The Marana Town Council is continuing to narrow its choices for future infrastructure projects that would be funded by a potential new and permanent sales tax increase.
While the council recognizes the need for a new funding source that can help cover the expenses of a rapidly growing town, they expressed concern with the lack of specific details about certain projects and want more time to consider their choices.
Currently on the table are four areas of need: the water treatment campuses in Picture Rocks and Airline/Lambert communities ($16 million), the Northwest Recharge, Recovery and Delivery System ($8.4 million), Barnett Channel construction ($30 million) and phase two of the Tangerine to I-10 project ($17 million).
The town would borrow money to get these projects done sooner rather than later, and town staff estimated a 0.45 percent sales tax increase would cover the total debt service.
Marana Finance Director Yiannis Kalaitzidis presented a range of sales tax percentages along with how much revenue would be collected annually for each. In just the first year, a 0.1 percent increase would yield $1.1 million, and a 0.5 percent (half-cent) increase would yield $5.7 million.
He said the projects included for the sales tax were limited to those that relate to public health and safety or infrastructure, allow for growth or increased capacity in Marana, and have either a potential, partial or full revenue stream that would help offset expenses.
Kalaitzidis said the town currently does not have an identified way to pay for three out of the four projects. Roadwork on Tangerine to I-10 is the sole project with an identified funding source, but Kalaitzidis said it’s limited in some ways.
“Impact fees are unpredictable and currently unavailable to fund the complete projects,” Kalaitzidis said.
Council member Patti Comerford questioned why all these initiatives were approved without a set funding source in the first place.
“I’m not looking to increase a tax to give you a cushion or to make it easier on you to come up with money,” she said to the staff. “I’m looking at you guys to go back and look at the budget and find a way to pay for it.”
According to Kalaitzidis, the town’s past major infrastructure projects were mostly funded by developers or state or federal funds. Marana only contributed about 25 percent of the total cost of these projects through direct funding or debt financing.
Marana’s sales tax was established in 1979 and has evolved to include specific initiatives. In 2004, the council enacted a temporary tax for road improvements and did the same in 2015 for the police station. Right now, Marana’s sales tax is at 2 percent.
Tucson’s sales tax rate is 2.6 percent, Oro Valley’s is 2.5 percent.
Kalaitzidis said if they don’t create a new funding source, and instead issue debt for all the projects and continue to pay for it out of the general fund, the town could lose flexibility and the ability to fund smaller projects or upgrade existing roads.
Mayor Ed Honea suggested they go back and look for other revenue sources such as impact fees, service fees, developer contributions and the like to figure out how much that could cover these projects.
“Some of these things are wants and some are needs,” Honea said. “Tangerine is a need. We need that road finished to the freeway. Water purity is a need. Some of the drainage projects are wants.”
Honea believes future site developers could pay for some of that work.
Council member Dave Bowen reiterated his opinion that it costs a lot more money to run the town than they have been collecting in taxes, citing “major infrastructure needs” within Marana. However, he said it’s still important to see if there are other options within the current budget open to funding these needs.
“We’re going to have to come up with the money somehow, for the [projects] that are absolutely necessary to be done,” Bowen said.
Council member John Officer said it will “take money to make money” in this instance. He wants to see a “well thought-out” plan to get proper infrastructure in place so that new buildings and houses can come into Marana.
Officer echoed Honea’s point, saying there needs to be more developer collaboration on some of these major projects.
“We are not the town we were 25 years ago,” said council member Roxanne Ziegler. “We’re almost at 50,000 people and we can’t run it like we did 15 years ago. This is not sitting well with any of us. We don’t want to put this burden on people of the Town of Marana, but we do need to fund some of this stuff … We just need to keep the standards high in the Town of Marana.”
Honea and the other council members agreed that the water quality and water system redundancy projects were a must-do because the council promised the community they would take care of it, but the other projects require more cost specificity and consideration. All of them said they weren’t ready to take a final vote yet.
Council member Jon Post said the town is already facing increasing construction costs, so they need to nail down a realistic number of what it will cost to do these projects in order to avoid unexpected budget overrides down the line.
Bowen added that the new sales tax revenue could be dedicated solely to infrastructure needs, not just debt payment on specific projects. He says it could ensure a revenue source for inevitable projects that will be needed in the future.
Town Manager Jamsheed Mehta said the town staff will look for existing funding sources for the water projects first, as a priority, and how much would be needed from sales tax to make up the difference. They will then do the same for the transportation and drainage projects, including which could be deferred on a pay-as-you-go basis.