Thank you for the info, Don!
First thing I decided about this city, was that it's located in Arizona. Then I thought of a name, and first thing about Arizona that came to my mind was the Navajo (because of the Tex Willer comic book series - you're probably not familiar with it
). As the Navajo are located in northern parts of Arizona, I located Navaho Springs there. Lastly I decided that this city will have a Tucson feel. At that point I didn't do my homework well, and didn't check whether a city looking like Tucson could exist in North Arizona. As I want this to be quite realistic SU city, I will relocate Navaho Springs to South Arizona.
As for the name, I'm quite attached to Navaho Springs, so I won't change it. Why Navaho? Well, here in Finland both forms are used, and I wrongly assumed that that's the case in US as well. Why two forms, I don't know, but now that I think of it, I'm guessing it has to do something with the fact that in Finland the word Navaho is pronounced like you pronounce the word Navajo - as Finnish is pronounced exactly as it is written.