program (“HSGP”) funds for construction/renovation per https://www.dol.gov/whd/govcontracts/dbra.htm. f.Subrecipient must maintain insurance coverage as provided in 2 CFR 200.310. Subrecipient must provide at least the equivalent insurance coverage for real property and equipment acquired or improved under this Agreement as provided to property owned by Subrecipient. g.Subrecipient must comply with 42 USC 6962, including procuring only items designated in the Environmental Protection Agency (“EPA”) guidelines at 40 CFR Part 247 as containing the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition. h.Subrecipient must comply with all Federal whistleblower protections, including 41 USC 4712. i.Subrecipient must comply with the PATRIOT Act, P.L. 107-56), including 18 USC 175-175c. j.Subrecipient must comply with the System for Award Management and Universal Identifier Requirements in 2 CFR, Appendix A to Part 25. k.Subrecipient must comply with the Trafficking Victims Protection Act, 22 USC 7101 et seq., as required by 2 CFR 175.15. l.Subrecipient must comply with US Executive Order 13224 (https://www.state.gov/executive- order-13224/) and all US laws that prohibit transactions with, and the provision of resources and support to, individuals and organizations associated with terrorism. m.Subrecipient must comply with the requirements on Reporting Subawards and Executive Compensation in Appendix A to 2 CFR Part 170. n.Subrecipient is subject to the debarment and suspension regulations in US Executive Order 12549 (https://www.archives.gov/federal-register/codification/executive-order/12549.html) and US Executive Order 12689 (https://www.gadoe.org/School-Improvement/Teacher-and- Leader-Effectiveness/Documents/Title%20II,%20Part%20A%20Documents/Guidance/WHEO %2012689%20Debarment%20and%20Suspension.pdf) and 2 CFR Part 180 and 2 CFR Part 3000. These restrict Federal awards, subawards, and contracts with parties debarred, suspended, or otherwise excluded from or ineligible for Federal programs or activities. o. If Subrecipient collects Personally Identifiable Information (“PII”), it must have a publically- available written policy stating its standards for the usage and maintenance of PII. PII is any information that permits the identity of an individual to be directly or indirectly inferred, 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 9 including information linked or linkable to that individual. Subrecipient must follow USDHS guidance (https://www.dhs.gov/publication/privacy-impact-assessment-guidance). p.Subrecipient must complete either the Standard Form 424B Assurances - Non-Construction Programs (https://omb.report/icr/202011-0560-005CF), or Standard Form 424D Assurances - Construction Programs (https://omb.report/icr/200906-4040-008), as applicable. The USDHS financial assistance office (“USDHS FAO”) may determine that certain assurances in these documents may not apply, or may require additional assurances; Subrecipient must contact the USDHS FAO with any questions. Subrecipient must follow the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR Part 200 and 2 CFR Part 3002. By entering into this Agreement, Subrecipient and its executives, as defined in 2 CFR 170.315, certify that Subrecipient’s policies comply with 2 CFR Part 200, all applicable Federal laws, and applicable guidance. q.Subrecipient must comply with the National Environmental Policy Act (“NEPA”) 42 USC 4321 et seq., and Council on Environmental Quality regulations (40 CFR Parts 1500-1508) regarding NEPA. r.Subrecipient must comply with 31 USC 1352, and may not use funds provided under this Agreement to pay any person to influence or attempt to influence an officer or employee of any government agency, Member of Congress, officer or employee of Congress, or an employee of a Member of Congress, relating in any way to a Federal award or contract. s.In accordance with 15 USC 2201 et seq. and 15 USC 2225a in particular, Subrecipient must ensure that all conference, meeting, convention, or training space funded in whole or in part with Federal funds complies with all applicable fire prevention and control guidelines. t.Subrecipient must comply with the International Air Transportation Fair Competitive Practices Act of 1974, 49 USC 40118, and the interpretative guidelines in Comptroller General Decision B-138942 (https://www.gao.gov/products/b-138942). u.Subrecipient law enforcement agencies must comply with the requirements of section 12(c) of E.O. 14074. Recipient State, Tribal, local, or territorial law enforcement agencies are also encouraged to adopt and enforce policies consistent with E.O. 14074 to support safe and effective policing. 31.Applicability of Terms of this Agreement to Tribes If a term in this Agreement does not apply to Indian Tribes, or there is a Federal law or regulation exempting Indian Tribes, if Subrecipient is an Indian Tribe, this Agreement does not change or alter the inapplicability of such requirements. 32.Cancellation for Conflict of Interest AZDOHS may, by written notice to Subrecipient, immediately cancel this Agreement without penalty or further obligation pursuant to ARS 38-511 if any person significantly involved in initiating, negotiating, securing, drafting, or creating this Agreement for AZDOHS is an employee or agent of Subrecipient in any capacity, or a consultant to Subrecipient with respect to this Agreement’s subject matter. Cancellation shall be effective when Subrecipient receives AZDOHS’ written notice, unless the notice specifies a later time. 33.Assignment and Delegation Subrecipient may not assign any rights hereunder without an express written agreement signed by authorized representatives of both parties. 34.Third Party Antitrust Violations Subrecipient hereby assigns to the State of Arizona any claim for overcharges resulting from antitrust violations, to the extent that such violations concern materials or services supplied by third parties to Subrecipient toward fulfilling this Agreement. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 10 35.Availability of Funds AZDOHS’ payment obligations under this Agreement are conditioned on the availability of funds appropriated or allocated for this purpose, per ARS 35-154. If funds are not allocated and available, AZDOHS may terminate this Agreement at the end of the period for which funds are available. No liability shall accrue to AZDOHS in the event this provision is exercised, and AZDOHS shall not be obligated or liable for any future payments or for any damages as a result of termination under this Paragraph, including purchases and/or contracts entered into by Subrecipient in the execution of this Agreement. 36.Force Majeure If either party is delayed or prevented from the performance of any act required in this Agreement by reason of acts of God, strikes, lockouts, labor disputes, civil disorder, or other causes without fault and beyond the control of the party obligated, performance of such act will be excused for the period of the delay. 37.Dispute Resolution In the event of a dispute regarding this Agreement, written notice must be provided to the other party within 30 calendar days of the relevant events. Any claim made by or against AZDOHS relating to this Agreement shall be resolved through the administrative claims process. The parties agree to resolve all disputes relating to this Agreement through arbitration, after exhausting applicable administrative review, to the extent required by ARS 12-1518 except as may be required by other applicable statutes. The forum for any dispute arising out of this Agreement shall be Maricopa County, Arizona. 38.Governing Law and Interpretation of This Agreement This Agreement is governed by the laws of the State of Arizona, without regard to its conflict of laws provisions. This Agreement is the parties’ complete agreement and replaces the parties’ prior and contemporaneous agreements, representations, and understandings pertaining to its subject matter, whether oral or written. No course of dealings or usage of the trade supplements or explains any terms. A party’s failure to insist on strict performance of any term is not a waiver of that term, even if the party accepting or acquiescing in the nonconforming performance knows the nature of the performance and fails to object. If any new legislation, laws, ordinances, or rules affect this Agreement, this Agreement automatically incorporates the terms of such legislation, laws, ordinances, or rules. Any term of this Agreement that is declared contrary to any current or future law, order, regulation, or rule, or that is otherwise invalid, shall be deemed stricken without impairing the validity of the remainder of this Agreement. In the event FEMA determines that changes are necessary to this Agreement after it has been entered into, including changes to Period of Performance or other terms, Subrecipient will be notified of the changes in writing; once notification is made, any subsequent request for funds by Subrecipient will constitute Subrecipient’s acceptance of the changes and will incorporate the changes into this Agreement. Except as expressly provided in this Paragraph, any amendment to or extension of this Agreement may be made only in a writing signed by authorized representatives of both parties. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. 39.Licensing Unless otherwise exempted by law, Subrecipient must obtain and maintain all licenses, permits, and authority necessary to perform its obligations under this Agreement. 40.Sectarian Requests Funds disbursed under this Agreement may not be used for any sectarian purpose or activity, including worship or instruction in violation of the US or Arizona Constitutions. 41.Closed-Captioning of Public Service Announcements Any television public service announcement funded in whole or in part by this Agreement must include closed captioning. 42.Indemnification Each party (as "Indemnitor") agrees to defend, indemnify, and hold harmless the other party (as "Indemnitee") from and against any and all claims, losses, liability, costs, or 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 11 expenses (including reasonable attorney's fees) (hereinafter collectively referred to as "Claims") arising out of bodily injury to any person (including death) or property damage, but only to the extent such Claims which result in vicarious/derivative liability to the Indemnitee are caused by the act, omission, negligence, misconduct, or other fault of the Indemnitor, its officers, officials, agents, employees, or volunteers. The State of Arizona and AZDOHS are self-insured per ARS 41-621. If Subrecipient utilizes contractor(s) and/or subcontractor(s), the indemnification clause between Subrecipient and contractor(s) and subcontractor(s) shall include the following: Contractor shall defend, indemnify, and hold harmless the Arizona Department of Homeland Security and the State of Arizona, and any jurisdiction or agency issuing any permits for any work arising out of this Agreement, and their departments, agencies, boards, commissions, universities, officers, officials, agents, and employees (hereinafter, “Indemnitee”) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorneys’ fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (including death), or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of the contractor or any of the directors, officers, agents, or employees or subcontractors of such contractor. This indemnity includes any claim or amount arising out of or recovered under the Workers’ Compensation Law or arising out of the failure of such contractor to conform to any Federal, State or Local law, statute, ordinance, rule, regulation or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by such contractor from and against any and all claims. It is agreed that such contractor will be responsible for primary loss investigation, defense and judgment costs where this indemnification is applicable. Additionally on all applicable insurance policies, contractor and its subcontractors shall name the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as an additional insured and also include a waiver of subrogation in favor of the State. 43.Termination Each party has the right to terminate this Agreement if the other party fails to comply with this Agreement. A party invoking the right to terminate shall provide written 30 day advance notice of all reasons for the termination. If Subrecipient chooses to terminate this Agreement before all deliverables have been delivered, AZDOHS has the right to recover all reimbursements made to Subrecipient. On termination, AZDOHS may procure, on terms that it deems appropriate, materials or services to replace those that otherwise would have been provided by Subrecipient, and Subrecipient will be liable to AZDOHS for all excess costs incurred by AZDOHS in procuring such materials or services. Subrecipient must continue to perform this Agreement until the date of termination, as directed in the termination notice. If AZDOHS reasonably believes Subrecipient does not intend to, or is unable to fully perform this Agreement, AZDOHS may demand in writing that Subrecipient give written assurance of its intent and ability to perform. If Subrecipient fails to provide written assurance within the time specified in the demand, AZDOHS may terminate this Agreement. 44.Paragraph Headings Paragraph headings in this Agreement are for convenience of reference only and do not define, limit, enlarge, or otherwise affect the interpretation of this Agreement. 45.Counterparts This Agreement may be executed in any number of counterparts, copies, or duplicate originals. Each such counterpart, copy, or duplicate original shall be deemed an original, and collectively they shall constitute one Agreement. 46.Authority to Execute This Agreement The person executing this Agreement on behalf of Subrecipient represents and warrants that he/she is duly authorized to do so. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 12 47. Transfer of Funds Prohibition Subrecipient may not transfer funds between programs (e.g., State Homeland Security Program, Urban Area Security Initiative, Operation Stonegarden). 48.Parties This Agreement is for the benefit of AZDOHS and Subrecipient as the only parties to this Agreement, and to their respective successors, assigns, executors and legal representatives. Except as expressly provided in this Agreement, nothing in this Agreement confers on any person other than the parties and their respective successors and assigns, any rights, remedies, obligations, or liabilities. 49.Respective Responsibilities Except as expressly provided in this Agreement, each party agrees that, to the extent authorized by law, it will be responsible for its own acts or omissions and the results thereof and will not be responsible for the acts or omissions of the other party and the results thereof. In the event that either party becomes aware of any claim made by or expected from a claimant against a party to this Agreement, which claim relates to the subject matter of this Agreement, that party will immediately notify the other party, and the parties will share all information regarding such matter and cooperate with each other in addressing the matter. The parties are independent contractors, and nothing contained in this Agreement will create the relationship of partnership, joint venture, agency, or employment between the parties or any of their employees, officers, agents, or contractors. Each party hereby agrees to perform any further acts and to execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement. 50.Publicity Neither party shall use or mention in any publicity, advertising, promotional materials or news release the name or service mark(s) of the other party without the prior written consent of that party. 51.Notices All communications by either party to this Agreement, shall be in writing, be delivered in person, or shall be sent to the respective parties at the following addresses: Arizona Department of Homeland Security 1802 West Jackson, #117 Phoenix, AZ 85007 Subrecipient must address all notices relative to this Agreement to the appropriate AZDOHS staff; contact information is at www.azdohs.gov. AZDOHS shall address all notices relative to this Agreement to: Enter Title, First & Last Name Above Enter Agency Name Above Enter Mailing Address Above Enter City, State, ZIP Above 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 13 IN WITNESS WHEREOF, the parties hereto agree to execute this Agreement. FOR AND BEHALF OF THE FOR AND BEHALF OF THE Arizona Department of Homeland Security Enter Agency Name Above Authorized Signature Above Susan Dzbanko, Deputy Director Print Name & Title Above Enter Date Above Date (Complete and mail two original documents to the Arizona Department of Homeland Security.) 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025    Town Council Regular Session C. Meeting Date:03/05/2025   Requested by: Zach Young Submitted By:Catherine Hendrix, Police Department Department:Police Department SUBJECT: Resolution No. (R)25-06, delegating authority to the Oro Valley Chief of Police to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund equipment under the Operation Stonegarden program RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: For several years, the Arizona Department of Homeland Security (AZDOHS) has partnered with the Town of Oro Valley Police Department (OVPD), providing funding for Operation Stonegarden to include overtime and mileage, as well as the purchase of critical equipment. On January 24, 2025, OVPD was provided a notice awarding the funding for equipment. OVPD wishes to enter into a subgrantee agreement with AZDOHS to fund equipment for officers to be deployed under the Operation Stonegarden program. BACKGROUND OR DETAILED INFORMATION: The grant application was made in order to work in a regional partnership with other local law enforcement agencies and the U.S. Border Patrol Tucson Sector to reduce crime and improve the quality of life for the residents and visitors of Oro Valley. This grant will use targeted deployments of officers and canine units to impact the flow of smugglers engaged in human trafficking and illegal contraband, as well as possible terrorists who intend to cause harm or commit crimes against this nation. FISCAL IMPACT: The capacity exists in the current FY 24/25 budget to accept this grant award for a total of $214,596. SUGGESTED MOTION: I MOVE to (approve or deny) Resolution No. (R)25-06, delegating authority to the Oro Valley Chief of Police to sign and enter a subgrantee agreement between the Town of Oro Valley and the Arizona Department of Homeland Security to fund equipment under the Operation Stonegarden program. Attachments (R)25-06 Stonegarden Equipment  Stonegarden Equipment Agreement  RESOLUTION NO. (R)25-06 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, DELEGATING AUTHORITY TO THE ORO VALLEY CHIEF OF POLICE TO SIGN AND ENTER A SUBGRANTEE AGREEMENT BETWEEN THE TOWN OF ORO VALLEY AND THE ARIZONA DEPARTMENT OF HOMELAND SECURITY TO FUND EQUIPMENT UNDER THE OPERATION STONEGARDEN PROGRAM; 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, the Arizona Department of Homeland Security (AZDOHS) requires participating jurisdictions to enter into a Subgrantee Agreement to receive the funds granted under the Operation Stonegarden Program; and WHEREAS, the Town of Oro Valley’s allocation under the grant is a maximum of $214,596 which will be used to fund equipment under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection; and WHEREAS, it is in the best interest of the Town of Oro Valley to delegate authority to the Oro Valley Chief of Police to enter the Subgrantee Agreement (attached hereto as Exhibit “A” and incorporated herein by this reference) in order to receive funds which will be used to fund equipment under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection. NOW THEREFORE BE IT RESOLVED by the Mayor and Town Council of the Town of Oro Valley, Arizona, that: SECTION 1. Authority is delegated to the Oro Valley Chief of Police to enter the Subgrantee Agreement between the Town of Oro Valley, for the benefit of the Oro Valley Police Department, and the Arizona Department of Homeland Security, attached hereto as Exhibit “A” and incorporated herein by this reference, to fund equipment under the Operation Stonegarden Program for deployments with the U.S. Department of Homeland Security Bureau of Customs and Border Protection. SECTION 2. 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 3. 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. SECTION 4. If any section, subsection, sentence, clause, phrase or portion of this Resolution, or the Subgrantee Agreement attached hereto as Exhibit “A” 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. PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona, this 5th day of March, 2025. TOWN OF ORO VALLEY, ARIZONA _____________________________ Joseph C. Winfield, Mayor ATTEST: APPROVED AS TO FORM: Michael Standish, Town Clerk Tobin Sidles, Legal Services Director Date: Date: EXHIBIT “A” 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 1 SUBRECIPIENT AGREEMENT OPERATION STONEGARDEN GRANT PROGRAM EQUIPMENT 24-AZDOHS-OPSG-___________ (Enter Subrecipient Agreement number above (e.g., 240XXX-XX) Between The Arizona Department of Homeland Security And (Enter the name of the Subrecipient Agency above) UEI Number___________ (Enter the UEI number above) WHEREAS, ARS 41-4254 makes AZDOHS responsible for administering the funds covered by this agreement (“Agreement”), the parties hereby agree to the following terms: 1.Purpose of Agreement This Agreement is to specify the rights and responsibilities of AZDOHS in administering the distribution of homeland security grant funds to Subrecipient, and to specify the rights and responsibilities of Subrecipient as the recipient of these funds. 2.Period of Performance This Agreement shall become effective on February 1, 2025 and shall terminate on March 31, 2026 (the “Period of Performance”). The obligations of the Subrecipient as described herein will survive termination of this agreement. 3.Description of Services The Subrecipient shall provide the services for AZDOHS as set forth in writing in Subrecipient’s grant application titled: “OPSG EQUIPMENT” and funded at $_____________ (as may have been modified by the award letter). (Enter funded award amount above) 4.Financing and Fiscal Responsibility Under US Department of Homeland Security (“USDHS”) grant EMW-2024-SS-05080 and Catalog of Federal Domestic Assistance (“CFDA”) #97.067, AZDOHS shall provide up to $_____________ to Subrecipient under this Agreement. Payment to Subrecipient must be on a reimbursement basis only, conditioned upon Subrecipient providing AZDOHS with proof of payment and applicable, accurate and complete reimbursement documents, as deemed necessary by AZDOHS. A list of acceptable documentation is at www.azdohs.gov. Payments are contingent on Subrecipient performing all its obligations under this Agreement. Subrecipient may use the funds provided under this Agreement only as provided in the application and award documentation. If Subrecipient does not complete all its obligations, Subrecipient must immediately reimburse all previously-provided funds to AZDOHS. If Subrecipient completes its obligations at a lower than the budgeted cost, the amount reimbursed to Subrecipient will be only the amount actually spent by Subrecipient in accordance with the approved application. For any expenditure disallowed after or otherwise by AZDOHS, or the State or Federal government, Subrecipient must immediately reimburse such funds to AZDOHS. Page 2 5.Reporting Requirements Subrecipient must submit quarterly programmatic reports to AZDOHS as follows: January 15 (for the period from October 1– December 31) April 15 (for the period from January 1 – March 31) July 15 (for the period from April 1 – June 30) October 15 (for the period from July 1 – September 30) Subrecipient must use the Quarterly Programmatic Report form (https://azdohs.gov/grant- program-forms) for these reports. Subrecipient must provide detailed information on the status of completion of the planned activities in the approved application satisfactory to AZDOHS in its sole discretion. Failure to adequately provide such information will result in the Quarterly Programmatic Report being rejected by AZDOHS and resubmission will be required. If the program has been fully completed so that there will be no further updates, then the quarterly report for the quarter in which the program was completed will be the final report; the report should be marked as “final” and must include all pertinent information regarding the program as determined solely by AZDOHS. Final Quarterly Programmatic Report: The final quarterly programmatic report is due no more than 15 calendar days after the end of the performance period. Subrecipient may submit a final quarterly report prior to the end of the performance period if the scope of the project has been fully completed and implemented. The Property Control Form is due with the final quarterly report (if applicable). 6. Reimbursements Subrecipient must provide AZDOHS with requests for reimbursement as frequently as monthly but not less than quarterly; submissions must be made via US Mail, delivery service (FedEx, UPS, etc.) or in person; submissions via fax or by any electronic means will not be accepted. Reimbursement requests shall be submitted with the Reimbursement Form provided by AZDOHS staff. AZDOHS has the right to require Subrecipient to provide any documentation and/or information AZDOHS deems necessary to process submissions. Reimbursement requests are only required when expenses have been incurred. The Subrecipient shall submit a final reimbursement request, marked as such, for expenses received and invoiced prior to the end of the period of performance. The final reimbursement must be received by AZDOHS no more than 45 calendar days after the end of the period of performance. Requests for reimbursement received by AZDOHS later than 45 calendar days after the end of the period of performance will not be paid. Subrecipients will only be reimbursed for expenses that have been obligated, expended and received within the authorized Period of Performance as identified in Paragraph 2 of this Agreement. Subrecipients are not authorized to obligate or expend funds prior to the start date of the Period of Performance. Any expenses obligated or expended prior to the Period of Performance start date will be deemed unallowable and will not be reimbursed. Any expenses/services that occur beyond the Period of Performance (e.g. cell phone service) will be deemed unallowable and will not be reimbursed. 7.Environmental Planning and Historic Preservation Subrecipient must comply with Federal, State and Local environmental and historical preservation (EHP) regulations, laws and Executive Orders as applicable. See https://www.fema.gov/media-library-data/1533321728657- 592e122ade85743d1760fd4747241776/GPD_EHP_Policy_Final Amendment_GPD_final_508.pdf and https://azdohs.gov/environmental-and-historic-preservation-ehp. Subrecipients proposing programs with potential environmental impact must participate in the USDHS/Federal Emergency Management Agency (FEMA) EHP review process. Subrecipient must complete the EHP review 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 3 process before funds will be released by AZDOHS. If Subrecipient engages in ground disturbing activities, Subrecipient must monitor ground disturbance. If archeological resources are discovered, Subrecipient must immediately (a) cease construction and (b) notify FEMA, AZDOHS, and the Arizona State Historic Preservation Office. AZDOHS/DHS/FEMA will not fund or reimburse projects that are initiated without the required EHP review. 8.Procurement (including Noncompetitive Procurement) Subrecipient must comply with its procurement rules/policies, all Federal procurement rules/policies, and all Arizona Procurement Code provisions and rules, the most restrictive of which will apply. Subrecipient must not enter into a noncompetitive procurement unless AZDOHS grants prior written approval via the Noncompetitive Procurement Request form at https://azdohs.gov/grant-program -forms. 9.Property Control Subrecipient must safeguard and maintain control and accountability for all property/equipment purchased under this Agreement, and Subrecipient must assure that it is used only for purposed authorized under this Agreement and maintained as provided in 2 CFR 200.313. Such property/equipment shall be used by Subrecipient in the program for which it was acquired as long as needed, whether or not the program continues to be supported by Federal grant funds. Subrecipient must immediately investigate and report to AZDOHS any loss, damage, or theft. Subrecipient must replace any property/equipment lost, damaged or stolen at Subrecipient’s expense, and must immediately submit an updated Property Control Form (https://azdohs.gov/grant-program-forms) to AZDOHS. “Nonexpendable Property/Equipment” is property that has a continuing use, is not consumed in use, has an expected life of one year or more, costs $5,000 or more per unit, and does not become a fixture or lose its identity as a component of other equipment/systems, while a “Capital Asset” is personal or real property or a fixture costing $5,000 or more per unit with an expected life of one year or more. Subrecipient is solely responsible for the proper maintenance of all Nonexpendable Property/Equipment and Capital Assets acquired under this Agreement Subrecipient must take a physical inventory of all such Nonexpendable Property/Equipment and Capital Assets and reconcile the results with the Property Control Form at least once every two years. Subrecipient must maintain a control system to prevent loss, damage, or theft of such Nonexpendable Property/Equipment and Capital Assets, and Subrecipient must immediately report any loss, damage, or theft to AZDOHS. A Property Control Form (if applicable) shall be maintained for the entire scope of the program or project for which property was acquired through the end of its useful life and/or disposition. All Nonexpendable Property and Capital Assets must be included on the Property Control Form. The Subrecipient, if applicable, shall provide AZDOHS a copy of the Property Control Form with the final quarterly programmatic report. The Property Control Form can be located at https://azdohs.gov/grant-program-forms. The Subrecipient agrees to be subject to equipment monitoring and auditing by state or federal authorized representatives to verify information. When Subrecipient is no longer using Nonexpendable Property/Equipment and/or Capital Assets acquired under this Agreement on the program, Subrecipient must immediately submit an updated Property Control Form to AZDOHS, and any disposition must be in compliance with AZDOHS Disposition Guidance (https://azdohs.gov/grant-program-forms) and 2 CFR Part 200, including specifically 2 CFR 200.313. If Subrecipient seeks disposition of such Nonexpendable Property/Equipment or Capital Assets for any reason other than theft, destruction, or loss, Subrecipient must submit an Equipment Disposition Request Form (https://azdohs.gov/grant- program-forms) to AZDOHS and receive approval from AZDOHS prior to disposition. Subrecipient must update the Property Control Form and provide a copy to AZDOHS within 45 calendar days after disposition. Per 2 CFR 200.333(c), Subrecipient must retain all records relating to such Nonexpendable Property/Equipment and Capital Assets for 3 years after disposition. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 4 10.Training and Exercise All training and/or exercise events must be included in Subrecipient’s application. Alternate/additional training/exercise requests must be approved in advance by AZDOHS. Subrecipient must submit a Project Modification Request Form (https://azdohs.gov/grant-program-forms) for review and approval by AZDOHS prior to scheduling alternate/additional training/exercise events. For those projects that are managed by DEMA, alternate/additional training requests must be approved in advance by DEMA and AZDOHS using the Pre-approval form (https://dema.az.gov/emergency-management/preparedness/training). All exercises must comply with FEMA Homeland Security Exercise and Evaluation Program (https://www.fema.gov/emergency-managers/national-preparedness/exercises/hseep; “HSEEP”) guidance. Subrecipient will (a) Submit an exercise summary and attendance/sign-in roster; and (b)Email the After Action Report/Improvement Plan to the local County Emergency Manager, AZDOHS, and the DEMA Exercise Branch, within 90 days of completion of an exercise or as prescribed by HSEEP. 11.Consultants/Trainers/Training Providers Invoices for consultants/trainers/training providers must include: a description of services; dates of services; number of hours for services performed; rate charged; and the total cost of services. Rates must be within the prevailing rates; must be consistent with Subrecipient’s procurement policies and 2 CFR Part 200; and shall not exceed $650 per day per consultant/trainer/training provider unless AZDOHS grants prior written approval. This includes internal personnel hired on backfill/overtime to deliver training. Subrecipient will not be reimbursed costs other than travel, lodging, meals, and incidentals on travel days for consultants/trainers/training providers, at rates not to exceed State rates, and itemized receipts are required. See Travel Costs below, at Paragraph 12. 12.Travel Costs All grant funds expended for travel, lodging, meals and incidentals are subject to the standards of Subrecipient’s policies and procedures, and the State of Arizona Accounting Manual (https://gao.az.gov/publications/saam), which Subrecipient must apply uniformly to both Federally financed and its other activities. AZDOHS will reimburse at the most restrictive allowability and rates. At no time will Subrecipient’s reimbursements exceed the State rates established by the Arizona Department of Administration: https://gao.az.gov/travel. 13. Contractors/Subcontractors Subrecipient may enter into written subcontract(s) in accordance with 2 CFR Part 200 and the NOFO. No subcontract that the Subrecipient enters into relieves Subrecipient of any responsibilities under this Agreement. Subrecipient must give AZDOHS immediate notice in writing of any action filed or claim made against Subrecipient by any subcontractor or vendor. 14.Allowable Costs The allowability of costs incurred under this Agreement shall be determined by AZDOHS in its sole discretion and in accordance with the general principles and standards set forth in the CFR, FEMA Authorized Equipment List (https://www.fema.gov/grants/tools/authorized-equipment-list), and guidance documents (i.e. NOFO, Preparedness Grants Manual, Information Bulletins). Subrecipient’s use of grant funds for indirect costs must be in accordance with 2 CFR Part 200 and the NOFO. Subrecipient must apply to AZDOHS for its written approval of indirect costs prior to expenditure. Subrecipient may not expend grant funds for Management and Administrative costs for administering such funds without prior written approval of AZDOHS. 15.Amendments Any change in this Agreement including but not limited to the Description of Services, Period of Performance and budget described herein, whether by modification or supplementation, must be accomplished by a formal Agreement amendment signed and approved by and between the duly authorized representatives of the Subrecipient and the AZDOHS. Any such amendment shall specify: 1) an effective date; 2) any increases or decreases in the amount of the Subrecipient’s reimbursement, if applicable; 3) be titled as an “Amendment,” and 4) be signed by the parties identified in the preceding paragraph. The 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 5 Subrecipient expressly and explicitly understands and agrees that no other method of communication, including any other document, correspondence, act, or oral communication by or from any person, shall be used or construed as an amendment or modification or supplementation to this Agreement. 16.Audit/Monitoring a.Subrecipient must comply with the record-keeping and other requirements of ARS 35-214 and 35-215, and shall ensure that its contractors and subcontractors at all tiers also comply. b. Under 31 USC 7501-7507and 2 CFR 200.501, Subrecipient will be subject to audit per 2 CFR Part 200, if Subrecipient expended $750,000 or more in Federal awards in its previous fiscal year. If Subrecipient has met or exceeded this threshold, Subrecipient must submit to AZDOHS a copy of Subrecipient’s single audit or program specific audit report for the previous fiscal year (and for subsequent fiscal years that fall within the Period of Performance) annually, within 9 months of Subrecipient’s fiscal year end. Subrecipients not subject to this requirement must submit to AZDOHS via audits@azdohs.gov a statement that they do not meet the threshold and therefore do not have to complete a single audit or program specific audit. c.Failure of Subrecipient to comply with any requirements resulting from an audit will suspend reimbursement by AZDOHS to Subrecipient and Subrecipient will not be eligible for any new award, until Subrecipient is in complete compliance. AZDOHS will monitor Subrecipient to ensure that program goals, objectives, performance requirements, timelines, planned objectives, budgets, and all other related program criteria are being met. Subrecipient must comply with applicable provisions governing USDHS access to records, accounts, documents, information, facilities, and staff and must require any contractors, successors, transferees, and assignees to comply with these same provisions. Subrecipient must cooperate with any review or investigation conducted by USDHS and/or AZDOHS. Subrecipient must give USDHS and AZDOHS access to and the right to copy records, accounts, and other documents and sources of information related to the grant and permit access to facilities, personnel, and other individuals and information as deemed necessary by USDHS or AZDOHS. Subrecipient must submit timely, complete, and accurate reports to the appropriate USDHS and AZDOHS officials and maintain appropriate backup documentation. Subrecipient must comply with all reporting, data collection, and evaluation requirements prescribed by law or in program guidance. 17.Notice of Funding Opportunity (NOFO) Subrecipient must comply with the Notice of Funding Opportunity (NOFO). The terms of the NOFO are hereby incorporated into this Agreement. 18.National Incident Management System Subrecipient must remain in compliance with National Incident Management System implementation initiatives as provided in the NOFO. 19.Communications Equipment All Land Mobile Radio equipment purchased must comply with: (a) P25 (Project 25) standards (https://www.cisa.gov/safecom); (b) SAFECOM Guidance (https://www.cisa.gov/safecom); (c) Land Mobile Radio Minimum Equipment Standards as approved by the Statewide Interoperability Executive Committee (https://www.azdps.gov/services/government/swic); and (d) Arizona's State Interoperable Priority Programming Guide (https://www.azdps.gov/services/government/swic). 20.Nonsupplanting Agreement Subrecipient must not use funds received under this Agreement to supplant Federal, State, Tribal or Local funds or other resources, and may be required to document this. If a position created by this Agreement is filled from within, the resulting vacancy 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 6 must be filled within 30 days, and if not, Subrecipient must stop charging the grant for the new position; upon filling the vacancy, Subrecipient may resume charging for the position. A cost allocable to a particular Federal award provided for in 2 CFR Part 200 Subpart E may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal award(s), or any other reason. However, Subrecipient from may shift costs allowable under two or more Federal awards if allowed by Federal statute, regulation, or the terms of the Federal award(s). 21.E-Verify Subrecipient must comply with all State and Federal immigration laws and regulations relating to its employees and to employees of any contractor or subcontractor retained through Subrecipient to provide goods or services related to this Agreement, including but not limited to ARS 23-214(A) and ARS 41-4401. A breach of this obligation is a material breach of this Agreement and Subrecipient may be subject to penalties to be determined at AZDOHS’s discretion, up to and including termination of this Agreement. AZDOHS will have the right to inspect the papers of any Subrecipient employee who works on this Agreement, and to those of any employee of any contractor or subcontractor retained through Subrecipient. 22.Research and Development Subrecipient may not use funds obtained under this Agreement for research/development. 23.Funds Management Subrecipient must maintain funds received under this Agreement in separate accounts and cannot mix these funds with funds from other sources. Subrecipient must manage funds according to all applicable Federal regulations, including 2 CFR Part 200 and specifically 2 CFR 200.302. Subrecipient must maintain the following business systems: •Financial Management •Procurement •Personnel •Property •Travel To be adequate, a business system must be 1) complete and in writing; and 2) consistently followed – Subrecipient must apply it in all circumstances, regardless of funding source. 24.Reporting of Matters Related to Recipient Integrity and Performance If the total of Subrecipient’s currently active grants, cooperative agreements, and procurement contracts from all Federal assistance offices exceeds $10,000,000 at any time during the Period of Performance, Subrecipient must comply with Appendix XII to 2 CFR Part 200. 25.Nondiscrimination Subrecipient must comply with the following that apply to this Federally- funded program: a.29 USC 794, which bars discrimination against qualified handicapped individuals solely by reason of the handicap; b.42 USC 2000d et seq., 6 CFR Part 21, and 44 CFR Part 7, which bar discrimination on grounds of race, color, or national origin (which requires Subrecipient to take reasonable steps to provide accommodation to persons with Limited English Proficiency; Subrecipient must refer to the USDHS Guidance at https://www.dhs.gov/guidance-published-help- department-supported-organizations-provide-meaningful-access-people-limited and the resources at http://www.lep.gov); c.All State and Federal equal opportunity and non-discrimination requirements and conditions of employment, including but not limited to Arizona Executive Order 2009-9 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 7 (https://azgovernor.gov/governor/executive-order/2020-09) and 42 USC 12101-12213 (which bar discriminating on the basis of disability; d.42 USC 6101 et seq., which prohibits discrimination on the basis of age; e.The equal treatment policies and requirements contained in 6 CFR Part 19 and other applicable statutes, regulations, and guidance governing faith-based organizations; f.20 USC 1681 et seq. and 6 CFR Part 17 and 44 CFR Part 19, which bars discrimination on the basis of sex; and g.42 USC 3601 et seq. and 24 CFR Part 100, which prohibit discrimination in the sale, rental, financing, and advertising of dwellings, or in the provision of related services, on the basis of race, color, national origin, religion, disability, familial status, and sex. 26.Intellectual Property Subrecipient must affix the copyright notices required by 17 USC 401 and 402 and include an acknowledgement of Government sponsorship (including award number) to any work first produced under this Agreement. Unless otherwise provided by law, Subrecipient is subject to 35 USC 200-212 and is subject to the specific requirements governing the development, reporting, and disposition of rights to inventions and patents resulting from financial assistance awards that are in 37 CFR Part 401, including specifically 37 CFR 401.14. Subrecipient must obtain USDHS’s approval prior to using the USDHS seal(s), logos, crests or reproductions of flags or likenesses of USDHS agency officials. Subrecipient agrees that USDHS and AZDOHS have a royalty-free, non-exclusive, and irrevocable license to reproduce, publish, or otherwise use, and authorize others to use: (a) the copyright in any work developed under an award or sub-award; and (b) any rights of copyright to which Subrecipient purchases ownership with Federal support. Subrecipient must acknowledge its use of Federal funding when issuing statements, press releases, requests for proposals, bid invitations, and other documents describing programs funded in whole or in part with Federal funds. Subrecipient must not advertise or publish information for commercial benefit concerning this Agreement without the prior written approval of AZDOHS. 27.Activities Conducted Abroad Subrecipient must ensure that program activities carried on outside the United States are coordinated as necessary with appropriate government authorities and that appropriate licenses, permits, or approvals are obtained. 28. Federal Debt Status Subrecipient must not be delinquent on any Federal obligations, including but not limited to payroll and other taxes, audit disallowances, and benefit overpayments. See OMB Circular A-129 (https://fiscal.treasury.gov/files/dms/circ-a129-upd- 0113.pdf). 29.Required Use of American Iron, Steel, Manufactured Products, and Construction Materials Subrecipients must comply with the Office of Management and Budget (OMB), Memorandum M-22-11 (https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf), which provides Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure. 30.Compliance with Certain Federal Statutes, Regulations, and Requirements a.Subrecipient must comply with the 31 USC 3729-3733, which prohibits the submission of false or fraudulent claims for payment to the Federal government; 31 USC 3801-3812 detail the remedies for false or fraudulent claims made. b.Subrecipient must comply with 42 USC 6201 et seq., which contain policies relating to energy efficiency that are defined in the State energy conservation plan issued 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 8 c.Subrecipient must comply with the drug-free workplace requirements in 2 CFR Part 3001 and 41 USC 8101-8106. d.Subrecipient is prohibited from acquiring certain Chinese and Russian telecommunications equipment, systems, and services as provided in FEMA Policy #405-143- 1(https://www.fema.gov/sites/default/files/documents/fema_policy-405-143-1-prohibition- covered-services-equipment-gpd.pdf) ; 2 C.F.R. sections 200.216, 200.327, 200.471 and Appendix II to 2 C.F.R. Part 200; 48 CFR 4.2100 et seq.; 48 CFR 52.204-25; 48 CFR 52.212- 3; 48 C.F.R. 204.2100 et seq.; and 48 C.F.R. 252.204-7018 1. e.If grant funds are used for construction, Subrecipient and its contractors and subcontractors at all tiers must comply with the Davis-Bacon Act (40 USC 3141 et seq.). Subrecipients must obtain AZDOHS’ written approval before using Homeland Security Grant Program (“HSGP”) funds for construction/renovation per https://www.dol.gov/whd/govcontracts/dbra.htm. f.Subrecipient must maintain insurance coverage as provided in 2 CFR 200.310. Subrecipient must provide at least the equivalent insurance coverage for real property and equipment acquired or improved under this Agreement as provided to property owned by Subrecipient. g.Subrecipient must comply with 42 USC 6962, including procuring only items designated in the Environmental Protection Agency (“EPA”) guidelines at 40 CFR Part 247 as containing the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition. h.Subrecipient must comply with all Federal whistleblower protections, including 41 USC 4712. i.Subrecipient must comply with the PATRIOT Act, P.L. 107-56), including 18 USC 175-175c. j.Subrecipient must comply with the System for Award Management and Universal Identifier Requirements in 2 CFR, Appendix A to Part 25. k.Subrecipient must comply with the Trafficking Victims Protection Act, 22 USC 7101 et seq., as required by 2 CFR 175.15. l.Subrecipient must comply with US Executive Order 13224 (https://www.state.gov/executive- order-13224/) and all US laws that prohibit transactions with, and the provision of resources and support to, individuals and organizations associated with terrorism. m.Subrecipient must comply with the requirements on Reporting Subawards and Executive Compensation in Appendix A to 2 CFR Part 170. n.Subrecipient is subject to the debarment and suspension regulations in US Executive Order 12549 (https://www.archives.gov/federal-register/codification/executive-order/12549.html) and US Executive Order 12689 (https://www.gadoe.org/School-Improvement/Teacher-and- Leader-Effectiveness/Documents/Title%20II,%20Part%20A%20Documents/Guidance/WHEO %2012689%20Debarment%20and%20Suspension.pdf) and 2 CFR Part 180 and 2 CFR Part 3000. These restrict Federal awards, subawards, and contracts with parties debarred, suspended, or otherwise excluded from or ineligible for Federal programs or activities. o. If Subrecipient collects Personally Identifiable Information (“PII”), it must have a publically- available written policy stating its standards for the usage and maintenance of PII. PII is any information that permits the identity of an individual to be directly or indirectly inferred, 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 9 including information linked or linkable to that individual. Subrecipient must follow USDHS guidance (https://www.dhs.gov/publication/privacy-impact-assessment-guidance). p.Subrecipient must complete either the Standard Form 424B Assurances - Non-Construction Programs (https://omb.report/icr/202011-0560-005CF), or Standard Form 424D Assurances - Construction Programs (https://omb.report/icr/200906-4040-008), as applicable. The USDHS financial assistance office (“USDHS FAO”) may determine that certain assurances in these documents may not apply, or may require additional assurances; Subrecipient must contact the USDHS FAO with any questions. Subrecipient must follow the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR Part 200 and 2 CFR Part 3002. By entering into this Agreement, Subrecipient and its executives, as defined in 2 CFR 170.315, certify that Subrecipient’s policies comply with 2 CFR Part 200, all applicable Federal laws, and applicable guidance. q.Subrecipient must comply with the National Environmental Policy Act (“NEPA”) 42 USC 4321 et seq., and Council on Environmental Quality regulations (40 CFR Parts 1500-1508) regarding NEPA. r.Subrecipient must comply with 31 USC 1352, and may not use funds provided under this Agreement to pay any person to influence or attempt to influence an officer or employee of any government agency, Member of Congress, officer or employee of Congress, or an employee of a Member of Congress, relating in any way to a Federal award or contract. s.In accordance with 15 USC 2201 et seq. and 15 USC 2225a in particular, Subrecipient must ensure that all conference, meeting, convention, or training space funded in whole or in part with Federal funds complies with all applicable fire prevention and control guidelines. t.Subrecipient must comply with the International Air Transportation Fair Competitive Practices Act of 1974, 49 USC 40118, and the interpretative guidelines in Comptroller General Decision B-138942 (https://www.gao.gov/products/b-138942). u.Subrecipient law enforcement agencies must comply with the requirements of section 12(c) of E.O. 14074. Recipient State, Tribal, local, or territorial law enforcement agencies are also encouraged to adopt and enforce policies consistent with E.O. 14074 to support safe and effective policing. 31.Applicability of Terms of this Agreement to Tribes If a term in this Agreement does not apply to Indian Tribes, or there is a Federal law or regulation exempting Indian Tribes, if Subrecipient is an Indian Tribe, this Agreement does not change or alter the inapplicability of such requirements. 32.Cancellation for Conflict of Interest AZDOHS may, by written notice to Subrecipient, immediately cancel this Agreement without penalty or further obligation pursuant to ARS 38-511 if any person significantly involved in initiating, negotiating, securing, drafting, or creating this Agreement for AZDOHS is an employee or agent of Subrecipient in any capacity, or a consultant to Subrecipient with respect to this Agreement’s subject matter. Cancellation shall be effective when Subrecipient receives AZDOHS’ written notice, unless the notice specifies a later time. 33.Assignment and Delegation Subrecipient may not assign any rights hereunder without an express written agreement signed by authorized representatives of both parties. 34.Third Party Antitrust Violations Subrecipient hereby assigns to the State of Arizona any claim for overcharges resulting from antitrust violations, to the extent that such violations concern materials or services supplied by third parties to Subrecipient toward fulfilling this Agreement. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 10 35.Availability of Funds AZDOHS’ payment obligations under this Agreement are conditioned on the availability of funds appropriated or allocated for this purpose, per ARS 35-154. If funds are not allocated and available, AZDOHS may terminate this Agreement at the end of the period for which funds are available. No liability shall accrue to AZDOHS in the event this provision is exercised, and AZDOHS shall not be obligated or liable for any future payments or for any damages as a result of termination under this Paragraph, including purchases and/or contracts entered into by Subrecipient in the execution of this Agreement. 36.Force Majeure If either party is delayed or prevented from the performance of any act required in this Agreement by reason of acts of God, strikes, lockouts, labor disputes, civil disorder, or other causes without fault and beyond the control of the party obligated, performance of such act will be excused for the period of the delay. 37.Dispute Resolution In the event of a dispute regarding this Agreement, written notice must be provided to the other party within 30 calendar days of the relevant events. Any claim made by or against AZDOHS relating to this Agreement shall be resolved through the administrative claims process. The parties agree to resolve all disputes relating to this Agreement through arbitration, after exhausting applicable administrative review, to the extent required by ARS 12-1518 except as may be required by other applicable statutes. The forum for any dispute arising out of this Agreement shall be Maricopa County, Arizona. 38.Governing Law and Interpretation of This Agreement This Agreement is governed by the laws of the State of Arizona, without regard to its conflict of laws provisions. This Agreement is the parties’ complete agreement and replaces the parties’ prior and contemporaneous agreements, representations, and understandings pertaining to its subject matter, whether oral or written. No course of dealings or usage of the trade supplements or explains any terms. A party’s failure to insist on strict performance of any term is not a waiver of that term, even if the party accepting or acquiescing in the nonconforming performance knows the nature of the performance and fails to object. If any new legislation, laws, ordinances, or rules affect this Agreement, this Agreement automatically incorporates the terms of such legislation, laws, ordinances, or rules. Any term of this Agreement that is declared contrary to any current or future law, order, regulation, or rule, or that is otherwise invalid, shall be deemed stricken without impairing the validity of the remainder of this Agreement. In the event FEMA determines that changes are necessary to this Agreement after it has been entered into, including changes to Period of Performance or other terms, Subrecipient will be notified of the changes in writing; once notification is made, any subsequent request for funds by Subrecipient will constitute Subrecipient’s acceptance of the changes and will incorporate the changes into this Agreement. Except as expressly provided in this Paragraph, any amendment to or extension of this Agreement may be made only in a writing signed by authorized representatives of both parties. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. 39.Licensing Unless otherwise exempted by law, Subrecipient must obtain and maintain all licenses, permits, and authority necessary to perform its obligations under this Agreement. 40.Sectarian Requests Funds disbursed under this Agreement may not be used for any sectarian purpose or activity, including worship or instruction in violation of the US or Arizona Constitutions. 41.Closed-Captioning of Public Service Announcements Any television public service announcement funded in whole or in part by this Agreement must include closed captioning. 42.Indemnification Each party (as "Indemnitor") agrees to defend, indemnify, and hold harmless the other party (as "Indemnitee") from and against any and all claims, losses, liability, costs, or 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 11 expenses (including reasonable attorney's fees) (hereinafter collectively referred to as "Claims") arising out of bodily injury to any person (including death) or property damage, but only to the extent such Claims which result in vicarious/derivative liability to the Indemnitee are caused by the act, omission, negligence, misconduct, or other fault of the Indemnitor, its officers, officials, agents, employees, or volunteers. The State of Arizona and AZDOHS are self-insured per ARS 41-621. If Subrecipient utilizes contractor(s) and/or subcontractor(s), the indemnification clause between Subrecipient and contractor(s) and subcontractor(s) shall include the following: Contractor shall defend, indemnify, and hold harmless the Arizona Department of Homeland Security and the State of Arizona, and any jurisdiction or agency issuing any permits for any work arising out of this Agreement, and their departments, agencies, boards, commissions, universities, officers, officials, agents, and employees (hereinafter, “Indemnitee”) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorneys’ fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (including death), or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of the contractor or any of the directors, officers, agents, or employees or subcontractors of such contractor. This indemnity includes any claim or amount arising out of or recovered under the Workers’ Compensation Law or arising out of the failure of such contractor to conform to any Federal, State or Local law, statute, ordinance, rule, regulation or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by such contractor from and against any and all claims. It is agreed that such contractor will be responsible for primary loss investigation, defense and judgment costs where this indemnification is applicable. Additionally on all applicable insurance policies, contractor and its subcontractors shall name the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as an additional insured and also include a waiver of subrogation in favor of the State. 43.Termination Each party has the right to terminate this Agreement if the other party fails to comply with this Agreement. A party invoking the right to terminate shall provide written 30 day advance notice of all reasons for the termination. If Subrecipient chooses to terminate this Agreement before all deliverables have been delivered, AZDOHS has the right to recover all reimbursements made to Subrecipient. On termination, AZDOHS may procure, on terms that it deems appropriate, materials or services to replace those that otherwise would have been provided by Subrecipient, and Subrecipient will be liable to AZDOHS for all excess costs incurred by AZDOHS in procuring such materials or services. Subrecipient must continue to perform this Agreement until the date of termination, as directed in the termination notice. If AZDOHS reasonably believes Subrecipient does not intend to, or is unable to fully perform this Agreement, AZDOHS may demand in writing that Subrecipient give written assurance of its intent and ability to perform. If Subrecipient fails to provide written assurance within the time specified in the demand, AZDOHS may terminate this Agreement. 44.Paragraph Headings Paragraph headings in this Agreement are for convenience of reference only and do not define, limit, enlarge, or otherwise affect the interpretation of this Agreement. 45.Counterparts This Agreement may be executed in any number of counterparts, copies, or duplicate originals. Each such counterpart, copy, or duplicate original shall be deemed an original, and collectively they shall constitute one Agreement. 46.Authority to Execute This Agreement The person executing this Agreement on behalf of Subrecipient represents and warrants that he/she is duly authorized to do so. 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 12 47. Transfer of Funds Prohibition Subrecipient may not transfer funds between programs (e.g., State Homeland Security Program, Urban Area Security Initiative, Operation Stonegarden). 48.Parties This Agreement is for the benefit of AZDOHS and Subrecipient as the only parties to this Agreement, and to their respective successors, assigns, executors and legal representatives. Except as expressly provided in this Agreement, nothing in this Agreement confers on any person other than the parties and their respective successors and assigns, any rights, remedies, obligations, or liabilities. 49.Respective Responsibilities Except as expressly provided in this Agreement, each party agrees that, to the extent authorized by law, it will be responsible for its own acts or omissions and the results thereof and will not be responsible for the acts or omissions of the other party and the results thereof. In the event that either party becomes aware of any claim made by or expected from a claimant against a party to this Agreement, which claim relates to the subject matter of this Agreement, that party will immediately notify the other party, and the parties will share all information regarding such matter and cooperate with each other in addressing the matter. The parties are independent contractors, and nothing contained in this Agreement will create the relationship of partnership, joint venture, agency, or employment between the parties or any of their employees, officers, agents, or contractors. Each party hereby agrees to perform any further acts and to execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement. 50.Publicity Neither party shall use or mention in any publicity, advertising, promotional materials or news release the name or service mark(s) of the other party without the prior written consent of that party. 51.Notices All communications by either party to this Agreement, shall be in writing, be delivered in person, or shall be sent to the respective parties at the following addresses: Arizona Department of Homeland Security 1802 West Jackson, #117 Phoenix, AZ 85007 Subrecipient must address all notices relative to this Agreement to the appropriate AZDOHS staff; contact information is at www.azdohs.gov. AZDOHS shall address all notices relative to this Agreement to: Enter Title, First & Last Name Above Enter Agency Name Above Enter Mailing Address Above Enter City, State, ZIP Above 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025 Page 13 IN WITNESS WHEREOF, the parties hereto agree to execute this Agreement. FOR AND BEHALF OF THE FOR AND BEHALF OF THE Arizona Department of Homeland Security Enter Agency Name Above Authorized Signature Above Susan Dzbanko, Deputy Director Print Name & Title Above Enter Date Above Date (Complete and mail two original documents to the Arizona Department of Homeland Security.) 24-AZDOHS-OPSG Any unauthorized changes to this document will result in termination of this award. Version 1/15/2025    Town Council Regular Session D. Meeting Date:03/05/2025   Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Appointment to the Budget and Finance Commission (BFC) RECOMMENDATION: The Budget and Finance Commission has recommended an appointment of Eloho Okeze, to a partial term ending December 31, 2026 Partial Terms do not count against the term limits established in Appendix "B" of the Council Parliamentary Rules and Procedures.  EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: The application for the prospective new commission member is attached.  FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to appoint Eloho Okeze to the Budget and Finance Commission for a partial term effective March 6, 2025, and expiring December 31, 2026. Attachments Application  Submit Date: Jan 28, 2025 First Name Middle Initial Last Name Suffix Email Address Street Address Suite or Apt City State Postal Code Primary Phone Alternate Phone Town of Oro Valley Boards & Commissions Profile Are you a full time Oro Valley resident (resides in Oro Valley 6 or more months a year) * Yes Number of years in Oro Valley (If less than 1 year, please state the number of months followed by Mo.) 1yr 11 months Which Boards would you like to apply for? Budget and Finance Commission: Submitted Interests & Experiences Please list your volunteer services in Oro Valley and with other organizations including any boards or commissions on which you have served : (board/commission , civic, educational, cultural, social, etc.) Soccer coach - OVCN (Active) Ambassador - Tucson Metro Chamber of Commerce (Active) Vice President - Saguaros Viejos East HOA External Advisory Board (EAB) Member - Seattle Children's Clinic (Active) Board Member - University of Evansville Alumni Association (Active) Advisor - Millions4One, Columbus, OH Tutor/Soccer coach - The Bridge Comunity Center, Columbus, OH Eloho Okeze Oro Valley AZ 85742 Mobile: Eloho Okeze Upload a Resume How does your previous volunteer service prepare you for the board or commission appointment for which you have applied? Please describe an issue considered at a meeting of the Board or Commission for which you are applying. My current/prior volunteer service, particularly as a board member of my HOA, the University of Evansville Alumni Board, and Millions4One—a nonprofit focused on education support in Nigeria—has provided me with valuable experience directly aligned with the responsibilities of the Budget and Finance Commission. These roles required me to engage in fiduciary oversight, budget planning, and financial decision-making, honing my ability to analyze financial reports, prioritize expenditures, and make strategic recommendations to ensure transparency and align with long-term goals. An issue I have observed that is relevant to the commission’s work involves maintaining a balanced budget while addressing critical community needs, such as infrastructure improvements and public safety. For example, in a recent HOA meeting, we deliberated on funding priorities, ensuring adequate reserves for future projects while balancing immediate maintenance needs. This mirrors the challenges the Budget and Finance Commission faces in providing sound financial recommendations to support Oro Valley’s growth and sustainability. My professional background working for Fortune 20 firms across strategy, product, finance, and business planning verticals, coupled with these volunteer experiences, equips me to contribute meaningfully to the commission’s mission of advising the Town Council on fiduciary responsibilities. I am confident that my skills and commitment to fiscal responsibility will help support Oro Valley's long-term financial health. Briefly describe your educational/vocational background. I hold a Master’s degree in Information Systems from Indiana University’s Kelley School of Business and a Bachelor’s degree in Internet Technology with a minor in Business Administration from the University of Evansville. With over 15 years of professional experience spanning strategy consulting, financial services, e-commerce, and technology, I have successfully managed budgets, implemented scalable data-driven solutions, and driven organizational efficiency across multiple continents while delighting customers. As the owner of Bin Masters, a Tucson-based mobile waste compaction company, I am transforming the waste management industry through innovative, sustainable, and cost-effective practices. This entrepreneurial endeavor has further honed my expertise in financial planning, operational strategy, and long-term decision-making—skills directly applicable to the responsibilities of the Budget and Finance Commission. Additionally, my volunteer leadership roles on the University of Evansville Alumni Board, Millions4One, my HOA, and as an External Advisory Board Member with Seattle Children’s Clinic have further enhanced my ability to analyze complex matters (not limited to just financial), foster collaboration, and deliver strategic insights. These combined experiences uniquely position me to contribute meaningfully to Oro Valley’s fiscal oversight and sustainable growth. Have you attended the Community Academy or CPI? Yes No If yes, what year? If no, are you willing to attend and complete the Community Academy within your first full term? Yes No Eloho Okeze Please attach any additional documents here Please Agree with the Following Statement I agree that the information provided in my application is true and correct I Agree * Eloho Okeze    Town Council Regular Session 1. Meeting Date:03/05/2025   Requested by: Peter Abraham Submitted By:Mike Standish, Town Clerk's Office Department:Water SUBJECT: RESOLUTION NO. (R)25-07, PROVIDING NOTICE OF INTENT TO INCREASE THE POTABLE WATER BASE RATES AND INCREASE THE POTABLE WATER COMMODITY RATES FOR THE ORO VALLEY WATER UTILITY RECOMMENDATION: The Water Utility Commission and Water Utility staff respectfully recommend the approval of Resolution No. (R)25-07, providing notice of intent to increase the potable water base rates and increase the potable water commodity rates 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 13, 2025, the Commission voted to recommend approval of the water rates identified in the Proposed Financial Scenario and supported by the 2025 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 4, 2025 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)25-07, providing notice of intent to increase the potable water base rates and increase the potable water commodity rates for the Oro Valley Water Utility. Attachments Attachments (R)25-07 Notice of Intent  Exhibit A - 2025 Water Rate Report  Staff Presentation  RESOLUTION NO. (R)25-07 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 AND INCREASE THE POTABLE WATER COMMODITY RATES 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 and increasing the potable water commodity rates 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 and increase the potable water commodity rates; 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 and increase the potable water commodity rates. SECTION 2. A public hearing shall be held at the regular meeting of the Mayor and Council at 6:00 p.m. on June 4, 2025, 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 5th day of March, 2025. 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 Town of Oro Valley Water Utility Water Rates Analysis Report March 2025 TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT MARCH 2025 ORO VALLEY TOWN COUNCIL Joseph Winfield, Mayor Melanie Barrett, Vice Mayor Harry “Mo” Green, II, MD, Councilmember Joyce Jones-Ivey, Councilmember Mary Murphy, Councilmember Josh Nicolson, Councilmember Elizabeth Robb, Councilmember ORO VALLEY WATER UTILITY COMMISSION Alan Forrest, Commission Chair Naranjan Vescio, CommissionVice-Chair David Atler, Commission Member Greg Hitt, Commission Member Joseph Hornat, Commission Member Tom Marek, Commission Member Michael Smjekal, 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 regarding the proposed financial scenario. Under the proposed financial scenario, the Operating Fund is projected to have a cash balance of $5,405,931 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 2025/26: A. Increase to the potable water base rates B. Increase to the potable water commodity rates A. Current and proposed monthly base rates for potable water are shown in Table 1 below: Table 1 Cost per month B. 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 $1.81 per month. Customers with a 5/8-inch meter represent 84 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 $1.11 per month for all customers with this meter size. The proposed commodity rate increase for customers in Tier 1 would be $0.10 per 1,000 gallons used per month. Water Utility staff 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 and increase to the potable commodity rates as detailed in the proposed financial scenario. - 4 - TOWN OF ORO VALLEY WATER UTILITY WATER RATES ANALYSIS REPORT MARCH 2025 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 2025/26 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 2,632 new metered connections over the last 10 years. At the end of Fiscal Year 2023/24, the customer base totaled 21,498 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 - 7 - Water Use Trends Water use remains consistent even though the number of connections has increased by 2,632 over the last ten years. The graph below indicates water usage from Fiscal Year 2014/15 through Fiscal Year 2023/24. As noted below, in Fiscal Year 2014/15 water usage was at 2,889 million gallons and 2,987 million gallons in Fiscal Year 2023/24. An increase of 98 million gallons. The revenue projections in this water rate analysis compiled water data from Fiscal Year 2023/24 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 ageing or broken dishwasher, clothes washer or bathroom faucet. - 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, 2024, are shown below in Table 4. Table 4 In April 2017, the Town entered into an Intergovernmental Agreement with the 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. In FY 2024/25, the water utility will issue approximately $17 million in new debt for the NWRRDS project. Debt service will be paid with Groundwater Preservation Fees (GPF) and 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 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 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 use 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 the purpose 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 new debt service 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 $4,813,539 at the beginning of Fiscal Year 2025-26 and is projected to have a balance of $5,405,931 at the end of Fiscal Year 2029/30. 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 base rates are projected to increase annually beginning in Fiscal Year 2025/26 and continue with modest increase through Fiscal Year 2029/30. The potable commodity rates are projected to increase beginning in Fiscal Year 2025/26 and Fiscal Year 2026/27 and remain stable starting in Fiscal Year 2027/28. The proposed base rate increase will generate revenue for the Water Utility’s fixed costs. 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 increases generate revenue for remaining costs not covered by the base rate. Commodity rates are recovered with revenue generated from the volume of water sold. 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 $684,343 over the five-year period. Projected interest income for the GPF monies is a cumulative total of $432,906 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 12.27 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 2024/25 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 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 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 9 percent in Fiscal Year 2025/26 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 by approximately $17 million in FY 2024/25 for the NWRRDS project and will be paid back by GPF and WRSDIF funds. 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 for 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 $8,213,117 at the beginning of FY 2025/26 and is projected to have $2,237,243 at the end of FY 2029/30. 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 $502,877 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 $5.5 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 - 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. A rate setting policy included in the Mayor and Council Water Policies is for the 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 potable and reclaimed water deliveries remaining stable over the last ten 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 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 SERVICE CONNECTIONSGALLONS DELVIEREDWater Sales & Growth (potable & reclaimed) Water Sales Service Connections - 18 - Table 15 below illustrates how regional water providers have increased their base rate for a 5/8-inch meter to compensate for the declines in water consumption as compared to the historical and the 2025 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 proforma 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 2025/26: A. Increase to the potable water monthly base rates B. Increase to the potable water commodity rates A. Tables 17 & 18 are shown below the proposed potable water base rates and commodity rates for each meter size. Approximately 84 percent of Utility 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 $1.81 per month. Table 17 Cost per month B. Table 18 Per 1,000 gallons - 20 - 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 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 a 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 perform 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 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 REVENUES Water Sales Potable Water Sales (excluding golf courses)16,617,000$ 17,140,895$ 17,770,515$ 17,965,528$ 18,165,460$ 18,370,346$ Potable Water Sales from Growth - Res. & Com.- 37,963 127,400 208,704 266,623 310,247 Potable Water Sales - Golf Course - 115,787 119,945 120,128 120,316 120,509 Total Potable Water Sales 16,617,000 17,294,645 18,017,860 18,294,360 18,552,399 18,801,102 Reclaimed Water Sales 1,383,000 1,449,000 1,449,000 1,449,000 1,449,000 1,449,000 Total Water Sales 18,000,000 18,743,645 19,466,860 19,743,360 20,001,399 20,250,102 Other Operating Revenue Service Fees & Charges 824,000 800,000 800,000 800,000 800,000 800,000 Interest Income 100,000 142,935 125,632 130,192 138,482 147,102 Total Other Operating Revenue 924,000 942,935 925,632 930,192 938,482 947,102 Total Operating Revenue 18,924,000$ 19,686,580$ 20,392,492$ 20,673,552$ 20,939,881$ 21,197,204$ OPERATING EXPENSES Potable Operating Expenses Personnel 3,588,654 3,910,067 4,023,705 4,140,752 4,261,311 4,385,486 Operations & Maintenance 3,655,715 3,860,113 3,999,319 4,110,796 4,224,895 4,341,644 Power for Pumping 1,005,000 1,035,150 1,066,205 1,098,191 1,131,136 1,165,070 CAP Wheeling Costs 2,224,000 2,224,000 2,314,021 2,440,983 2,574,929 2,716,241 CAP Water Delivery Costs 2,881,000 3,138,450 3,231,195 3,251,805 3,416,685 3,550,650 Total Potable Operating Expenses 13,354,369$ 14,167,780$ 14,634,445$ 15,042,527$ 15,608,956$ 16,159,091$ Reclaimed Operating Expenses Personnel 203,774 210,130 216,237 222,527 229,006 235,679 Operating & Maintenance 971,569 1,084,970 1,133,210 1,183,681 1,236,490 1,273,585 Power for Pumping 66,000 55,481 57,145 58,860 60,626 62,444 Total Reclaimed Operating Expenses 1,241,343$ 1,350,581$ 1,406,592$ 1,465,068$ 1,526,122$ 1,571,708$ Total Operating Expenses 14,595,712$ 15,518,361$ 16,041,037$ 16,507,595$ 17,135,078$ 17,730,799$ Net Operating Revenue 4,328,288$ 4,168,219$ 4,351,455$ 4,165,957$ 3,804,803$ 3,466,405$ DEBT SERVICE - POTABLE P&I - 2014 WIFA Loan - Sr. Lien - AMI 376,416 376,298 376,178 376,054 375,927 - P&I - 2015 Excise Tax Bonds - Refinance 2005 150,756 149,918 - - - - P&I - 2017 Excise Tax Bonds - Refinance 2007 1,638,991 1,638,851 1,638,703 - - - P&I - 2018 Excise Tax Bonds - Exist. System CIP- 15 yrs.$6M 515,154 514,546 514,338 514,506 514,289 513,687 P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 274,422 275,489 276,064 274,061 169,843 40,694 Total Potable System Debt Service 2,955,739$ 2,955,102$ 2,805,283$ 1,164,621$ 1,060,059$ 554,381$ Net Balance From Operations before capital outlay 1,372,549$ 1,213,116$ 1,546,172$ 3,001,336$ 2,744,744$ 2,912,024$ Capital Outlay Meters & Equipment & Vehicles 717,446$ 720,000$ 790,000$ 790,000$ 860,000$ 490,000$ Capital Improvements: Existing System 1,067,884 945,000 1,010,000 1,580,000 2,030,000 1,610,000 Total Capital Outlay 1,785,330$ 1,665,000$ 1,800,000$ 2,370,000$ 2,890,000$ 2,100,000$ Net Balance From Operations including capital outlay (412,781)$ (451,884)$ (253,828)$ 631,336$ (145,256)$ 812,024$ Beginning Cash Balance 5,226,320$ 4,813,539$ 4,361,655$ 4,107,827$ 4,739,163$ 4,593,907$ Net Balance From Operations (412,781) (451,884) (253,828) 631,336 (145,256) 812,024 Ending Cash Balance 4,813,539$ 4,361,655$ 4,107,827$ 4,739,163$ 4,593,907$ 5,405,931$ Oro Valley Water Utility – Operating Fund Groundwater Preservation Fees A-2 Budget FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 GPF Beginning Balance 3,384,037$ 3,818,692$ 1,241,865$ 2,181,095$ 2,783,433$ 3,865,425$ Revenue GPF Revenue - Potable 2,341,500 2,341,500 2,341,500 2,341,500 2,341,500 2,341,500 GPF Revenue - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500 GPF Revenue - Growth - 6,007 15,117 22,017 27,217 31,695 Total GPF Revenue 2,600,000$ 2,606,007$ 2,615,117$ 2,622,017$ 2,627,217$ 2,631,695$ 2025 Loan Proceeds (20 years @ 3%)8,000,000 - - - - - Interest Income - 78,254 49,625 72,400 96,316 136,311 Total All Revenue 10,600,000$ 2,684,261$ 2,664,742$ 2,694,417$ 2,723,533$ 2,768,006$ GPF Expenses Capital Cost for CAP Allotment 7305 AF 395,000 409,080 467,520 467,520 445,605 430,995 Capital Costs for NWRRDS Project 9,300,000 3,660,000 - - - - Capital Improvements - GPF - 185,000 250,000 620,000 370,000 - P&I - 2021 Sr. Lien Water Revenue Refunding Obligations 470,345 472,174 473,158 469,726 291,102 69,748 P&I - 2025 Loan Payable - 534,834 534,834 534,834 534,834 534,834 Total GPF Expenses 10,165,345 5,261,088 1,725,512 2,092,080 1,641,541 1,035,577 GPF Ending Balance 3,818,692$ 1,241,865$ 2,181,095$ 2,783,433$ 3,865,425$ 5,597,855$ Water Resource and System Development Impact Fee Fund A-3 Budget FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 REVENUES Impact Fee Revenue- Residential 1,092,177$ 830,310$ 1,098,564$ 766,440$ 510,960$ 402,381$ Impact Fee Revenue- Non-Residential 178,664 107,472 107,472 107,472 107,472 107,472 Subtotal Revenue 1,270,841$ 937,782$ 1,206,036$ 873,912$ 618,432$ 509,853$ Other Operating Revenue 2025 Loan Proceeds (20 years @ 3%)10,000,000 - - - - - WIFA Grant Proceeds 1,638,383 - - - - - Interest Income 275,000 172,414 89,071 88,036 82,168 71,188 Subtotal Other Operating Revenue 11,913,383 172,414 89,071 88,036 82,168 71,188 Total Operating Revenue 13,184,224$ 1,110,196$ 1,295,107$ 961,948$ 700,600$ 581,041$ OPERATING EXPENSES Capital Cost for CAP Allotment 3000 AF 162,000 168,000 192,000 192,000 183,000 177,000 Total Operating Expenses 162,000$ 168,000$ 192,000$ 192,000$ 183,000$ 177,000$ Net Operating Revenue 13,022,224$ 942,196$ 1,103,107$ 769,948$ 517,600$ 404,041$ DEBT SERVICE P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 55,711 56,237 56,354 55,945 34,671 8,307 P&I - 2025 Loan Payable - 802,250 802,250 802,250 802,250 802,250 Total Debt Service 55,711$ 858,487$ 858,604$ 858,195$ 836,921$ 810,557$ CAPITAL OUTLAY Capital Improvements: Capital Costs for NWRRDS Projects 13,950,000 5,490,000 - - - - Capital Costs for Other Potable Projects 3,235,424 - - - - - Total Capital Outlay 17,185,424$ 5,490,000$ -$ -$ -$ -$ Net Balance From Operations (4,218,911)$ (5,406,291)$ 244,503$ (88,247)$ (319,321)$ (406,516)$ Beginning Cash Balance 12,432,028$ 8,213,117$ 2,806,826$ 3,051,329$ 2,963,081$ 2,643,760$ Net Balance From Operations (4,218,911)$ (5,406,291)$ 244,503$ (88,247)$ (319,321)$ (406,516)$ Ending Cash Balance 8,213,117$ 2,806,826$ 3,051,329$ 2,963,081$ 2,643,760$ 2,237,243$ Summary of All Funds A-4 Budget FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 REVENUES Water Sales Potable Water Sales (exclude golf courses)16,617,000$ 17,140,895$ 17,770,515$ 17,965,528$ 18,165,460$ 18,370,346$ Potable Water Sales from Growth - 37,963 127,400 208,704 266,623 310,247 Potable Water Sales - Golf Course - 115,787 119,945 120,128 120,316 120,509 Total Potable Water Sales 16,617,000 17,294,645 18,017,860 18,294,360 18,552,399 18,801,102 Reclaimed Water Sales 1,383,000 1,449,000 1,449,000 1,449,000 1,449,000 1,449,000 Total Water Sales 18,000,000 18,743,645 19,466,860 19,743,360 20,001,399 20,250,102 Other Operating Revenue Groundwater Preservation Fees Groundwater Preservation Fee - Potable 2,341,500 2,341,500 2,341,500 2,341,500 2,341,500 2,341,500 Groundwater Preservation Fee - Reclaimed 258,500 258,500 258,500 258,500 258,500 258,500 Groundwater Preservation Fee - Growth - 6,007 15,117 22,017 27,217 31,695 Loan Proceeds-GPF 8,000,000 - - - - - Total Groundwater Preservation Fees 10,600,000 2,606,007 2,615,117 2,622,017 2,627,217 2,631,695 Water Resource & System Development Impact Fees 1,270,841 937,782 1,206,036 873,912 618,432 509,853 Loan Proceeds-WRSDIF 10,000,000 - - - - - WIFA Grant Proceeds 1,638,383 - - - - - Service Fees & Charges 824,000 800,000 800,000 800,000 800,000 800,000 Interest Income 375,000 393,603 264,328 290,628 316,966 354,601 Total Other Operating Revenue 14,108,224 2,131,385 2,270,364 1,964,540 1,735,398 1,664,454 Total Operating Revenue 42,708,224$ 23,481,037$ 24,352,341$ 24,329,917$ 24,364,014$ 24,546,251$ OPERATING EXPENSES Potable Operating Expenses Personnel 3,588,654 3,910,067 4,023,705 4,140,752 4,261,311 4,385,486 Operations & Maintenance 3,655,715 3,860,113 3,999,319 4,110,796 4,224,895 4,341,644 Power for Pumping 1,005,000 1,035,150 1,066,205 1,098,191 1,131,136 1,165,070 CAP Wheeling Costs 2,224,000 2,224,000 2,314,021 2,440,983 2,574,929 2,716,241 CAP Delivery Costs 2,881,000 3,138,450 3,231,195 3,251,805 3,416,685 3,550,650 CAP Capital Costs paid by GPF Revenue 395,000 409,080 467,520 467,520 445,605 430,995 Total Potable Operating Expenses 13,749,370$ 14,576,860$ 15,101,965$ 15,510,047$ 16,054,561$ 16,590,086$ Reclaimed Operating Expenses Personnel 203,774 210,130 216,237 222,527 229,006 235,679 Operating & Maintenance 971,569 1,084,970 1,133,210 1,183,681 1,236,490 1,273,585 Power for Pumping 66,000 55,481 57,145 58,860 60,626 62,444 Total Reclaimed Operating Expenses 1,241,343$ 1,350,581$ 1,406,592$ 1,465,069$ 1,526,123$ 1,571,707$ WRSDIF Operating Expenses CAP Capital Costs 162,000 168,000 192,000 192,000 183,000 177,000 Total WRSDIF Operating Expenses 162,000$ 168,000$ 192,000$ 192,000$ 183,000$ 177,000$ Total Operating Expenses 15,152,713$ 16,095,441$ 16,700,557$ 17,167,116$ 17,763,684$ 18,338,793$ Net Operating Revenue 27,555,511$ 7,385,596$ 7,651,784$ 7,162,801$ 6,600,330$ 6,207,458$ Summary of All Funds A-5 Budget FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Debt Service Debt Service - Potable- Existing System P&I - 2014 WIFA Loan - Sr. Lien - AMI 376,416 376,298 376,178 376,054 375,927 - P&I - 2015 Excise Tax Bonds - Refinance 2005 150,756 149,918 - - - - P&I - 2017 Excise Tax Bonds - Refinance 2007 1,638,991 1,638,851 1,638,703 - - - P&I - 2018 Excise Tax Bonds - Exist. System CIP- 15 yrs. $6M 515,154 514,546 514,338 514,506 514,289 513,687 P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 274,422 275,489 276,064 274,061 169,843 40,694 Total Potable Existing System Debt Service 2,955,739$ 2,955,102$ 2,805,283$ 1,164,621$ 1,060,059$ 554,381$ Debt Service - GPF P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 470,345 472,174 473,158 469,726 291,102 69,748 P&I - Loan Payable (20 years @ 3%)- 534,834 534,834 534,834 534,834 534,834 Total GPF Debt Service 470,345$ 1,007,008$ 1,007,992$ 1,004,560$ 825,936$ 604,582$ Debt Service - WRSDIF - Growth Related P&I - 2021 Sr. Lien Bonds - Refinance 2007 & 2009 WIFA & 2012 55,711 56,237 56,354 55,945 34,671 8,307 P&I - Loan Payable (20 years @ 3%)- 802,250 802,250 802,250 802,250 802,250 Total WRSDIF Growth Related Debt Service 55,711$ 858,487$ 858,604$ 858,195$ 836,921$ 810,557$ Total Water System Debt Service 3,481,795$ 4,820,597$ 4,671,879$ 3,027,376$ 2,722,916$ 1,969,520$ Capital Outlay Meters & Equipment & Vehicles 717,446$ 720,000$ 790,000$ 790,000$ 860,000$ 490,000$ Capital Improvements: Existing System 1,067,884 945,000 1,010,000 1,580,000 2,030,000 1,610,000 Groundwater Preservation Fees 9,300,000 3,845,000 250,000 620,000 370,000 - NWRRDS Projects 13,950,000 5,490,000 - - - - Other Potable Growth Related Projects 3,235,424 - - - - - Total Capital Outlay 28,270,754$ 11,000,000$ 2,050,000$ 2,990,000$ 3,260,000$ 2,100,000$ Net Balance From Operations (4,197,038)$ (8,435,002)$ 929,905$ 1,145,425$ 617,414$ 2,137,937$ Growth - New Metered Connections 300 130 172 120 80 63 Monthly (Avg.) increase to residential customer using 7K gals.N/A 3.6%3.8%1.1%1.1%1.2% Monthly (Avg.) increase to residential customer using 7K gals.N/A $1.81 $1.94 $0.61 $0.62 $0.65 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 $0.00 Debt Service Coverage Ratio: Sr. Lien & WIFA 6.73 2.93 3.04 2.85 2.99 4.26 Debt Service Coverage Requirement = 1.30 Required Operating Fund Cash Reserves (20% of personnel, O&M, debt)3,510,290$ 3,694,693$ 3,769,264$ 3,534,443$ 3,639,028$ 3,657,036$ (does not include depreciation/amortization) Operating Fund Cash Reserves 4,813,539$ 4,361,655$ 4,107,827$ 4,739,163$ 4,593,907$ 5,405,931$ Groundwater Preservation Fees 3,818,692 1,241,865 2,181,095 2,783,433 3,865,425 5,597,855 WRSD Impact Fee Fund 8,213,117 2,806,826 3,051,329 2,963,081 2,643,760 2,237,243 Total Ending Cash Balance 16,845,348$ 8,410,346$ 9,340,251$ 10,485,677$ 11,103,092$ 13,241,029$ 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 - $3.02 Tier 2 - $5.02 Tier 3 - $8.17 Tier 4 - $12.32 Meter Size Base Rate Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons Usage Rate: Per 1,000 gallons 5/8 Inch 23.31$ 0 - 7,000 7,001 - 16,000 16,001 - 32,000 OVER 32,000 3/4 Inch 34.93$ 0 - 10,000 10,001 - 24,000 24,001 - 48,000 OVER 48,000 1 inch 58.23$ 0 - 17,000 17,001 - 40,000 40,001 - 80,000 OVER 80,000 1.5 inch 116.47$ 0 - 35,000 35,001 - 80,000 80,001 - 160,000 OVER 160,000 2 inch 186.35$ 0 - 56,000 56,001 - 128,000 128,001 - 256,000 OVER 256,000 3 inch 372.68$ 0 - 112,000 112,001 - 256,000 256,001 - 512,000 OVER 512,000 4 inch 582.33$ 0 - 175,000 175,001 - 400,000 400,001 - 800,000 OVER 800,000 6 inch 1,164.65$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000 8 inch 1,863.45$ 0 - 860,000 860,001 - 2,000,000 2,000,001 - 3,500,000 OVER 3,500,000 $3.02 Meter Size Base Rate Usage Rate: Per 1,000 gallons 5/8 Inch 23.31$ Fixed usage rate 3/4 Inch 34.93$ Fixed usage rate 1 inch 58.23$ Fixed usage rate 1.5 inch 116.47$ Fixed usage rate 2 inch 186.35$ Fixed usage rate 3 inch 372.68$ Fixed usage rate 4 inch 582.33$ Fixed usage rate 6 inch 1,164.65$ Fixed usage rate 8 inch 1,863.45$ Fixed usage rate $7.65 Meter Size Base Rate Usage Rate: Per 1,000 gallons 5/8 Inch 23.31$ Fixed usage rate 3/4 Inch 34.93$ Fixed usage rate 1 inch 58.23$ Fixed usage rate 1.5 inch 116.47$ Fixed usage rate 2 inch 186.35$ Fixed usage rate 3 inch 372.68$ Fixed usage rate 4 inch 582.33$ Fixed usage rate 6 inch 1,164.65$ Fixed usage rate 8 inch 1,863.45$ 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 5, 2025 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 22.20 - 22.20 23.31 - 23.31 1.11 5.0% 1,000 25.12 1.00 26.12 26.33 1.00 27.33 1.21 4.6% 2,000 28.04 2.00 30.04 29.35 2.00 31.35 1.31 4.4% 3,000 30.96 3.00 33.96 32.37 3.00 35.37 1.41 4.2% 4,000 33.88 4.00 37.88 35.39 4.00 39.39 1.51 4.0% 5,000 36.80 5.00 41.80 38.41 5.00 43.41 1.61 3.9% 6,000 39.72 6.00 45.72 41.43 6.00 47.43 1.71 3.7% 7,000 42.64 7.00 49.64 44.45 7.00 51.45 1.81 3.6% 8,000 47.49 8.00 55.49 49.47 8.00 57.47 1.98 3.6% 9,000 52.34 9.00 61.34 54.49 9.00 63.49 2.15 3.5% 10,000 57.19 10.00 67.19 59.51 10.00 69.51 2.32 3.5% 11,000 62.04 11.00 73.04 64.53 11.00 75.53 2.49 3.4% 12,000 66.89 12.00 78.89 69.55 12.00 81.55 2.66 3.4% 13,000 71.74 13.00 84.74 74.57 13.00 87.57 2.83 3.3% 14,000 76.59 14.00 90.59 79.59 14.00 93.59 3.00 3.3% 15,000 81.44 15.00 96.44 84.61 15.00 99.61 3.17 3.3% 16,000 86.29 16.00 102.29 89.63 16.00 105.63 3.34 3.3% 17,000 94.46 17.00 111.46 97.80 17.00 114.80 3.34 3.0% 18,000 102.63 18.00 120.63 105.97 18.00 123.97 3.34 2.8% 19,000 110.80 19.00 129.80 114.14 19.00 133.14 3.34 2.6% 20,000 118.97 20.00 138.97 122.31 20.00 142.31 3.34 2.4% 21,000 127.14 21.00 148.14 130.48 21.00 151.48 3.34 2.3% 22,000 135.31 22.00 157.31 138.65 22.00 160.65 3.34 2.1% 23,000 143.48 23.00 166.48 146.82 23.00 169.82 3.34 2.0% 24,000 151.65 24.00 175.65 154.99 24.00 178.99 3.34 1.9% 25,000 159.82 25.00 184.82 163.16 25.00 188.16 3.34 1.8% 26,000 167.99 26.00 193.99 171.33 26.00 197.33 3.34 1.7% 27,000 176.16 27.00 203.16 179.50 27.00 206.50 3.34 1.6% 28,000 184.33 28.00 212.33 187.67 28.00 215.67 3.34 1.6% 29,000 192.50 29.00 221.50 195.84 29.00 224.84 3.34 1.5% 30,000 200.67 30.00 230.67 204.01 30.00 234.01 3.34 1.4% 31,000 208.84 31.00 239.84 212.18 31.00 243.18 3.34 1.4% 32,000 217.01 32.00 249.01 220.35 32.00 252.35 3.34 1.3% 33,000 229.33 33.00 262.33 232.67 33.00 265.67 3.34 1.3% 34,000 241.65 34.00 275.65 244.99 34.00 278.99 3.34 1.2% 35,000 253.97 35.00 288.97 257.31 35.00 292.31 3.34 1.2% 36,000 266.29 36.00 302.29 269.63 36.00 305.63 3.34 1.1% 37,000 278.61 37.00 315.61 281.95 37.00 318.95 3.34 1.1% 38,000 290.93 38.00 328.93 294.27 38.00 332.27 3.34 1.0% 39,000 303.25 39.00 342.25 306.59 39.00 345.59 3.34 1.0% 40,000 315.57 40.00 355.57 318.91 40.00 358.91 3.34 0.9% 41,000 327.89 41.00 368.89 331.23 41.00 372.23 3.34 0.9% 42,000 340.21 42.00 382.21 343.55 42.00 385.55 3.34 0.9% 43,000 352.53 43.00 395.53 355.87 43.00 398.87 3.34 0.8% 44,000 364.85 44.00 408.85 368.19 44.00 412.19 3.34 0.8% 45,000 377.17 45.00 422.17 380.51 45.00 425.51 3.34 0.8% 46,000 389.49 46.00 435.49 392.83 46.00 438.83 3.34 0.8% 47,000 401.81 47.00 448.81 405.15 47.00 452.15 3.34 0.7% 48,000 414.13 48.00 462.13 417.47 48.00 465.47 3.34 0.7% 49,000 426.45 49.00 475.45 429.79 49.00 478.79 3.34 0.7% 50,000 438.77 50.00 488.77 442.11 50.00 492.11 3.34 0.7% B-2 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 3/4-INCH METER BASE RATE 34.93$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 10,000 GALLONS TIER 2 = 5.02$ 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 33.27 - 33.27 34.93 - 34.93 1.66 5.0% 7,000 53.71 7.00 60.71 56.07 7.00 63.07 2.36 3.9% 11,000 67.32 11.00 78.32 70.15 11.00 81.15 2.83 3.6% 28,000 163.05 28.00 191.05 168.09 28.00 196.09 5.04 2.6% 50,000 351.09 50.00 401.09 356.13 50.00 406.13 5.04 1.3% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL CUSTOMERS WITH A 3/4-INCH METER BASE RATE 34.93$ COMMODITY RATE: TIER 1 = 3.02$ 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 33.27 - 33.27 34.93 - 34.93 1.66 5.0% 7,000 53.71 7.00 60.71 56.07 7.00 63.07 2.36 3.9% 11,000 65.39 11.00 76.39 68.15 11.00 79.15 2.76 3.6% 28,000 115.03 28.00 143.03 119.49 28.00 147.49 4.46 3.1% 50,000 179.27 50.00 229.27 185.93 50.00 235.93 6.66 2.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR SF & MF RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 1-INCH METER BASE RATE 58.23$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 17,000 GALLONS TIER 2 = 5.02$ 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 55.46 - 55.46 58.23 - 58.23 2.77 5.0% 17,000 105.10 17.00 122.10 109.57 17.00 126.57 4.47 3.7% 27,000 153.60 27.00 180.60 159.77 27.00 186.77 6.17 3.4% 38,000 206.95 38.00 244.95 214.99 38.00 252.99 8.04 3.3% 50,000 298.35 50.00 348.35 306.73 50.00 356.73 8.38 2.4% B-3 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL CUSTOMERS WITH A 1-INCH METER BASE RATE 58.23$ COMMODITY RATE: TIER 1 = 3.02$ 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 55.46 - 55.46 58.23 - 58.23 2.77 5.0% 15,000 99.26 15.00 114.26 103.53 15.00 118.53 4.27 3.7% 27,000 134.30 27.00 161.30 139.77 27.00 166.77 5.47 3.4% 38,000 166.42 38.00 204.42 172.99 38.00 210.99 6.57 3.2% 50,000 201.46 50.00 251.46 209.23 50.00 259.23 7.77 3.1% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 1.5-INCH METER BASE RATE 116.47$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 35,000 GALLONS TIER 2 = 5.02$ 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 0 110.92 - 110.92 116.47 - 116.47 5.55 5.0% 38,000 227.67 38.00 265.67 237.23 38.00 275.23 9.56 3.6% 64,000 353.77 64.00 417.77 367.75 64.00 431.75 13.98 3.3% 90,000 513.07 90.00 603.07 529.77 90.00 619.77 16.70 2.8% 125,000 799.02 125.00 924.02 815.72 125.00 940.72 16.70 1.8% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 1.5-INCH METER BASE RATE 116.47$ COMMODITY RATE: TIER 1 = 3.02$ 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 0 110.92 - 110.92 116.47 - 116.47 5.55 5.0% 30,000 198.52 30.00 228.52 207.07 30.00 237.07 8.55 3.7% 64,000 297.80 64.00 361.80 309.75 64.00 373.75 11.95 3.3% 90,000 373.72 90.00 463.72 388.27 90.00 478.27 14.55 3.1% 125,000 475.92 125.00 600.92 493.97 125.00 618.97 18.05 3.0% B-4 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 2-INCH METER BASE RATE 186.35$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 56,000 GALLONS TIER 2 = 5.02$ 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 0 177.48 - 177.48 186.35 - 186.35 8.87 5.0% 57,000 345.85 57.00 402.85 360.49 57.00 417.49 14.64 3.6% 130,000 706.54 130.00 836.54 733.25 130.00 863.25 26.71 3.2% 250,000 1,686.94 250.00 1,936.94 1,713.65 250.00 1,963.65 26.71 1.4% 325,000 2,586.04 325.00 2,911.04 2,612.75 325.00 2,937.75 26.71 0.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 2-INCH METER BASE RATE 186.35$ COMMODITY RATE: TIER 1 = 3.02$ 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 0 177.48 - 177.48 186.35 - 186.35 8.87 5.0% 57,000 343.92 57.00 400.92 358.49 57.00 415.49 14.57 3.6% 128,000 551.24 128.00 679.24 572.91 128.00 700.91 21.67 3.2% 250,000 907.48 250.00 1,157.48 941.35 250.00 1,191.35 33.87 2.9% 325,000 1,126.48 325.00 1,451.48 1,167.85 325.00 1,492.85 41.37 2.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 3-INCH METER BASE RATE 372.68$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 112,000 GALLONS TIER 2 = 5.02$ 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 0 354.93 - 354.93 372.68 - 372.68 17.75 5.0% 50,000 500.93 50.00 550.93 523.68 50.00 573.68 22.75 4.1% 150,000 866.27 150.00 1,016.27 901.68 150.00 1,051.68 35.41 3.5% 300,000 1,739.85 300.00 2,039.85 1,793.28 300.00 2,093.28 53.43 2.6% 500,000 3,373.85 500.00 3,873.85 3,427.28 500.00 3,927.28 53.43 1.4% B-5 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 3-INCH METER BASE RATE 372.68$ COMMODITY RATE: TIER 1 = 3.02$ 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 0 354.93 - 354.93 372.68 - 372.68 17.75 5.0% 50,000 500.93 50.00 550.93 523.68 50.00 573.68 22.75 4.1% 150,000 792.93 150.00 942.93 825.68 150.00 975.68 32.75 3.5% 300,000 1,230.93 300.00 1,530.93 1,278.68 300.00 1,578.68 47.75 3.1% 500,000 1,814.93 500.00 2,314.93 1,882.68 500.00 2,382.68 67.75 2.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR IRRIGATION CUSTOMERS WITH A 4-INCH METER BASE RATE 582.33$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 175,000 GALLONS TIER 2 = 5.02$ 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 0 554.60 - 554.60 582.33 - 582.33 27.73 5.0% 300,000 1,671.85 300.00 1,971.85 1,738.33 300.00 2,038.33 66.48 3.4% 550,000 3,382.35 550.00 3,932.35 3,465.83 550.00 4,015.83 83.48 2.1% 700,000 4,607.85 700.00 5,307.85 4,691.33 700.00 5,391.33 83.48 1.6% 850,000 6,040.85 850.00 6,890.85 6,124.33 850.00 6,974.33 83.48 1.2% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 4-INCH METER BASE RATE 582.33$ COMMODITY RATE: TIER 1 = 3.02$ 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 0 554.60 - 554.60 582.33 - 582.33 27.73 5.0% 300,000 1,430.60 300.00 1,730.60 1,488.33 300.00 1,788.33 57.73 3.3% 550,000 2,160.60 550.00 2,710.60 2,243.33 550.00 2,793.33 82.73 3.1% 700,000 2,598.60 700.00 3,298.60 2,696.33 700.00 3,396.33 97.73 3.0% 850,000 3,036.60 850.00 3,886.60 3,149.33 850.00 3,999.33 112.73 2.9% B-6 TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR RESIDENTIAL & IRRIGATION CUSTOMERS WITH A 6-INCH METER BASE RATE 1,164.65$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 860,000 GALLONS TIER 2 = 5.02$ 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 1,109.19 - 1,109.19 1,164.65 - 1,164.65 55.46 5.0% 425,000 2,350.19 425.00 2,775.19 2,448.15 425.00 2,873.15 97.96 3.5% 1,000,000 4,299.39 1,000.00 5,299.39 4,464.65 1,000.00 5,464.65 165.26 3.1% 1,500,000 6,724.39 1,500.00 8,224.39 6,974.65 1,500.00 8,474.65 250.26 3.0% 2,000,000 9,149.39 2,000.00 11,149.39 9,484.65 2,000.00 11,484.65 335.26 3.0% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR COMMERCIAL & MULTIFAMILY CUSTOMERS WITH A 6-INCH METER BASE RATE 1,164.65$ COMMODITY RATE: TIER 1 = 3.02$ 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 1,109.19 - 1,109.19 1,164.65 - 1,164.65 55.46 5.0% 425,000 2,350.19 425.00 2,775.19 2,448.15 425.00 2,873.15 97.96 3.5% 1,000,000 4,029.19 1,000.00 5,029.19 4,184.65 1,000.00 5,184.65 155.46 3.1% 1,500,000 5,489.19 1,500.00 6,989.19 5,694.65 1,500.00 7,194.65 205.46 2.9% 2,000,000 6,949.19 2,000.00 8,949.19 7,204.65 2,000.00 9,204.65 255.46 2.9% TABLE FOR MONTHLY CHARGES AND PERCENT INCREASE COMPARISON FOR CUSTOMERS WITH A 8-INCH METER BASE RATE 1,863.45$ COMMODITY RATE: TIER 1 = 3.02$ FOR 0 - 860,000 GALLONS TIER 2 = 5.02$ 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 1,774.71 - 1,774.71 1,863.45 - 1,863.45 88.74 5.0% 425,000 3,015.71 425.00 3,440.71 3,146.95 425.00 3,571.95 131.24 3.8% 1,000,000 4,964.91 1,000.00 5,964.91 5,163.45 1,000.00 6,163.45 198.54 3.3% 1,500,000 7,389.91 1,500.00 8,889.91 7,673.45 1,500.00 9,173.45 283.54 3.2% 2,000,000 9,814.91 2,000.00 11,814.91 10,183.45 2,000.00 12,183.45 368.54 3.1% (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 1,863.45$ COMMODITY RATE: TIER 1 = 3.02$ 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 1,774.71 - 1,774.71 1,863.45 - 1,863.45 88.74 5.0% 425,000 3,015.71 425.00 3,440.71 3,146.95 425.00 3,571.95 131.24 3.8% 1,000,000 4,694.71 1,000.00 5,694.71 4,883.45 1,000.00 5,883.45 188.74 3.3% 1,500,000 6,154.71 1,500.00 7,654.71 6,393.45 1,500.00 7,893.45 238.74 3.1% 2,000,000 7,614.71 2,000.00 9,614.71 7,903.45 2,000.00 9,903.45 288.74 3.0% (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 2024/25. Actual cash balances on the 6/30/24 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 2025-26 through FY 2029-30 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 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 Single Family Residential 130 172 120 80 63 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 2023-24 was 7,000 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 2025-26 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 water consumption for FY 2023-24. The GPF funds are dedicated to paying 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 2024-25 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% 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 the 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 6/6/24. 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. $10.8 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 approximately $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 2024-25. 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 2025-26 through FY 2029-30 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 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 Single Family Residential SU’s 130 172 120 80 63 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 6/6/24. 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 approximatley $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 2025-26 By: Peter A. Abraham, P.E. March 5, 2025 Notice of Intent (NOI) 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 2025 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 4, 2025 Rate Drivers 3 What is driving a water rate increase? Increasing water resource costs: CAP deliveries (up $257,450 / 8.9%), Cash Firming (up $200,000) Cash funding existing system improvements over the 5-year projection period ($10.8 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: 84% of customers have a 5/8-inch meter and will see a $1.11 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 No other proposed rate or fee increases: Meter Size Current Proposed Monthly (in inches)Potable Base Rates Potable Base Rates Increase 5/8 $ 22.20 $ 23.31 $ 1.11 (5%) 3/4 $ 33.27 $ 34.93 $ 1.66 (5%) 1 $ 55.46 $ 58.23 $ 2.77 (5%) 1.5 $ 110.92 $ 116.47 $ 5.55 (5%) 2 $ 177.48 $ 186.35 $ 8.87 (5%) 3 $ 354.93 $ 372.68 $ 17.75 (5%) 4 $ 554.60 $ 582.33 $ 27.73 (5%) 6 $1,109.19 $1,164.65 $ 55.46 (5%) 8 $1,774.71 $1,863.45 $ 88.74 (5%) Commodity Tiers Current Proposed Increase Tier 1 $ 2.92 $ 3.02 $ 0.10 (3.5%) Tier 2 $ 4.85 $ 5.02 $ 0.17 (3.5%) Tier 3 $ 8.17 $ 8.17 $ 0.00 (0.0%) Tier 4 $ 12.32 $12.32 $ 0.00 (0.0%) Potable Water Cost Comparisons 5 Monthly Water Bill Comparisons to Other Water Providers: 84% 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 $1.81 or 3.6% 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 $49.64 $96.44 $184.82 $355.57 Oro Valley Proposed $51.45 (3.6%)$99.61 (3.3%)$188.61 (2.1%)$358.91 (.9%) Metro Water $57.10 $105.10 $179.65 $307.90 Marana Water $55.50 $104.56 $179.26 $319.81 Tucson Water $56.74 $139.10 $288.21 $581.49 Schedule 6 01/13/25 Commission made a recommendation on water rates 03/05/25 Present Notice of Intent to increase rates to Town Council 03/06/25 Publish public hearing date on Town website – 60 day notice 03/06/25 Publish Notice of Intent in newspaper – 20 day notice 06/04/25 Town Council to hold public hearing on proposed rate increase 07/05/25 New rates become effective – 30 days after adoption 7 Questions?    Town Council Regular Session 1. Meeting Date:03/05/2025   Requested by: Paul Melcher  Submitted By:Paul Melcher, Community and Economic Development Department:Community and Economic Development SUBJECT: DISCUSSION REGARDING COMMUNITY AND ECONOMIC DEVELOPMENT STAFF REPORT REGARDING ORO VALLEY RETAIL AND RESTAURANT GAP ANALYSIS RECOMMENDATION: There is not a recommendation since this is a study session. EXECUTIVE SUMMARY: Understanding the Town of Oro Valley General Fund relies on Sales Taxes to cover approximately 50% of overall general fund revenues, the Oro Valley Town Council Strategic Plan for Fiscal Years 2021 to 2023 included an objective that read as follows: Conduct an external retail market assessment by a qualified firm to provide targeted data designed to assist the town in attracting and retaining restaurant and retail establishments. Using Placer.ai, Community and Economic Development staff have created Oro Valley’s first Retail and Restaurant Leakage Analysis.  BACKGROUND OR DETAILED INFORMATION: The Town of Oro Valley General Fund relies on Sales Taxes to cover approximately 50% of overall general fund revenues. Thus, the Oro Valley Town Council Strategic Plan for Fiscal Years 2021 to 2023 included an objective that read as follows: Conduct an external retail market assessment by a qualified firm to provide targeted data designed to assist the town in attracting and retaining restaurant and retail establishments. Then-Town Manager Mary Jacobs and the Community and Economic Development Director recommended delaying the initiation of the assessment until after the following occurred: 1) Arizona lifting pandemic-related public gatherings and other restrictions impacting patronage at restaurants and retail establishments, 2) Stabilization of national, state, and local economies after demonstrating that society had returned to most pre-pandemic shopping and dining habits. Then-Governor Doug Ducey removed the first restrictions on businesses and public gatherings March 25, 2021, then lifted the full emergency declarations on March 31, 2022. In response, staff began creating a Scope of Work for a Retail Analysis and a corresponding budget ask for the FY22-23 budget. However, staff presented Town Council with an alternative option for FY23-24 to conduct the retail analysis since analysis cost estimates increased to over $60,000 and the availability of software such as Placer.ai became available to government entities. Costing approximately $28,000 per year and providing the staff updated data sets every three days, Placer.ai has allowed staff the ability to not only create this retail analysis, but it has provided retail spend analysis for chain stores and restaurants, special event attendance, spending, and traffic pattern data, Oro Valley visitor spend and travel data, and a host of other data sets that help analyze and define the Oro Valley economy. Using Placer.ai, Community and Economic Development staff have created Oro Valley’s first Retail and Using Placer.ai, Community and Economic Development staff have created Oro Valley’s first Retail and Restaurant Leakage Analysis. Since Placer.ai continually updates the program’s data sets, Town staff will have near-instantaneous access to invaluable economic development information to be able to track the efficacy of study implementation strategies and to be able to share it with Small Business and Tourism partners in support of Comprehensive Economic Development and Tourism strategies.   FISCAL IMPACT: To be determined based on the percentage of recaptured retail and restaurant sales lost to Oro Valley residents shopping and Adinine outside the Town. SUGGESTED MOTION: There is not a recommended motion this is a study session. Attachments Retail/Restaurant Leakage Report  Staff Presentation  Town of Oro Valley Community and Economic Development Department Oro Valley, it’s in our nature. 11000 N. La Cañada Drive, Oro Valley, Arizona 85737 www.orovalleyaz.gov | phone: (520) 229-4800 | fax: (520) 742-1022 Oro Valley Retail and Restaurant Leakage Analysis March 2025 2 | P a g e Table of Contents Section 1: Glossary Section 2: Retail and Restaurant Leakage Section 3: Top 10 Categories of Retail and Restaurant Leakage Section 4: Market Analysis of Lost Revenue Section 5: Exploring Reasons Why Oro Valley Residents Make Purchases and Dine Outside Oro Valley Section 6: Conclusions and Recommendations 3 | P a g e Purpose The Town of Oro Valley General Fund relies on sales taxes to cover approximately 50% of overall general fund revenues. Thus, the Oro Valley Town Council Strategic Plan for Fiscal Years 2021 to 2023 included an objective that read as follows: Conduct an external retail market assessment by a qualified firm to provide targeted data designed to assist the town in attracting and retaining restaurant and retail establishments. The Town Manager and Community and Economic Development Director recommended delaying the initiation of the assessment until after the following occurred: 1) Arizona’s governor lifting pandemic-related restrictions on public gatherings and other restrictions impacting patronage at restaurants and retail establishments, 2) Stabilization of national, state, and local economies after demonstrating that society had returned to most pre-pandemic shopping and dining habits. Then-Governor Doug Ducey removed the first restrictions on businesses and public gatherings March 25, 2021, then lifted the full emergency declarations on March 31, 2022. In response, staff began creating a Scope of Work for a Retail Analysis and a corresponding budget ask for the FY22-23 budget. However, staff presented Town Council with an alternative option for FY23-24 to conduct the retail analysis since analysis cost estimates increased to over $60,000 and the availability of software such as Placer.ai became available to government entities. Costing approximately $28,000 per year and providing the staff updated economic data sets every three days, Placer.ai has allowed staff the ability to not only create this retail analysis, but it has also provided retail spend analysis for chain stores and restaurants, information regarding special event attendance, spending, and traffic pattern data, Oro Valley visitor spend and travel data, and a host of other data sets that help analyze and define the Oro Valley economy. Using Placer.ai, Community and Economic Development staff have created Oro Valley’s first Retail and Restaurant Leakage Analysis. Since Placer.ai continually updates the program’s data sets, Town staff will have near-instantaneous access to invaluable economic development information to be able to track the efficacy of study implementation strategies and to be able to share that information with Small Business and Tourism partners in support of Comprehensive Economic Development and Tourism strategies. Section 1: Glossary It is important for the reader to understand the terminology included in the report to ensure a complete understanding of the concepts discussed, so a glossary is provided. The reader will note that retail classifications include what is known as a NAICS Code, which stands for The North American Industry Classification System (NAICS), the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. 4 | P a g e Auto Dealers (STI: Market Outlook – Data Dictionary) Industries in the Motor Vehicle and Parts Dealers subsector retail motor vehicles and parts from fixed point-of-sale locations. Establishments in this subsector typically operate from a showroom and/or an open lot where the vehicles are on display. The display of vehicles and the related parts require little by way of display equipment. The personnel generally include both the sales and sales support staff familiar with the requirements for registering and financing a vehicle as well as a staff of parts experts and mechanics trained to provide repair and maintenance services for the vehicles. Specific industries have been included in this subsector to identify the type of vehicle being retailed. Building Material and Supplies Dealers (STI: Market Outlook – Data Dictionary) This industry group comprises establishments primarily engaged in retailing new building materials and supplies from fixed Synergos Technologies, Inc. 15 point-of-sale locations. Establishments in this subsector have display equipment designed to handle lumber and related products that may be kept either indoors or outdoors under covered areas. The staff is usually knowledgeable in the use of the specific products being retailed in the construction, repair, and maintenance of the home. Clothing Stores (STI: Market Outlook – Data Dictionary) Industries in the Clothing Stores subsector retail new clothing merchandise from fixed point-of- sale locations. Establishments in this subsector have similar display equipment and staff that is knowledgeable regarding fashion trends and the proper match of styles, colors, and combinations of clothing and accessories to the characteristics and tastes of the customer Community Shopping Center (ICSC: International Council of Shopping Centers) General merchandise or convenience-oriented offerings. Wider range of apparel and other soft goods offerings than neighborhood centers (convenience oriented). The center is usually configured in a straight line as a strip or may be laid out in a/n L or U shape, depending on the site and design. Demand (Merriam-Webster) The quantity of a commodity or service wanted at a specified price and time. Department Store (NAICS Code 455110) This industry comprises establishments generally known as department stores that have separate departments for general lines of new merchandise, such as apparel, jewelry, home furnishings, and toys, with no one merchandise line predominating. Department stores may sell perishable groceries, such as fresh fruits, vegetables, and dairy products, but such sales are insignificant. Department stores with fixed point-of-sale locations may have separate customer 5 | P a g e checkout areas in each department, central customer checkout areas, or both. Electronic Shopping and Mail Order Houses/Non-store Retailers (STI: Market Outlook – Data Dictionary) Industries in the Non-store Retailers subsector retail merchandise using methods, such as infomercials, direct-response advertising, paper and electronic catalogs, door-to-door solicitation, in-home demonstration, selling from portable stalls, and distribution through vending machines. Establishments in this subsector include mail-order houses, vending machine operators, home delivery sales, door-to-door sales, party plan sales, electronic shopping, and sales through portable stalls (e.g., street vendors, except food). Also included are establishments engaged in the direct sale (i.e., non-store) of products, such as home heating oil dealers and newspaper delivery service providers. Fast Casual Restaurant (Merriam-Webster) A restaurant that combines elements of fast-food service (such as counter ordering) with other elements (such as made-to-order food) that are typical of a full-service restaurant. Favorite Chains (Placer.ai) Favorite Chains provides a list of other [local] retail chains that visitors to your selected location have also visited during the selected date range (i.e., "X% of visitors to 'my location' also visited 'Chain A' during the last X months"). Full-Service Restaurant (STI: Market Outlook – Data Dictionary) Industries in the Food Services and Drinking Places subsector prepare meals, snacks, and beverages to customer order for immediate on-premises and off-premises consumption. There is a wide range of establishments in these industries. Some provide food and drink only; while others provide various combinations of seating space, waiter/waitress services and incidental amenities, such as limited entertainment. The industries in the subsector are grouped based on the type and level of services provided. The industry groups are full-service restaurants; limited- service eating places; special food services, such as food service contractors, caterers, and mobile food services; and drinking places. Gasoline Stations (STI: Market Outlook – Data Dictionary) Industries in the Gasoline Stations subsector retail automotive fuels (e.g., gasoline, diesel fuel, gasohol) and automotive oils or retail these products in combination with convenience store items. These establishments have specialized equipment for the storage and dispensing of automotive fuels. 6 | P a g e Geofence (Placer.ai) A virtual perimeter that can be drawn around any real-world geographic location/area using a series of points on a map. These points are defined by latitude and longitude coordinates. A geofence can be drawn around a property, complexes, an entire region, etc. Goods (Merriam-Webster) Something manufactured or produced for sale. Health and Personal Care Stores (STI: Market Outlook – Data Dictionary) Industries in the Health and Personal Care Stores subsector retail health and personal care merchandise from fixed point-of-sale locations. Establishments in this subsector are characterized principally by the products they retail, and some health and personal care stores may have specialized staff trained in dealing with the products. Staff may include pharmacists, opticians, and other professionals engaged in retailing, advising customers, and/or fitting the product sold to the customer's needs. Limited-Services Eating Places (STI: Market Outlook – Data Dictionary) This industry group comprises establishments primarily engaged in providing food services where patrons generally order or select items and pay before eating. Most establishments do not have waiter/waitress service, but some provide limited service, such as cooking to order (i.e., per special request), bringing food to seated customers, or providing off-site delivery. Other General Merchandise Stores (STI: Market Outlook – Data Dictionary) This industry comprises establishments primarily engaged in retailing new goods in general merchandise stores (except department stores, warehouse clubs, superstores, and supercenters). These establishments retail a general line of new merchandise, such as apparel, automotive parts, dry goods, hardware, groceries, housewares or home furnishings, and other lines in limited amounts, with none of the lines predominating. Other Motor Vehicle Dealers (STI: Market Outlook – Data Dictionary) This industry group comprises establishments primarily engaged in retailing new and used vehicles (except automobiles, light trucks, such as sport utility vehicles, and passenger and cargo vans). POI--Point of Interest (Placer.ai) Specific point locations that are available for exploration and analysis within Placer. Locations are geofenced across the entire U.S. to provide analytics for any POI. 7 | P a g e Retail and Restaurant leakage (Wikipedia) The economic definition of leakage is a situation in which income exits an economy instead of staying within. In retail, leakage refers to consumers spending money outside the local market. For instance, crossing a border to buy goods instead of making the same purchase from local shops. Retail and Restaurant surplus (Buxton.com) A retail surplus means that the community's trade area is capturing the local market plus attracting non-local shoppers. A retail surplus does not necessarily mean that the community cannot support additional business. Synergos Technologies, Inc. (STI) Synergos Technologies inc. is a market research company founded in 1992. It provides companies with innovative and confidence-boosting demographic data building blocks. STI's goal is to develop powerful software tools and data products for consumer-focused companies. Unmet needs (Merriam-Webster) Not satisfied or fulfilled. Visitor Journey (Placer.ai) Visitor Journey visualizes the flow of visitation activity to and from any property in the U.S. by showing the top "Prior" and "Post" locations. This allows you to identify the locations and brands that visitors visit before and after your selected Point of Interest (POI). The percentages show the share of visitors who visited a particular location before or after the analyzed POI. Section 2: Retail and Restaurant Leakage This report provides a leakage analysis: the businesses and restaurants Oro Valley residents patronize and the types of goods that are purchased both inside and outside of Oro Valley. The value of this lost revenue and probable causes for these losses are also identified and are referred to as “retail and restaurant gaps.” The following tables define leakage that has occurred the previous three years (2022-2024), January 1 – December 31 by spending category. The tables were created by Town staff using Placer.ai data and identify the number of visits made by Oro Valley residents to the listed business types outside of Oro Valley and the number of residents that made the visits. The last column shows how many visits each resident would have made to reach the total (i.e. 5,102,636 visits were made to community shopping centers by 55,990 residents. 5,102,636 ÷ 55,990 = 91%) and are listed in descending order by number of resident visits. Please note that residents are classified by home location which is where a device spends the night on a regular basis over the last 30 days. 8 | P a g e For the purposes of this report, residents of zip codes 85737, 85755 and 85739 are included in the total Oro Valley population. Staff chose these zip codes for analysis based on a desire to represent as accurately as possible the Town’s overall local market and resident area understanding that Placer.ai does not allow for splits in zip codes to determine population Staff included 85739 based on the number of visits from Catalina and Saddlebrook residents to Oro Valley retail, service, medical, and restaurant destinations. Conversely, staff excluded 85704 from the population set since it was too difficult to carve out the Oro Valley residences from those in the unincorporated areas of Pima County and obtain valid statistical information from Placer.ai. The impacts of this choice are a reduction in the overall population for Oro Valley and a resulting reduction in leakage amounts among the major sectors. Table 1. Oro Valley Retail and Restaurant Leakage from 1.1.24 – 12.31.24 Category Visits by Residents Residents* # Visits/ Resident Community Shopping Centers 5,102,636 55,990 91 Fast Food & QSR 1,923,995 49,826 38 Gas Stations & Convenience Stores 1,615,002 48,502 33 Groceries 1,195,349 48,744 24 Restaurants 1,138,833 50,070 22 Superstores 862,867 45,727 18 Breakfast, Coffee, Bakeries & Dessert Shops 735,269 42,920 17 Home Improvement 286,894 29,315 9 Car Shops & Services 284,386 32,440 8 Clothing 278,783 34,574 8 TOTAL 13,424,014 438,108 *Placer.ai’s counting methodology is different than the Census data methodology. For the period 1.1.24 – 12.31.24, Placer.ai estimates that Oro Valley has 59,500 residents. 9 | P a g e Table 2. Oro Valley Retail and Restaurant Leakage 1.1.23 – 12.31.23 Category Visits by Residents Residents* # Visits/ Resident Community Shopping Centers 4,854,554 53,478 90 Fast Food & QSR 1,891,200 47,753 39 Gas Stations & Convenience Stores 1,605,612 46,642 34 Restaurants 1,159,572 47,912 24 Groceries 1,153,914 46,619 24 Superstores 869,759 44,159 19 Breakfast, Coffee, Bakeries & Dessert Shops 721,020 40,763 17 Home Improvement 293,744 28,908 10 Car Shops & Services 288,782 30,970 9 Clothing 277,742 32,776 8 TOTAL 13,115,899 419,981 *Placer.ai’s counting methodology is different than the Census data methodology. For the period 1.1.23 – 12.31.23, Placer.ai estimates that Oro Valley has 58,400 residents. Table 3. Oro Valley Retail and Restaurant Leakage 1.1.22 – 12.31.22 Category Visits by Residents Residents* # Visits/ Resident Community Shopping Centers 4,806,288 51,276 93 Fast Food & QSR 1,838,166 46,187 39 Gas Stations & Convenience Stores 1,417,139 43,568 32 Restaurants 1,143,734 45,318 25 Groceries 1,030,524 43,054 23 Superstores 801,816 39,683 20 Breakfast, Coffee, Bakeries & Dessert Shops 666,878 36,949 18 Home Improvement 292,709 26,223 11 Clothing 282,633 31,233 9 Car Shops & Services 255,923 26,956 9 TOTAL 12,535,809 390,448 *Placer.ai’s counting methodology is different than the Census data methodology. For the period 1.1.22 – 12.31.22, Placer.ai estimates that Oro Valley has 57,700 residents. Per the three years of data in the tables, one can see that Oro Valley does not have a retail or restaurant surplus in any of the categories. 10 | P a g e Section 3: Top 10 Categories of Retail Leakage The top ten categories of businesses visited by Oro Valley residents outside of Town are listed below and the ten most frequented locations in each category are also identified. #1 Community Shopping Centers • Arizona Pavilions Shopping Center; SWC I-10 and Cortaro Road (Ross, Walmart Supercenter, Kohl’s, Harkins Theatres) • Casa Adobes Shopping Plaza; SWC Ina Rd. & Oracle Rd. (Whole Foods Market, Frost, Sauce Restaurant) • Foothills Mall; NWC Ina Rd. & La Cholla Blvd. (Barnes & Noble, Bath & Body Works, AMC Theatres) • La Encantada; NWC Skyline Dr & Campbell Ave. (Apple, Blanco, North, Crate & Barrel) • La Toscana Village; SEC Ina Rd. & Oracle Rd. (Safeway, Walgreens, Bank of America) • Oracle Wetmore Shopping Center; SWC Oracle Rd. & Wetmore Rd. (Cost Plus World Market, Jo-Ann Stores, PetSmart, Ulta) • Plaza Del Oro; NEC Oracle Rd. & Orange Grove Rd. (Hobby Lobby, CVS Pharmacy, Oreganos) • The Shoppes at Tangerine Crossing; NEC Tangerine Rd. & Thornydale Rd. (Fry’s Marketplace, The UPS Store, AutoZone Auto Parts) • Tucson Mall; NEC Oracle Rd. & Wetmore Rd. (Dillard’s, Macy’s, Dick’s Sporting Goods) • Tucson Premium Outlets; SWC Twin Peaks Rd. & I-10 (Banana Republic, Bath & Body Works, Old Navy, Saks Off 5th) #2 Fast Food & Quick-Service Restaurants • McDonald's; 3640 W. Tangerine Rd. • Chick-fil-A; 3943 W. Ina Rd., 4585 N. Oracle Rd. • Raising Cane's Chicken Fingers; 4219 N. Oracle Rd. • Oregano's Pizza Bistro; 100 W. Orange Grove Rd. • Culver’s; 6905 N. Thornydale Rd., 4810 N. 1st Ave. • Wendy's; 7675 N. La Cholla Blvd. • Whataburger; 1430 W. River Rd. • In-N-Out Burger; 4620 N. Oracle Rd., 8180 N. Cortaro Rd. • Chipotle Mexican Grill; 7555 N. La Cholla Blvd. • Wingstop; 3662 W. Ina Rd. #3 Gas Stations & Convenience Stores • Circle K; 3880 W. Tangerine Rd., 2088 W. Orange Grove Rd., 2880 W. Ina Rd., 15935 N. Oracle Rd. • Costco Gasoline; 3901 W. Costco Dr. 11 | P a g e • Fry’s Fuel Center; 12020 Thornydale Rd. • Sam’s Club Gas Station; 4701 N. Stone Ave. • QuikTrip; 6555 W. Twin Peaks Rd., 68 W. River Rd., 3390 W. Ina Rd.; 9400 W. Tangerine Rd. • Maverik Adventures First Stop; 9171 W Tangerine Rd. • Luke’s; 6741 N Thornydale Rd. #157 • Love’s Travel Stop; 5000 N. Sunland Gin Rd. • Valero; 15240 N. Oracle Rd. #4 Groceries (2024) Restaurants (2022 and 2023) #5 Restaurants (2024) Groceries (2022 and 2023) • Fry’s; 12100 N. Thornydale Rd.; 3770 W. Ina Rd. • Whole Foods; 7133 N. Oracle Rd. • Safeway; 7110 N. Oracle Rd. • Lee Lee International Supermarket; 1990 W. Orange Grove Rd. • Basha’s; 15310 N. Oracle Rd., 8360 N. Thornydale Rd. • AJ’s Fine Foods; 2805 E. Skyline Dr. • Albertsons; 7300 N. La Cholla Blvd. • Total Wine & More; 4370 N. Oracle Rd. • Natural Grocers; 6320 N Oracle Rd. • Rancheros Market; 16142 N. Oracle Rd. • Guadalajara; 7360 N. Oracle Rd. • Texas Roadhouse; 8450 N. Cracker Barrel Rd. • The Cheesecake Factory; 60 W. Wetmore Rd. • Craft Republic/Champps Americana; 7625 N. La Cholla Blvd. • Trident Grill IV; 2912 W. Ina Rd. • Sauce Pizza & Wine; 7117 N. Oracle Rd. • BJ’s Restaurant and Brewhouse; 4270 N. Oracle Rd. • Mr. An’s Teppan Steak and Seafood; 6091 N Oracle Rd. • P.F. Chang's; 1805 E River Rd. • North Italia; 2995 E. Skyline Dr. #6 Superstores • Costco; 3901 W. Costco Dr., 1650 E. Tucson Marketplace Blvd., 6255 E. Grant Rd. • Walmart; 7635 N. La Cholla Blvd., 8280 N. Cortaro Rd., 455 E. Wetmore Rd. • Target; 3901 W. Ina Rd., 4040 N. Oracle Rd., 3699 E. Broadway Blvd. • Sam’s Club; 4701 N. Stone Ave. • Big Lots; 3900 W. Ina Rd. 12 | P a g e #7 Breakfast, Coffee, Bakeries & Dessert Shops • Dairy Queen; 12030 N. Thornydale Rd. • Starbucks; 639 W. Ina Rd., 6363 N. La Cholla Blvd., 3951 W. Ina Rd., 6401 Marana Center Blvd. • Beyond Bread; 421 W. Ina Rd. • Dutch Bros. Coffee; 5690 W. Cortaro Farms Rd. • Jeremiah’s Italian Ice; 7348 N. Oracle Rd. • Baskin-Robbins; 7555 N. La Cholla Blvd. • IHOP; 8445 N. Cerius Strave, 4187 N. Oracle Rd. • First Watch; 5055 N. Oracle Rd. • Bisbee Breakfast Club; 4131 W. Ina Rd. • Cold Stone Creamery; 475 W. Wetmore Rd. #8: Home Improvement • The Home Depot; 3925 W Costco Dr., 4302 N Oracle Rd, 3689 E. Broadway Blvd. • Lowe's; 4075 W. Ina Rd., 4151 N. Oracle Rd. • Tractor Supply Co.; 15884 N. Oracle Rd. • Harbor Freight Tools; 3970 W. Ina Rd. • Catalina Ace Hardware; 16120 N Oracle Rd.; Mark's Ace Hardware; 9705 N. Thornydale Rd. • Floor & Decor; 7025 E Broadway Blvd. • Green Things; 3384 E River Rd. #9 Car Shops & Services (2024 and 2023); Clothing (2022) #10 Clothing (2024 and 2023); Car Shops & Services (2022) • Nordstrom Rack; 4320 N. Oracle Rd. • Goodwill; 2990 W. Ina Rd.; 7366 N. Oracle Rd. • Forever 21; 4510 N. Oracle Rd. • Boot Barn; 3719 N. Oracle Rd. • Ross Dress for Less; 8030 N. Cortaro Rd., 4425 N. Oracle Rd. • Old Navy; 6401 Marana Center Blvd. • Calvin Klein; 6401 Marana Center Blvd. #101 • Tommy Hilfiger; 6401 Marana Center Blvd. #225 • Banana Republic; 6401 Marana Center Blvd. • Men's Wearhouse; 475 W. Wetmore Rd. • Precision Toyota of Tucson; 700 W. Wetmore Rd 13 | P a g e • Costco Tire; 3901 W. Costco Dr., 1650 E. Tucson Marketplace Blvd., 6255 E. Grant Rd. • Watson Chevrolet; 625 W. Auto Mall Dr. • CarMax; 4755 N. Oracle Rd. • Jim Click Nissan; 800 W. Auto Mall Dr. • Lexus of Tucson; 4670 Circuit Rd. • Jim Click Jeep; 701 W. Auto Mall Dr. • Auto Nation Honda; 810 W. Wetmore Dr. • CarMax; 4755 N. Oracle Rd. • Tucson Subaru; 4901 N. Oracle Rd. 14 | P a g e Section 4: Market Analysis of Lost Revenue Placer.ai contracts Synergos Technologies, Inc. (STI), a third-party company, to provide data in the creation of a market analysis of lost revenue when Oro Valley residents make purchases outside of Oro Valley. The table below identifies the top ten categories of unmet need, or the leakage in retail and restaurant sectors. The dollar values are from calendar year 2024. Categories are listed in descending amount based on percentage loss between unmet need and demand. For example, Oro Valley residents spent $20,648,843 at clothing stores but $19,682,821 of that amount was spent at clothing stores outside of Oro Valley. This equals a 95% loss. Table 4. Market Analysis of Lost Revenue by Retail/Restaurant Sector Category Demand($) Supply($) Unmet Need($) Loss Automobile Dealers 195,848,281 0 195,848,281 100% Clothing Stores 20,648,843 966,022 19,682,821 95% Gasoline Stations 101,596,062 13,502,332 88,093,730 87% Other Motor Vehicle Dealers 21,079,688 2,642,130 18,437,558 87% Electronic Shopping & Mail-Order Houses/Non-store Retailers 222,344,258 32,399,029 189,945,229 85% Other General Merchandise Stores 125,191,908 27,447,031 97,744,877 78% Limited-Service Eating Places 54,121,884 13,103,593 41,018,291 76% Full-Service Restaurants 52,432,890 12,893,100 39,539,790 75% Building Material & Supplies Dealers 83,894,282 24,021,410 59,872,872 71% Health & Personal Care Stores 50,724,718 24,794,529 25,930,189 51% TOTAL TOP TEN CATEGORIES $927,882,814 $151,769,176 $776,113,638 84% TOTAL ALL CATEGORIES $1,185,659,658 $292,908,016 $892,751,642 75% To further identify leakage from specific stores, the following visuals compare sales data of five chain stores with locations in Oro Valley and other locations in the greater Tucson metropolitan area: Ross Dress for Less, Kohls, Walmart, Target, and The Home Depot Store. The chart following each diagram identifies each location, visits from Oro Valley residents, average sales amounts of those visits, and the amount of uncaptured sales tax. The leakage amounts demonstrate that Oro Valley residents do shop outside the Town where the same offerings are available, and that leakage is not limited to residents shopping when then option does not exist locally. 15 | P a g e Ross Dress for Less Store Comparisons 16 | P a g e Ross Dress for Less Store Location Visits from TOV Residents 2024 TOV Total Sales Loss TOV Sales Tax Loss 4425 N. Oracle Rd. 9,400 $470,000 $11,570 2890 N. Campbell Ave. 2,172 $108,600 $2,715 3485 E. Broadway Blvd. 1,592 $79,600 $1,990 8030 N. Cortaro Rd. 8,900 $445,000 $11,125 5550 E. Grant Rd. 1,200 $60,000 $1,500 7250 E. Broadway Blvd. 942 $47,100 $1,178 1165 W. Irvington Rd. 1,117 $55,850 $1,396 9600 E. 22nd St. 196 $9,800 $245 9240 S. Houghton Rd. 241 $12,050 $301 TOTAL 25,760 $1,288,000 $32,200 Oro Valley Ross Dress for Less 10575 N. Oracle Road OV Resident Visits 2024 Resident Total Sales Sales Tax $50 average taxable sale 143,500 $7,175,000 $179,375 2. Kohl’s Store Comparisons 17 | P a g e Kohl's Store Location Visits from TOV Residents 2024 TOV Total Sales Loss TOV Sales Tax Loss 199 N. Pantano Rd. 1,178 $84,816 $2,120 5850 Arizona Pavilions Dr. 7,000 $504,000 $12,600 TOTAL 8,178 $588,816 $14,720 Oro Valley Kohl's 7785 N. Oracle Road OV Resident Visits 2024 Resident Total Sales Resident Sales Tax $72 average taxable sale 109,200 $7,862,400 $196,560 3. Walmart Store Comparisons 18 | P a g e Walmart (excluding neighborhood markets) Visits from TOV Residents 2024 TOV Total Sales Loss TOV Sales Tax Loss 455 E. Wetmore Rd. 15,400 $385,000 $9,625 7635 N. La Cholla Blvd. 134,300 $3,357,500 $83,938 7150 E. Speedway Blvd. 8,100 $202,500 $5,063 3435 E. Broadway Blvd. 8,100 $202,500 $5,063 1260 E. Tucson Marketplace Blvd. 10,300 $257,500 $6,438 8280 N. Cortaro Rd. 29,300 $732,500 $18,313 2711 S. Houghton Rd. 1,487 $37,175 $929 1650 W. Valencia Rd. 2,771 $69,275 $1,732 9260 S. Houghton Rd. 2,555 $63,875 $1,597 TOTAL 212,313 $5,307,825 $132,696 Oro Valley Walmart Supercenter; 2150 E. Tangerine Rd. OV Resident Visits 2024 Resident Total Sales Sales Tax $25 average taxable sale 1,158,000 $28,950,000 $723,750 19 | P a g e 4. Target Store Comparisons Target Store Location Visits from TOV Residents 2024 TOV Total Sales Loss TOV Sales Tax Loss 3901 W. Ina Rd. 35,500 $1,881,500 $47,038 4040 N. Oracle Rd. 27,900 $1,478,700 $36,968 3699 E. Broadway Blvd. 8,900 $471,700 $11,793 6500 E. Grant Rd. 4,200 $222,600 $5,565 1225 W. Irvington Rd. 2,841 $150,573 $3,764 9615 E. Old Spanish Tr. 1,617 $85,701 $2,143 TOTAL 80,958 $4,290,774 $107,271 Oro Valley Target 10555 N. Oracle Rd. OV Resident Visits 2024 Resident Total Sales Resident Sales Tax $53 average taxable sale 457,500 $24,247,500 $606,188 20 | P a g e 5. The Home Depot Store Comparisons Home Depot Visits from TOV Residents 2024 TOV Total Sales Loss TOV Sales Tax Loss 4302 N. Oracle 32,700 $2,387,100 $59,678 3925 W. Costco Dr. 31,000 $2,263,000 $56,575 3689 E. Broadway 9,000 $657,000 $16,425 7677 E. Broadway 4,506 $328,938 $8,223 1155 W. Irvington 4,260 $310,980 $7,775 10072 E. Old Vail 641 $46,793 $1,170 TOTAL 82,107 $5,993,811 $149,845 Oro Valley Home Depot 10855 N. Oracle Road OV Resident Visits 2024 Resident Total Sales Sales Tax $73 average taxable sale 472,000 $34,456,000 $861,400 21 | P a g e Section 5: Exploring Reasons Why Oro Valley Residents Make Purchases and Dine Outside Oro Valley This analysis shows that there are two main reasons why Oro Valley residents make purchases outside of Oro Valley: lack of availability and convenience. Lack of availability is clearly evidenced by the fact that the highest percentage of retail sales loss is because there are no automobile dealers in Oro Valley. Similarly, the chain store analysis in Section Four demonstrates that residents will shop opportunistically as well. This reason for retail loss is also apparent in Table 4 above which shows the dollar amount of unmet need in Oro Valley and the Top Ten Categories of Retail Loss table that lists businesses visited by Oro Valley residents. 63 of the 81 businesses listed (not including the community shopping centers) are not in Oro Valley. The 18 businesses identified in bold print DO HAVE A LOCATION IN ORO VALLEY, yet residents are shopping at the non-Oro Valley locations. One type of convenience shopping is when Oro Valley residents leave Town for their employment and may find it more convenient to make purchases during a commute or over a work break rather than returning to Oro Valley. Electronic Shopping and Mail Order Houses (Non-store Retailers) are also types of convenience shopping and are also a significant source of retail loss. Large portions of this type of shopping have been termed the “Amazon effect” for the last several years and are a major contributor to lost revenue for all municipalities. The final example of convenience shopping occurs when Oro Valley residents shop at a business not available in Town and then complete their other retail needs at businesses near that store even though the same business may have an Oro Valley location, most often at a dedicated retail node. Further supporting the concept of retail node attraction, the following diagrams demonstrate the retail losses and sales tax losses during 2024 for three different commercial nodes (Tucson Auto Mall, Costco, Foothills Mall) that are visited by Oro Valley residents. 22 | P a g e 23 | P a g e 24 | P a g e 25 | P a g e A larger attraction factor to consider when looking at the reason for leakage is retail gravitation. William J. Reilly (Education: Dr. Reilly’s Thoughts. Time. August 1, 1938.) developed a simple theory in 1931 that describes how shoppers feel a pull to travel to a larger, urban area because: 1) they can find more variety and may have a better overall shopping experience, and 2) the distance separating the cities is not a disincentive for travel. According to Reilly, the strength of the pull is proportional to both the differences in the sizes of the cities and the distance between each. Other factors influencing the strength of retail pull include social influences such as younger shoppers visiting malls as a social experience and demographic behaviors specific to large groups of people (John Quincy Stewart. Sociometry, 1947). With much of Tucson’s and surrounding Pima County’s retail and dining offerings within a 30- minute drive from Oro Valley, residents may acquiesce to this pull to travel outside Oro Valley and shop/dine. An example of such gravitation is present in the following diagram which compares two restaurants with similar average ticket sizes: Carrabba’s Italian Grill in Oro Valley restaurant and The Cheesecake Factory near Tucson Mall. The Cheesecake Factory is an example of gravitational pull as the restaurant requires a 15 to 25-minute drive time from various residential areas in Oro Valley and is located near the Tucson Mall with more potential to create an individual dining experience in additional to possible shopping opportunities. The concept of pull is further developed considering the Tucson Auto Mall, a major source of leakage for Oro Valley, is near The Cheesecake Factory. Figure 1. Concept of Retail Gravitation 26 | P a g e Restaurant Visits from OV Residents 2024 The Cheesecake Factory 60 W. Wetmore Rd. 31,000 Carrabba’s Italian Grill 7635 N. Oracle Rd. 12,300 Section 6: Conclusions and Recommendations In conclusion, and to make a very broad and simplified statement about Oro Valley’s retail leakage, it occurs primarily because of the lack of available business types such as automobile dealers, super stores, specific popular convenience restaurants and from residents choosing convenience shopping choices over shopping at the same Oro Valley business. There are three priority actions staff recommend the Town take to mitigate the high level of retail sales revenue and tax loss: 1. Educate residents about the importance of retail and restaurant sales taxes on the Town’s budget (the WHY) and how this tax money is used to provide desired services and products (safety, road improvements, shade structures, pickleball courts, parks, etc.). 2. Develop and promote an active shop and dine-local program in coordination with the Oro Valley Chamber of Commerce to reinforce the WHY education messaging. 3. Recruit businesses of the types and brands identified in the leakage report that are not currently available but are likely feasible based on location, market size, and traffic counts. Expectations for recruitment should be tempered considering the following factors: • Site topography limiting the overall site development size • Smaller parcel sizes limiting larger commercial development • The total market populations in 10-, 20-, and 30-mile increments from certain commercial nodes in Oro Valley where unoccupied buildings and undeveloped lots and pads exist. From a performance perspective, the goal of the above strategies is reducing the estimated amount of unmet need calculated in Section Four of $892,751,642. The goal revenue amount will fluctuate based on economic conditions, but key performance indicators can be developed to demonstrate the effectiveness of all three efforts, thinking that every $10,000,000 in additional taxable sales generated or recaptured will generate a corresponding $250,000 in sales tax. 27 | P a g e Additionally, communicating specific values related to the importance of shopping and dining in Oro Valley transcends data. Rather, the importance of shopping and dining in Oro Valley is a specific story about resident/town values that deserves telling. Generally, Oro Valley residents value the following aspects of the Town, in no specific order: • Personal security and safety • Respect for nature and the environment • Town’s cultural and arts assets • Small town feel. Communicating the need to shop and dine locally in terms of a storytelling approach will involve enumerating these values and their importance to residents, explaining the likely consequences of not shopping in the Town, and detailing the actions needed to solve the problem of retail and restaurant leakage. For example, the following storytelling approach could become the rallying point for a shop/dine local program: The Town of Oro Valley relies heavily on the local retail sales and restaurant sales taxes to support quality of life amenities for residents, AND residents are requesting more and higher quality amenities, BUT the sales taxes lost from shopping outside Oro Valley town limits the Town’s ability to meet these needs. THEREFORE, it’s imperative that the Town educate residents about the importance of shopping and dining in Oro Valley to change their spending habits and generate needed revenues. Retail and Restaurant Leakage Analysis and Recommendations Paul Melcher, Community and Economic Development Director Margie Adler, Economic Development Specialist 2 Leakage Analysis Topics Retail and Restaurant Leakage Top 10 Categories of Retail and Restaurant Leakage Market Analysis of Lost Revenue Exploring Reasons Why Oro Valley Residents Make Purchases and Dine Outside of Oro Valley Conclusions and Recommendations Dining Retail Auto 3 Retail and Restaurant Leakage and Surplus: What is it? A situation in which income exits an economy instead of staying within. In retail, leakage refers to consumers spending money outside the local market. For instance, crossing a border to buy goods instead of making the same purchase from local shops. A retail surplus means that the community's trade area is capturing the local market plus attracting non- local shoppers. 4 Retail Gap/Leakage: Why is it important? The Oro Valley Story: The Town of Oro Valley relies heavily on the local retail sales and restaurant sales taxes to support quality of life amenities for residents, AND residents are requesting more and higher quality amenities, BUT the sales taxes lost from shopping outside Oro Valley town limits the Town’s ability to meet these needs. THEREFORE, it’s imperative that the Town educate residents about the importance of shopping and dining in Oro Valley to change their spending habits. Retail Leakage 1.1.24 – 12.31.24 Visits by Residents Residents # Visits per Resident Community Shopping Centers 5,102,636 55,990 91 Fast Food & QSR 1,923,995 49,826 38 Gas Stations & Convenience Stores 1,615,002 48,502 33 Groceries 1,195,349 48,744 24 Restaurants 1,138,833 50,070 22 Superstores 862,867 45,727 18 Breakfast, Coffee, Bakeries & Dessert Shops 735,269 42,920 17 Home Improvement 286,894 29,315 9 Car Shops & Services 284,386 32,440 8 Clothing 278,783 34,574 8 TOTAL 13,424,014 438,108 OV Resident Visits and Leakage Supply and Demand, Leakage and Surplus Table 4. Market Analysis of Lost Revenue by Retail/Restaurant Sector Category Demand($)Supply($)Unmet Need($)$ Loss Est. Sales Tax Loss Automobile Dealers 195,848,281 0 195,848,281 100%$4,896,207 Clothing Stores 20,648,843 966,022 19,682,821 95%$492,070 Gasoline Stations 101,596,062 13,502,332 88,093,730 87%N/A Other Motor Vehicle Dealers 21,079,688 2,642,130 18,437,558 87%$460,938 Electronic Shopping & Mail-Order Houses/Non-store Retailers 222,344,258 32,399,029 189,945,229 85%$4,748,630 Other General Merchandise Stores 125,191,908 27,447,031 97,744,877 78%$2,443,621 Limited-Service Eating Places 54,121,884 13,103,593 41,018,291 76%$1,025,457 Full-Service Restaurants 52,432,890 12,893,100 39,539,790 75%$988,494 Building Material & Supplies Dealers 83,894,282 24,021,410 59,872,872 71%$1,496,821 Health & Personal Care Stores 50,724,718 24,794,529 25,930,189 51%$648,254 TOTAL TOP TEN CATEGORIES $927,882,814 $151,769,176 $776,113,638 84%$17,200,492 TOTAL ALL CATEGORIES $1,185,659,658 $292,908,016 $892,751,642 75%N/A 7 Top 10 Sources of Leakage by Category Community Shopping Centers AZ Pavilions SWC I-10 and Cortaro Road Fast Food & Quick Service McDonald’s 3640 W. Tangerine Rd. Gas Stations & Convenience Circle K 3880 W. Tangerine Rd Groceries Fry’s 12100 N. Thornydale Rd. Restaurants Guadalajara Grill 7360 N. Oracle Rd. Home Improvement The Home Depot 3925 W. Costco Drive Breakfast, Coffee, Dessert Dairy Queen 12030 N. Thornydale Rd. Superstores Costco 3901 W. Costco Drive Clothing Nordstrom Rack 4320 N. Oracle Rd. Car Shops & Services Precision Toyota of Tucson 700 W. Wetmore Rd. 8 Tucson Metro Area “Pull” Tucson (547,000) Oro Valley (48,311) Marana (58,430) Sahuarita (36,356) 9 Commercial Node Pull Examples 10 Strategies and Recommendations Education •The WHY •OV Values •OV Story Shop and Dine Local •Targeted Audiences •Year -round Strategic Recruiting •Placer info •Nodes!!! •Best Fits 11 Strategies and Recommendations Gap Reduction Goal: A percentage reduction of the $776,113,638 “GAP” by shopper recapture and recruiting specific retail/restaurant businesses to prevent leakage. % Recapture Estimated REV Recapture Estimated Sales Tax Recapture 1%$7,761,136 $194,028 2%$15,522,272 $388,056 3%$23,283,409 $582,085 4%$31,044,545 $776,113 5% $38,805,681 $970,142 12 Reminder: Why is it important? The Oro Valley Story: The Town of Oro Valley relies heavily on the local retail sales and restaurant sales taxes to support quality of life amenities for residents, AND residents are requesting more and higher quality amenities, BUT the sales taxes lost from shopping outside Oro Valley town limits the Town’s ability to meet these needs. THEREFORE, it’s imperative that the Town educate residents about the importance of shopping and dining in Oro Valley to change their spending habits. Paul Melcher, Community and Economic Development Director Margie Adler, Economic Development Specialist    Town Council Regular Session 1. Meeting Date:03/05/2025   Submitted By:Mike Standish, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Pursuant to A.R.S. 38-431.03 (A)(4) to discuss and consult with its representatives concerning contract negotiations for the acquisition of property RECOMMENDATION: N/A EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to go into Executive Session. Attachments No file(s) attached.    Town Council Regular Session 2. Meeting Date:03/05/2025   Submitted By:Mike Standish, Town Clerk's Office Department:Town Clerk's Office SUBJECT: APPROVAL OF ANY DIRECTION TO THE TOWN ATTORNEY AND/OR NECESSARY STAFF AS DISCUSSED IN EXECUTIVE SESSION PERTAINING TO CONTRACT NEGOTIATIONS FOR THE ACQUISITION OF PROPERTY RECOMMENDATION: N/A EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to... Attachments No file(s) attached.