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Oro Valley Town Council set to vote on $14M bond for new golf, water infrastructure

Oro Valley Town Council set to vote on $14M bond for new golf, water infrastructure

Oro Valley golf

A golfer plays in the shadow of the Santa Catalina Mountains on the nine hole course at El Conquistador Resort. Photo taken Tuesday, December 16, 2014. Photo by Ron Medvescek / Arizona Daily Star.

The Oro Valley Town Council will vote Wednesday on a $14 million bond to fix aging water pipes throughout the community and at its golf courses, and to make significant changes to the community center that is part of those courses.

Town Manager Mary Jacobs offered the council detailed plans last week on how the town would put about $6 million into its struggling golf operations by replacing the water lines and remodeling the community center without raising the sales tax or increasing property taxes. The plan also includes $6 million to replace water pipes in the town that are at the end of their useful life and $2 million to build a police evidence facility that has been in the planning stages for years.

Central to Jacobs’ plan is that issuing the bonds does not require voter approval; it relies on pre-existing revenue sources, primarily sales taxes and fees that are included in the town’s water bill. The bonds will be paid back over the next 20 years.

Jacobs said the decision to pour millions of dollars into the town-owned golf courses and the former country club clubhouse reflects a long-term commitment the council made when it purchased El Conquistador Country Club in 2014 for $1 million from HSL Properties and adopted a half-cent sales-tax increase to pay for renovations to turn the clubhouse into a community center.

Jacobs has previously told the council that without millions of dollars in renovations — the city has already spent roughly $2.7 million in upgrades after it voted to acquire three courses, with 45 total holes — the town will have limited options to increase the financial outlook of its golf operations.

Councilman Steve Soloman said the changes are costly but worthwhile over the long term.

“It is a win-win situation,” he said. “We save water and money at the same time.”

Councilman Joe Hornat agreed.

“We always knew it was going to take money to turn it into a facility that we think the community deserves,” Hornat said.

Mayor Satish Hiremath was also supportive of the proposal. He said he was glad to see that town officials were able to find a way to propose building the long-stalled police evidence facility.

Most of the changes are designed to increase visits to the community center while cutting costs there.

The town spends about $1 million on water for the golf courses annually and town officials acknowledge the aging pipes are leaking significant amounts of water.

Plans call for $3.8 million to replace the course water lines, closing one of the two 18-hole golf courses each summer to do the work, starting next year.

The town also operates the Pusch Ridge Golf Course, an executive nine-hole golf course next to El Conquistador Resort.

If approved, the town would spend another $2.2 million to remodel the community center — the former country club clubhouse — that is home to The Overlook restaurant. Officials say that despite changes in the menu, the restaurant continues to lose money.

The 5,282-square-foot restaurant, which features high ceilings and a loft-like view overlooking the golf course and surrounding Santa Catalina Mountains, would be converted into a recreational and fitness space for the community.

The Garden Cafe on the ground floor of the community center would be expanded and turned into a self-serve bar and grill, eliminating table service.

Finding a way to finance the bond without raising taxes is the main aspect of Jacobs’ proposal.

In November, an overwhelming majority of town voters rejected Proposition 454 — a $17 million general obligation bond proposal that would have been used to build new fields and other amenities at Naranja Park.

The new proposal hinges on the end of an $800,000 sales tax rebate that has been going to the Oro Valley Marketplace. Those funds, Jacobs told the council, would be used to pay a portion of the $14 million bond debt.

The other funds to pay off the bond would come from fees already paid by Oro Valley water customers to replace infrastructure.

Replacing water lines throughout the town could have been done on a pay-as-you-go system, but the bond proposal to do $6 million in water-line repairs and replacements over the next few years will be cheaper and more efficient, officials said.

However, the town will be telling investors that it plans on securing its bond payments by pledging all of its revenue sources — including state shared revenue — to those who purchase shares of the $14 million bond. Pledging a secondary revenue source isn’t uncommon and unlikely to be used, but investors want assurances the bond debt would be paid even if sales-tax revenues drop in the future.

Jacobs said she isn’t worried, noting the town has very little debt and bondholders would be one of the long-term creditors if the $14 million proposal moves forward.

The council is set to vote on the proposal at the Town Council meeting Wednesday at 6 p.m. but would revisit the issue several months from now before the bonds are sold.

Contact reporter Joe Ferguson at jferguson@tucson.com or 573-4197. On Twitter: @JoeFerguson

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Reporter

Joe has been with the Star for six years. He covers politics as well as the city of Tucson and other municipalities in Southern Arizona. He graduated from the UA and previously worked for the Arizona Daily Sun.

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