Consideration and Adoption of Resolution No. 2025-34:  A resolution of the Flagstaff City Council adopting a Notice of Intention to increase fees; and setting a public hearing date on August 26, 2025.
 

1. Read Resolution No. 2025-34 by title only
2. City Clerk reads Resolution No.2025-34 by title only (if approved above)
3. Adopt Resolution No. 2025-34

City Council adopted an increase to water and wastewater capacity fees in July, 2024 with the adoption of water, wastewater, and reclaimed water rates and fees. The changes to City Code were updated per the redline presented to City Council and provided to the City Clerk. However, two water meter capacity fees were mistyped by Staff. The charges listed for a 3-inch meter size and a 4-inch meter size in 7-03-001-0011 Water Main Capacity Charges need to be corrected in City Code to reflect the charges calculated and posted in the draft report at the time and the final report posted on the City's website in August 2024.
 
Since the corrections increase both fees, a Notice of Intention to increase fees must be adopted, pursuant to Arizona Revised Statutes Section 9-511.01, before a municipality may increase water, wastewater, reclaimed water or stormwater rates, rate components, fee or service charges. The Notice of Intention must be adopted at least 60 days prior to a public hearing (August 26, 2025), and published in the local newspaper not less than 20 days before the public hearing (August 6, 2025). A written report and cost flow analysis to support the rate increases were filed with the City Clerk on May 20, 2024 and the final report was posted on the City website on August 20, 2024. This date is well before the requirement, which is 30 days before the public hearing (July 27, 2025). A public hearing is scheduled for the August 26, 2025 City Council meeting.  The second public hearing is scheduled for the September 2, 2025 City Council meeting.

Staff will present the corrected Water Main Capacity Charges for City Council review and discussion. 

Staff is submitting to adjust the City Code 7-03-001-0011 Water Main Capacity Charges as follows:

• 3-inch from $81,456 to $81,459
• 4-inch from $84,459 to $135,791

Financial impact will be based on how many meters are purchased after the effective date of the new rates. 

This is a correction to City Code.

On July 3, 2024, City Council adopted Resolution No. 2024-30 and Ordinance No. 2024-19: A Resolution declaring as a public record that certain documents were filed with the City Clerk and entitled "Water Services Rates Code Changes" and an Ordinance amending the affected Flagstaff City Code by adopting by reference the document entitled "Water Services Rates Code Changes". The capacity fees were updated in City Code as per the redline presented to City Council. However, the two Capacity Fees were mistyped in the redlined document provided to the Clerk and presented to City Council.
 

• Approve the Notice of Intention. This allows the process to begin for the update to the water capacity fees based on the 2024 rate study.
• Do not approve the Notice or Intention. Council may elect to keep the Capacity Fees as is. However, this would result in the fees for the 3-inch and 4-inch meter sizes collecting less than the proportional share of the system capacity compared to the other meter sizes. This would also mean that Water Services is under collecting the funds the utility was forecast to recover in the Rates and Fees Study.

The Water Services Division completed a Water, Reclaimed Water, and Wastewater Cost of Service Rates and Fees Study August 2024.  The  report provide details to the calculation of water capacity fees.  The fees adopted by Council had a error in the redlines for the 3" and 4" capacity fees as compared to the report.   The report is currently available on the Water Services website at https://www.flagstaff.az.gov/1275/Water-Services main page.  The proposed water capacity fees are on Page 54 of the Water, Reclaimed Water, and Wastewater Cost of Service Rates and Fees Study - Final Report. This process is to allow an update to City Code to reflect that appropriate rate fo the 3" and 4" meter sizes.  

Sustainable and Innovative Infrastructure, Safe and Healthy Community: Deliver outstanding services to residents through a healthy, well-maintained infrastructure system

Goal WR.2. Manage a coordinated system of water, wastewater, and reclaimed water utility service facilities and resources at the City level and identify funding to pay for new resources.
Goal WR.4. Logically enhance and extend the City’s public water, wastewater, and reclaimed water services including their treatment, distribution, and collection systems in both urbanized and newly developed areas of the City to provide efficient delivery of services.

CR-2 Strengthen existing community systems to create resilience to both short-term shocks and long-term change.
WS-1 Improve water infrastructure and expand water reuse.
HS-3 Adequately fund services for disaster preparedness.
HS-4 Improve the resilience of public infrastructure and City facilities.

None.