The Oro Valley Town Council at its next meeting June 19 will take up again whether to share with Tucson Electric Power Co. the cost of burying new electrical distribution lines that would extend from the utility's Rancho Vistoso substation south and east to a widened Tangerine Road.

Town staff had recommended approval of a cost sharing agreement with the utility calling for the town to pay $262,853 of the $593,497 cost of extending a new 13.8 kilovolt line along the northern side of Tangerine from First Avenue. The line would serve the 180-bed Northwest Medical Center and a proposed 100-acre retail center at the southwest corner of Oracle Road and Tangerine.

The new line is also critical to the town's plans to widen Tangerine from two to four lanes from La Canada Drive to First Avenue. Construction on this stretch is scheduled to begin in the fall.

The town and TEP have agreed to share in the costs of burying existing utility lines in the area. TEP will pay $278,652, or 48 percent of the $580,081 cost, Oro Valley the remainder. It is the new line that is the sticking point.

At its June 5 meeting, the council voted 3 to 1 against the cost sharing agreement. The vote resulted from a tactical move by Councilmember Werner Wolff to oppose the agreement and with Councilmember Dick Johnson absent, to avoid a 2-2 deadlock that would have defeated the measure. The vote put Wolff on the side of the majority and in a position to request reconsideration of the issue.

Wolff joined Mayor Paul Loomis and new Councilmember Paula Abbott on the dissenting side. Councilmember Bart Rochman cast the lone vote in favor.

Loomis led the opposition "on principle," contending that the utility as the owner of the line should be held responsible under the town's code requiring the burying of new utility lines.

"I don't like this," Loomis said. "This is a new line of major benefit to TEP and they should pay for it." .

Art Fregoso, TEP account manager, said the utility's policy is to pay for installing overhead power lines but to require the developer or the municipality to pay the difference in what it cost to put in an underground line vs. an overhead line. The utility has offered to deed more than two acres to the town worth an estimated $150,000 as part of the cost sharing agreement.

Abbott, who had just been sworn in as a councilmember following her victory over Lyra Done in the May 21 runoff election, was of the opinion that the town didn't have a legal leg to stand on in trying to avoid the cost sharing.

Before casting his vote in favor, Rochman expressed concerns as to whether the town might have to take money out of the contingency fund to finance future utility line improvements and where that might take the town down the road financially.

Public Works Director Bill Jansen and Jeff Weir, economic development administrator, explained the town was being put in a position of having to share in the cost of the Tangerine utility line because it isn't part of the actual road widening work and highway user funds and impact fees can't be used to cover such costs, especially in the case of the Arizona Department of Transportation's jurisdiction over stretches of the road.

On other road improvement projects planned for First Avenue, Lambert Lane and La Canada, the town will be able to use highway funds and impact fees because road construction will force the utility lines to be moved, Jansen said.

These projects include the widening of La Canada next summer to four lanes from Tangerine to Moore Road, and in the summer of 2005, a widening of First Avenue from two to four lanes from the CDO Wash to Tangerine. The four-lane road will connect to a new bridge at the CDO Wash and tie into the Tangerine widening at the Tangerine and First Avenue intersection. The existing road will be realigned and provide a four-lane section with median, curbs, gutters, sidewalks and landscaping improvements at Naranja Drive, Lambert and Palisades Road.

In addition to the need to have power available for Northwest Medical Center and retail development, Jansen and Weir stressed the importance of timing road widening and the utility line installation so the widened road wouldn't have to be dug up at a later date for the new line.

The council also approved by a 3-1 vote with Abbott dissenting to retain the current base rate for water users but drop the 1,000 free gallons a month consumers get under the current rate structure. Under the new measure, effective July 1, all the utility's 15,400 users will pay $1.90 more a month for their water. The utility also is projecting rate increases of only 2 percent a year in the fiscal years from 2003 through 2007, compared with earlier projections of 7 percent.

The earlier projections were based on a compounding error.

Abbott was opposed to the town charging lower water users more while it continues to subsidize the cost of water developers have been pouring on golf courses since the town purchased private water companies in 1996.

The utility is basing its revenue needs on the addition of 500 residential customers annually over the next five years and getting all of the town's golf courses off ground water over three years beginning in the 2004-2005 fiscal year.

Other assumptions on which the water utility's revised proposal are based include:

No additional Central Arizona Project water rights acquisitions.

The sale of bonds in 2003-2004 to pay the balance of the utility's debt to the city of Tucson for CAP water and to finance capital improvement projects.

No budget deficit for more than two consecutive years.

Operations and maintenance cost increase by no more than 2.45 percent annually over the next five years.

Late last year, Oro Valley reached an historic settlement with the city of Tucson that gave the town access to an additional 4,454 acre feet of CAP water, supplementing its current 2,294 acre foot allocation, and the right to control the effluent the town produces.

For this, the town agreed to pay Tucson $3.75 million to annual provisions of a water agreement negotiated in 1979 and compensate Tucson for damages it incurred for CAP water purchases and CAP water distribution costs in behalf of Oro Valley.

The town also agreed to pay an additional $1.66 million to reimburse Tucson for capital charges it paid to the Central Arizona Water Conservation District for the CAP water Oro Valley will get as a result of the settlement.

Oro Valley is intent on first getting renewable water (treated effluent) to the town to address the golf course problem, then the CAP water, but is simultaneously progressing with plans for both CAP and effluent systems. Addressing the effluent situation is the less expensive approach.

In other action, the council approved without debate the hiring of a special projects coordinator to assist the town manager at a salary of approximately $50,000 annually. The coordinator's responsibilities would cover overall planning, organizing and management of assigned town projects, including special building projects, policy projects, coordination of the town's annexation efforts and the revision and negotiation of contracts.

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