Oro Valley outlines $50M+ Northwest Recharge, Recovery and Delivery System plan; seeks $6M private loan and WIFA financing

Oro Valley Water Utility Director Peter Abraham updated the Water Utility Commission on the Northwest Recharge, Recovery and Delivery System project, saying the multi‑partner effort is under construction and is on track for a mid‑2026 commissioning.

Abraham told commissioners the partnered portion of the project—built under a 2017 intergovernmental agreement among Oro Valley and two partner water providers—includes two recovery wells, roughly seven miles of transmission main and a partnered 1,000,000‑gallon reservoir. He said the partnered component is largely complete in design and is in active construction while Oro Valley continues independent work to integrate that supply into the town’s system.

“The partnered piece is slated for completion in July of ’26,” Abraham said. “By the time we get done there … I’m seeing we’re going to be over a $55,000,000 project, we’re in rounding numbers, including contingency.” He also told the commission, “we’re going to be short about $6,000,000” to finish Oro Valley’s share of the partnered component and recommended a private placement loan to fill that gap.

Why it matters: the combined partnered and Oro Valley independent portions will increase local supply and distribution capacity. Abraham said the full project will enable Oro Valley to take up to 4,000 additional acre‑feet into its service area and that the mix of partner and town projects is intended to be commissioned together so Oro Valley can immediately use the new assets.

Project structure and partners

Abraham described the NWRRDS as a multi‑jurisdictional project with a 50‑year intergovernmental agreement executed in 2017. He named Metro Water and Marana as the other participating entities and said each partner’s contractual entitlement is based on capacity—Metro Water’s entitlement is 4,000 acre‑feet per year and Marana’s contractual amount is 2,400 acre‑feet per year, as described by Abraham.

The partnered scope includes recovery wells and conveyance to a shared reservoir; Oro Valley’s independent work begins at each partner booster station and includes booster stations, transmission mains and system blending work to reduce hardness and total dissolved solids before distribution.

Delivery methods and contractor

Abraham explained the project used multiple delivery methods as appropriate to risk: low‑risk items used design‑bid‑build or job‑order contracting, higher‑risk transmission mains used construction manager at risk (CMAR) delivery. He said the town selected Borderland Construction as the CMAR contractor for the partnered work and cited Borderland’s regional experience and relationships—particularly with ADOT and local agricultural users—as one factor in the selection.

Budget, financing and timing

Abraham gave high‑level cost shares and funding sources. He estimated the entire program (partnered plus independent Oro Valley components) would exceed $50 million and, in some slides he referenced, roughly $55 million to $57 million including contingencies. He said the project financing plan for Oro Valley’s partnered share relies 60% on water resource system development impact fees and 40% on groundwater preservation fee (GPF) revenue; growth‑related impact fees cover the larger share, while existing customers cover the remainder.

To finish Oro Valley’s partnered portion he said the town will seek a roughly $6 million private placement loan; town staff planned to seek council authorization on March 19. For Oro Valley’s independent portion Abraham said the town will pursue a Water Infrastructure Finance Authority (WIFA) loan, with a projected need of about $12 million less a roughly $1.2 million forgivable principal award, producing debt on approximately $11 million. Abraham said WIFA financing carries a lower rate (about 1 percentage point below the private placement option) and a longer note term; the town planned WIFA approval steps in April and was scheduled to appear before the WIFA board in Phoenix.

Abraham emphasized the town has so far cash‑funded much of the work and used grants where available. He said the private placement is callable after three years and that staff considered 10‑year versus 15‑year terms, preferring the 10‑year note for the private placement based on cash‑flow modeling.

Risks and completion

Abraham discussed program risk and schedule: the partnered piece must be usable at the same time as Oro Valley’s independent distribution work to avoid creating an asset the town cannot use. He estimated the partnered construction was about 60–75% complete, depending on the element, and said the whole package is slated to be commissioned around July 2026.

Commissioners asked about partners’ financial commitments, federal funding risk and how billing and benefits are split among partners; Abraham said partners are borrowing or using other financing for their independent portions and that the IGA allocates costs by contractual entitlements but that project nuances mean simple pro‑rata math does not map exactly to every component.

Abraham said the town’s modeling shows the planned debt will not require a water‑rate increase because the debt service for the projects will be covered by impact fees and by existing steady GPF revenue—unless growth stalled completely and impact‑fee revenue fell to zero.

What’s next

Abraham said council would consider authorizing the private placement loan March 19 and that staff would seek WIFA loan approval in April, with a WIFA board appearance scheduled. He asked the commission to note the schedule and to expect continued updates as council considers the financing steps.

Ending

Commissioners praised the program’s long‑term planning and cash funding approach while noting the complexity of coordinating partner and Oro Valley timing. Abraham thanked prior utility leadership and his staff for prior work that positioned the town to proceed.