Oro Valley Missed Its Sales Tax Budget by $3.6 Million Last Year as Construction Slowed; Council Delays Vistoso Grant, Narrows Annexation Focus

Oro Valley Missed Its Sales Tax Budget by $3.6 Million Last Year as Construction Slowed; Council Delays Vistoso Grant, Narrows Annexation Focus

Oro Valley collected $3.64 million less in local sales tax than it budgeted for the fiscal year that ended June 30, with construction sales tax down 30% from the year before, the town's finance chief told the council Wednesday. Departments held spending to 92.7% of budget, so the general fund balance slipped only about $800,000, to $19.9 million. The council also pushed a decision on a federal grant for Vistoso Trails Nature Preserve to Oct. 7 after Vice Mayor Melanie Barrett objected to tying up the town's match for years, and in a study session told staff to concentrate annexation work on the Ina and Oracle commercial corridor.

FY 2025-26 Financial Results Show Sales Tax Shortfall, Strong Golf Revenue

Chief Financial Officer David Gephart presented unaudited results for the fiscal year that ended June 30; auditors begin field work later this month. General fund revenues came in at 97% of budget, roughly $2.12 million short, driven primarily by local sales tax. Construction sales tax fell 30% from the prior year and ended at 53% of budget. Total local sales tax collections landed at 88.8% of budget, a shortfall of about $3.64 million. On the spending side, every department finished under budget and total general fund spending came in at 92.7% of budget, leaving an ending fund balance of about $19.9 million, down from $20.7 million at the start of the year.

Barrett asked how residential building permits could come in at 170% of budget while construction sales tax fell so far short, since the two have historically moved together. Gephart said permits are collected at the front end of a project while construction sales tax lags the actual work, and that the Marketplace Apartments site was mostly earthwork and grading through June. On Barrett's follow-up about the apartments planned at the preserve and the Marketplace hotel, both budgeted for construction sales tax, Gephart said he did not have a good answer and would have to review how the permit and sales-tax lines were built; Barrett asked for a written report.

The community center fund posted a golf net operating profit of $805,000 and a town-operations net operating deficit of $616,000, both improved from the prior year. The water utility drew $1.87 million from fund balance against a budgeted $9.5 million, a gap Gephart tied mainly to the timing of loan draws for the Northwest Recharge, Recovery and Delivery System project. Asked by Mayor Joseph C. Winfield whether recurring revenues still cover recurring costs once one-time items are stripped out, Gephart said yes, with a small margin, but that the capital, community center and highway funds will keep needing general fund support.

In response to Council Member Mary Murphy, Town Manager Jeff Wilkins said Oro Valley expects about $148.7 million over 20 years from RTA Next: roughly $81 million for two road projects, $10.4 million for safety elements, $5 million for pavement preservation and $52.4 million for transit.

Annexation Strategy Leans Toward Ina-Oracle Focus; 880-Acre State Land Questioned

Assistant Town Manager Karl Shaddock presented a proposed update to the town's annexation strategy built around five policy questions: whether to focus proactive work on retail and commercial revenue, whether a two-tier priority structure makes sense, which areas belong in each tier, how to handle unexpected owner-initiated opportunities, and at what points the council should formally authorize action. Staff recommended Tier 1 status for the Ina and Oracle commercial corridor and for the Tangerine-and-Thornydale state trust land known as the "880," with La Encantada, a Foothills Mall pathway along Ina Road and the broader Oracle corridor in Tier 2. Shaddock said the update drops the large residential swaths in the 2020 strategy, which offered little fiscal return.

Council members broadly agreed that Ina and Oracle should be the one active priority. Winfield said that corridor has been the focus for six years and that "it just seems like we have not made any advances until, I'll acknowledge, possibly recently." Council Member Joyce Jones-Ivey asked for a tangible progress report on it before deciding whether the pursuit is worth continuing. Several members questioned keeping the 880 at the same level, citing water supply, the parcel's location in the Marana school district and the Marana retail beside it. Council Member Josh Nicolson, Jones-Ivey and Winfield asked that long-term water cost be added to the strategic criteria; Barrett asked that community acceptance be restored as one.

Barrett proposed three tiers, with Ina and Oracle alone at the top, and said the 880 should be split back into what was once called the "550," the southern portion along Tangerine Road with some retail potential, with the northern piece dropped to a lower tier. Winfield said he would put the northern L-shaped segment in a third tier. Barrett also asked that Arroyo Grande stay on the list, saying that if water is available it would serve the town better than the 880. Murphy said the town's roughly $10,000 annual annexation budget should go to Ina and Oracle for now. Council Member Elizabeth Robb backed three tiers; Jones-Ivey suggested La Encantada and Foothills Mall may not warrant Tier 2.

Barrett, Jones-Ivey and Winfield each called for regular staff reporting on annexation work, with Barrett noting that consultant spending and a year of effort can pile up before council hears about it. Shaddock said a revised strategy will return Oct. 21 for possible adoption, with a separate council discussion of the 880 on Oct. 7.

Vistoso Trails Grant Continued to Oct. 7

Barrett pulled the Land and Water Conservation Fund grant application from the consent agenda, saying she did not have a full picture of the project or of other work under way at the preserve. The application would seek a 50-50 match on an estimated $815,000 project: a 0.8-acre lawn for low-impact recreation beside the preserve's pond, six 10-by-10-foot ramadas on concrete pads, two concrete trails north of the pond, 50 shade trees along trails, upgraded metal benches and trash cans, electrical and ADA upgrades to a restroom near the driving range, and a two-foot decomposed-granite shoulder on each side of the trails. The town's half would come from next year's $200,000 site-improvement budget, about $192,000 left in the Zimmerman funds once the memorial's cost is separated out, and any unspent site-improvement or operating money.

Parks staff said the grant runs on a revolving schedule with no deadline, and that Arizona State Parks had reviewed the application and called it ready to submit. The town's Naranja Park grant took nine months to approve, which staff said was fast; a year is typical, which would put a decision around this time next year, with design and bidding still to follow. Staff warned that any element the town starts before the award becomes ineligible for reimbursement, so applying encumbers the town's match until a decision arrives. Barrett said, and staff confirmed, that an open award would also block the town from applying for another Land and Water Conservation Fund grant until the project is closed out — a lockout she put at three years, naming basketball courts at Naranja Park as the kind of amenity that would have to wait.

Barrett also said she learned only that night that irrigation for the lawn area cannot be installed until the area is graded, and that the town's current pond contract does not include that grading. She said that conflicts with the council's earlier direction to put in irrigation and trails alongside the pond work. Public works staff said the pond, whose contract runs to May 2027, should be finished by the end of the year; grading and irrigation could follow if the council funds a contract change, with sod possible as early as April 2027, an estimate staff called rough. Wilkins urged the council to submit the application now rather than delay.

Nicolson first moved to carve the lawn out of the application and fund it for immediate installation while tabling the rest, then withdrew the motion after the sequencing discussion. Barrett's motion, adopted 5-0 with one abstention, continues the item to Oct. 7 and asks staff to meet beforehand with Barrett, Nicolson, Robb and Jones-Ivey. Council Member Harry "Mo" Greene was absent. Barrett separately placed a full update on the preserve on the Oct. 7 agenda as a future agenda item.

Also discussed:

• Consent items A and B — the Sept. 2 minutes and reappointments to the Budget and Finance Commission, the Corrections Officer Retirement Plan local board and the Public Safety Personnel Retirement System local board — passed 6-0.
• In his report, Winfield noted that Proposition 431, the "OV Path Forward" general plan, is on the Nov. 3 ballot and urged residents to read it before voting. No one spoke at call to audience.

This report was drafted by Claude Sonnet 4.6 from a live transcript produced by Deepgram Nova-2, then reviewed and edited by Nicholas De Leon with Claude Fable 5.1, and published at 8:16 AM MST on September 17, 2026. Read more about how this is made.