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Home My WebLink AboutPackets - Council Packets (2044)Town Council Regular Session June 3, 2026 Upcoming Meeting Announcements Upcoming Meetings Meetings are subject to change. Check the Town website for meeting status. Water Utility Commission -Cancelled June 8 at 5:00 p.m. Hopi Conference Room Tourism Advisory Commission -Cancelled June 15 at 4:00 p.m. Council Chambers Budget and Finance Commission June 16 at 4:00 p.m. Council Chambers Town Council Regular Session June 17 at 6:00 p.m. Council Chambers 4 Mayor and Council Reports 6 Mayor and Council Reports Town Manager’s Report Upcoming Events $5 Sunday Family Fun Day Oro Valley Aquatic Center Sundays, May 31 – August 2 9 a.m. – 4 p.m. Join us at the Oro Valley Aquatic Center where $5 will gain the whole family (up to 6) entry into the facility. National Trails Day Night Hike – FREE 730 E Linda Vista Road Saturday, June 7 7:00 – 9:00 p.m. Bring your flashlight and head out to Linda Vista Trailhead to celebrate National Trails Day! This family-friendly hike is good for all ages. Registration is required at PlayOV.com Town Council Regular Session June 3, 2026 Oro Valley Water Utility FY 2026-27 Water Rates Presentation June 3, 2026 The Oro Valley Water Utility 11 The Water Utility is an Enterprise Fund Funded solely from water sales, fees and charges All revenues are used for operating costs of the Utility Not dependent on the Town’s General Fund Administrative service fees are paid to the General Fund Water Rates Analysis Process & Goals 12 Goals: Meets revenue, cash reserve & debt service coverage requirements Recovers the cost of service Cash funds existing system improvements Promotes water conservation & maintains the financial health of the Utility Process: Annually, Utility staff prepares a water rate analysis report that is presented to, reviewed and commented on, by the Water Utility Commission The Commission and Utility staff make a recommendation to Council on the proposed water rates Water rate report available for public review www.orovalleyaz.gov/files/assets/public/v/1/documents/water-utility/rates-and-fees/water-rates -analysis-report-march-2026.pdf Water Rates Analysis Modeling 13 Rate modeling is in alignment with the General Fund Cost Projections & Water Utility specific Cost Projections General Fund Cost Projections Include ► Employee health care costs ► Employee wage adjustments ► Administrative fees ► Interest rates ► Inflation rates ► Growth rates Water Utility specific Cost Projections Include ► Maintain current staffing levels ► Water resource costs ► Cash funding existing system CIP ► Water use trends ► Regulatory compliance costs ► Debt management (Operating / GPF / Impact Fees) Proposed Rate Changes 14 Drinking Water Rates & Fee Recommendations: Increases to the drinking water base rates only No increases to drinking water commodity rates No changes to drinking water rates or fees Reclaimed Water Rates & Fee Recommendations: No increases to reclaimed water base rates No increases to reclaimed water commodity rates No changes to reclaimed water rates or fees The Water Utility Operates two Separate Water Systems Potable (Drinking Water) & Reclaimed Water Why is there no increase to the Reclaimed water rate? 15 The reclaimed water system is a smaller and less complex system to operate Reclaimed water system: Consists of 1 reservoir, 2 booster stations and 14 miles of water mains. vs. Drinking water system: Consists of 18 reservoirs 24 booster stations and 376 miles of water mains. The source of supply is a lot closer to Oro Valley Reclaimed water: The reclaimed water source of supply is 23 miles away. vs. Drinking water system: Central Arizona Project water source of supply is 336 miles away. At this time, the reclaimed water cost allocation model indicates that, the current reclaimed water rate structure is adequate to recover the cost of service for reclaimed water. What is driving a Drinking water rate increase? 16 Why is drinking water getting more expensive? Increasing operating expenses (Personnel, O&M, Power, CAP delivery, CAP wheeling): Up $900,000 / 5.94% What is the Utility doing to offset increasing costs? Reduced Capital spending FY 26/27, reduced debt paid by rates (2015 Excise tax), no additional staff: $450,000 in savings Cash reserve requirements determine annual revenue requirements: Utility must maintain an operating cash reserve requirement of 20% of personnel, O&M and debt Cash reserves at end of FY must exceed cash reserve requirement Proposed Drinking Water Rates and Fees Proposed Changes to the Drinking Water Base Rate: Water base rates increase by meter size: 84% of customers have a 5/8-inch meter and will see a $1.86 per month increase in the base rate No proposed changes to the commodity rate: Commodity Tiers Current Proposed Increase Tier 1 (68%) – 14576 (Up 276)$ 3.02 No change $ 0.00 (0.0%) Tier 2 (28%) – 5998 (Up 223)$ 5.02 No change $ 0.00 (0.0%) Tier 3 (4%) – 862 (Down 188)$ 8.17 No change $ 0.00 (0.0%) Tier 4 (<1%) – 102 (Down 98)$ 12.32 No change $ 0.00 (0.0%) Meter Size Current Proposed Monthly (in inches)Potable Base Rates Potable Base Rates Increase 5/8 $ 23.31 $ 25.17 $ 1.86 3/4 $ 34.93 $ 37.72 $ 2.79 1 $ 58.23 $ 62.89 $ 4.66 1.5 $ 116.47 $ 125.79 $ 9.32 2 $ 186.35 $ 201.26 $ 14.91 3 $ 372.68 $ 402.49 $ 29.81 4 $ 582.33 $ 628.92 $ 46.59 6 $1,164.65 $1,257.82 $ 93.17 8 $1,863.45 $2,012.53 $149.08 Customers continue to respond favorably to the current commodity rate structure: Customers historically in Commodity Tiers 2, 3 & 4 are migrating to Tiers 1, 2 & 3 No proposed changes to the Groundwater Preservation Fee: Drinking Water Cost Comparisons 18 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 $1.86 or 3.6% increase Below is a graphical representation of Oro Valley’s current and proposed water bill compared to neighboring water providers $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $51.45 $53.31 $60.12 $60.90 $61.31 $68.97 Potable Water Cost Comparisons: (5/8-inch Residential Meter @ 7,000 Gallons / Month In Closing 19 Recommendation for approval: The Water Utility Commission and Water Utility staff respectfully recommend approval of water rate increases to the drinking water base rates If the proposed rates are approved, they will become effective July 4th and will be reflected on the water bills beginning in August of the new fiscal year 20 Questions? Town Council Regular Session June 3, 2026 TOWN OF ORO VALLEYUPDATE-JUNE 2026 23 Pension funding equation C + I = B + E Contributions Investment Benefits Expenses Income LIABILITY METHODS Present Value of Future Normal Costs Unfunded Actuarial Accrued Liability Normal Cost Amortization Payment Present Value of Future Benefits: Includes All Future Pay and Service Assets: At Valuation Date Actuarial Accrued Liability: Includes Service Earned to Date 24 •TOWN OF ORO VALLEY POLICE 25 (20,000,000) - 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Oro Valley Police Unfunded Liability Change Assets Liabilities Unfunded Liability •TOWN OF ORO VALLEY (P.14) 26 •TOWN OF ORO VALLEY 27 Oro Valley Police—Paid $27,612,366 on 7/6/21 6/30/25 Present Value of Benefits (PVB) $97,180,915 Actuarial Accrued Liability (AAL) $90,269,748 Actuarial Value of Assets (AVA) $91,172,990 Market Value of Assets (MVA) $94,785,694 Unfunded AAL ($ 903,242) Funded Ratio 101.0% FY26 Employer Contribution Rate 10.47% Owe on POBs (2.39%) $15,115,000 28 PSPRS Fund Performance •TOWN OF ORO VALLEY 29 QUESTIONS, COMMENTS, AND DISCUSSION •TOWN OF ORO VALLEY Town Council Regular Session June 3, 2026 FY 2026/27 Tentative Budget Adoption June 3, 2026 FY 2026/27 TENTATIVE BUDGET Tentative Budget totals $127,985,725 $2,052,909 decrease from the Recommended Budget $23,513,825 (15.5%) decrease from the FY 2025/26 Adopted Budget, driven primarily by the expected completion of the NWRRDS project in FY27, along with retiring debt, reduced contingency, and lower excess PSPRS contributions. FY2026/27 expenditure limitation calculated by Economic Estimates Commission: $179,794,919 General Fund Budget totals $55,018,570 $57,876 (0.1%) increase from the Recommended Budget ($54,960,694) $382,039 (0.7%) increase from FY 2025/26 Adopted Budget ($54,636,531) Tentative Budget brings forward all changes from Manager’s Recommended Budget as outlined in the Council communication, including updated and revised CIP budget figures If approved, Tentative Budget establishes the overall expenditure limitation Structurally balanced budget reflects the careful allocation of available resources Estimated Ending Fund Balances Beginning Fund Balance Revenue Transfers In Personnel O&M Capital Debt Service Contingency Total Budget Appropriation Transfers Out Ending Fund Balance General Fund 16,090,550 59,645,003 - 36,860,595 16,132,975 25,000 - 2,000,000 55,018,570 7,693,886 15,023,098 Special Revenue Funds Community Center Fund 1,033,918 8,728,936 - 1,444,830 7,048,974 150,000 253,325 500,000 9,397,129 - 865,726 Highway Fund 2,015,023 4,772,671 3,000,000 1,397,470 1,246,991 5,106,490 - 200,000 7,950,951 - 2,036,743 Seizures & Forfeitures 399,360 40,000 - - 100,000 - - 339,360 439,360 - 339,360 Debt Service Fund 107,428 118,836 3,608,234 - 10,000 - 3,697,070 100,000 3,807,070 - 127,428 Capital Project Funds Capital Fund 17,717,774 1,639,414 4,000,000 - - 7,103,904 - 2,000,000 9,103,904 3,000,000 13,253,284 Grants & Contributions 85,164 1,008,600 123,200 - 1,009,400 - - 100,000 1,109,400 - 207,564 TWDIF Fund 3,826,696 292,255 - - 5,294 650,000 - 300,000 955,294 1,000,000 2,463,657 PAG/RTA Fund 343,894 145,000 1,000,000 - 80,000 1,000,000 - 120,000 1,200,000 - 408,894 Parks & Rec Impact Fee Fund 777,254 128,463 - - 2,471 300,000 - 185,000 487,471 - 603,246 Police Impact Fee Fund 227,265 40,203 - - 707 - - 50,000 50,707 34,696 232,065 Rec In Lieu Fee Fund 53,418 1,450 - - - - - 18,216 18,216 - 54,868 Internal Service Funds Benefit Self Insurance Fund 2,920,260 4,543,643 - - 5,040,065 - - 500,000 5,540,065 - 2,423,838 Enterprise Funds Water Utility Fund 6,546,045 23,107,500 - 4,112,071 11,957,720 2,270,000 3,827,269 500,000 22,667,060 2,402,852 5,083,632 WRSDIF Fund 7,542,015 965,019 2,400,000 - 184,232 6,000,000 931,822 500,000 7,616,054 - 3,790,980 Stormwater Utility Fund 1,643,746 2,084,742 - 982,013 456,445 936,016 - 250,000 2,624,474 - 1,354,014 61,329,810 107,261,735 14,131,434 44,796,979 43,275,274 23,541,410 8,709,486 7,662,576 127,985,725 14,131,434 48,268,396 SOURCES USES FY 2026/27 Tentative Budget - $127,985,725 By Category:By Function: FY 2026/27 Tentative General Fund Budget - $55,018,570 By Category:By Function: FY 2026/27 Sources: $127,985,725 FY 2026/27 CAPITAL IMPROVEMENT PROGRAM (CIP): $24,215,466 FINAL NOTES AND NEXT STEPS Tentative Budget adoption sets the maximum spending ceiling at $127,985,725 Once approved, expenditure authority may only be reallocated or reduced Council has authority to amend budget throughout the fiscal year (but cannot increase expenditure authority) Publish Tentative Budget for two consecutive weeks Final Budget approval and public hearing set for June 17th regular session Town Council Regular Session June 3, 2026