Funding Options

 

Staff Recommendations for Funding the Community Center and Golf Course Improvements

 

At the November 6th Town Council meeting, Town Staff recommended a “hybrid” funding plan for the improvements to the Community Center and the town golf courses consisting of a Pay-As-You-Go element for the Canada course improvements, an Intra-Fund Loan for Conquistador improvements, and a Tax-Exempt Bond for Community Center improvements. All repayments would be made out of the existing Community Center Fund revenue stream (including the 1/2% dedicated sales tax).

The hybrid funding option represents the lowest overall cost to taxpayers when compared to the Pay-As-You-Go option. Bottom line is that the Pay As You Go option will cost Oro Valley taxpayers an additional $790,000 as compared to the recommended option.

Note that Town Staff used a representative total cost of $6.8 million for the Community Center and Golf Course improvement projects.

 

Pay-As-You-Go (PAYG) Option

The PAYG option would fund new projects with the accumulated cash saved from prior years’ appropriations to the Community Center Fund from the dedicated “half-cent” sales tax.

The Community Center Fund would not reach the full funding level for the representative $6.8 million project cost until FY25-26. Staff estimated a total inflationary increase in construction prices of $960,000 due to the delay until funding is available to begin the projects(6% for the first two years, 3% there after). In addition to the inflationary impact of delaying the projects, the additional cost of water due to waiting to repair the irrigation system was projected to be $525,000.

In summary, the PAYG option is estimated to incur an additional $1.485 million dollars in cost due to the inherent delay of this option.

 

Hybrid Funding Plan – Town Staff Recommended Option

This option would fund the Conquistador course improvements with a loan of $1.9 million from the General Fund, paid back over a 3 year period, minimizing the escalation of construction costs and maximizing water savings by starting the project in the Summer of 2020. No additional financing or inflationary costs would be incurred for this element of the plan.

Improvements to the Community Center would be funded with a $3.2 million dollar tax-exempt municipal bond with construction potentially commencing in FY20/21, minimizing inflationary cost increases. This option would provide for construction of community amenities and ADA upgrades (which are required by law when upgrading an existing builiding) as soon as possible. Additional costs incurred for this element would be related to financing and closing costs and would total approximately $390,000 according to the Town Staff presentation.

Improvements to the Cañada course would be funded using the PAYG concept with a project timeline of May 2021 through October 2021, limiting the escalation of construction costs and maximizing water savings. No bonds would be issued for the Cañada course improvement element of the plan. Additional costs incurred under this element of the plan due to inflationary and water costs would total $305,000.

In summary, the Hybrid Funding Plan recommended by Town Staff would incur a total additional cost of $695,000 for funding the representative $6.8 million dollar trio of projects.

 

Please see below for source information on the Town of Oro Valley Website:

Nov 6 Agenda Item on Comm Center and Golf

Nov 6th Town Council Meeting Video – Funding presentation starts at 1:45:00