Consideration and Adoption of Resolution No. 2025-54, Resolution No. 2025-55, and Ordinance No. 2025-21: A resolution of the Flagstaff City Council, repealing Resolution No. 2017-03 related to ParkFlag District fees; repeal of conflicting resolutions; and establishing an effective date; a resolution of the Flagstaff City Council declaring as a public record that certain documents filed with the City Clerk and entitled "2025 ParkFlag Code Amendments"; and an ordinance of the City Council of the City of Flagstaff, amending the Flagstaff City Code, Title 3 Business Regulations, to establish parking and permit fees for the ParkFlag District, and Title 9 Traffic, to update provisions related to the Comprehensive Parking Management Program and duties of the Office of the Parking Manager; providing for penalties, repeal of conflicting ordinances, severability, authority for clerical corrections, and establishing an effective date
 

The ParkFlag District was created in 2017 to manage parking and traffic in the Downtown and Southside areas, ensure parking spaces turn over regularly, generate revenue to purchase additional parking in these areas, and support local businesses.  The public currently pays $1.00 per hour for use of a parking space during posted hours, while employees may purchase monthly or annual permits.  Since its inception, hourly parking rates have not changed, even as operating costs for vendors, maintenance, staffing, and technology continue to rise at a rate of 3%–8% annually.

In July 2025, a Parking Rates and Fees Analysis was completed by the Management Services Division in the City of Flagstaff. The study found that Flagstaff’s rates are below both peer communities and local private operators and confirmed that, without an adjustment, projected revenues will not keep up with anticipated expenses over the next 10 years.  

If adopted, the proposed ordinance will increase the hourly parking rate to $2.00 per hour for on-street spaces and $3.00 per hour for future covered parking.  Revenues will be used as follows:

1. ParkFlag will continue to set aside 20% of all parking revenues into the restricted fund balance of the ParkFlag fund for acquisition of 450 parking spaces (“the Lockbox”).
2. A portion of the new revenues will be used for ParkFlag operating costs. 
3. A portion of the new revenues will be used to provide enhanced municipal services to help regulate traffic and improve the public rights-of-way in the parking district.  Property owners within the Flagstaff Downtown Business and Improvement Revitalization District (“FDBIRD”) and members of the Downtown Business Alliance are requesting enhanced municipal services in this area due to the high volume of pedestrian and vehicular traffic in this area.  FDBIRD is a special taxing district with authority to levy secondary property taxes to help pay for enhanced municipal services and with authority to contract with the City to provide such services. The City currently participates in funding FDBIRD through an Intergovernmental Agreement. City staff will be requesting that the City Council at its October 21, 2025 public meeting consider approval of a proposed new IGA with FDBIRD wherein FDBIRD would receive funding to provide enhanced municipal services in public rights-of-way in Downtown and Southside as permitted by A.R.S. Section 48-6808.A.2 & A.14. 

The proposed ordinance will increase the hourly parking rate effective March 1, 2026.  Prior to the rate increase going live, staff will conduct public outreach, and enforcement staff will spend about one week updating kiosk software, followed by one to two weeks assisting customers with the updated kiosks.  The ordinance will also establish new parking permits—vendor (V) and construction (C) effective December 1, 2025. 

Economic Vitality and Management Services staff partnered to develop a Parking Rates and Fees Analysis Report that was posted for public review and provided as an attachment to this staff summary. The proposed rate adjustments are expected to increase annual revenues, stabilize the long-term operating budget, provide additional funds to provide enhanced municipal services within the ParkFlag District, and provide additional funding for investments in parking capacity. 

ParkFlag funding has historically been restricted to parking operations and inventory.  Approval of this ordinance will authorize the use of funds for additional services within the rights-of-way in the parking district.  Additionally, the parking permit and hourly fee schedule will be codified in City Code 3-10-001-0009, providing greater clarity on parking fees.  As part of this adjustment, new permit types have been added to the administrative guidelines to expand eligibility, reflecting public feedback and addressing an identified gap in the program.
 

In April 2025, during the budget retreat, staff presented consideration of proposed parking rate changes to Council and received direction to proceed with a rate analysis and potential rate increase. As part of the current process, ParkFlag hosted two public meetings after the rate study was published on the ParkFlag website (parkflag.org), the City of Flagstaff website, and in the Arizona Daily Sun. Staff collected and reviewed community feedback, including questions and concerns raised during the public meetings as well as those submitted online or by email. The enhanced services being considered were proposed by the Flagstaff Downtown Business Allicance (FDBA) and the Flagstaff Downtown Business Improvement and Revitalization District (FDBIRD), with ongoing discussions involving their boards and downtown businesses. 

1. Approve the proposed rate adjustment (Recommended action) 
   • Implement the new parking rates as proposed. 
   • Aligns revenues with projected expenditures and supports enhanced services in the parking district. 
2. Approve a different rate adjustment 
   • Implement a modified rate increase (higher or lower than proposed). 
   • May partially address revenue shortfalls while balancing community impact. 
3. Postpone adoption of the ordinance and the resolutions and direct staff to perform additional analysis 
   • Delay rate changes while staff conducts further study of financial impacts, peer benchmarks, or community feedback. 
   • Provides more data to inform future decisions but postpones addressing the revenue gap. 
4. Do not approve the ordinance and resolutions  
   • Keep existing parking fees and permit types unchanged. 
   • Identify alternative funding sources to cover operational increases. 
   • Risk continued revenue shortfalls to pay for ParkFlag operational costs and limit the ability to fund enhanced municipal services. 

City staff is proposing to increase paid parking rates to $2.00 per hour per parking space, and $3.00 per hour for covered parking. The proposed parking rate adjustment is needed to keep ParkFlag financially stable and to allow for future improvements in the parking district.  Since 2017, vendor contracts have increased approximately 5% annually, while other costs such as maintenance, staffing, and technology have increased 3%-8% annually.  Without an adjustment, revenues are not expected to keep up with expenses over the next 10 years.  In fact, ParkFlag currently uses a one-time funding of $60,000 for ongoing expenses, which is not sustainable. 

The recent rate study confirmed this challenge. It showed that expenditure increases are outpacing revenue trends, furthering an imbalance. The study also found that Flagstaff's parking rates are lower than those in many peer cities, communities of similar size with universities and tourism-based economies that experience comparable parking demand. For example, San Luis Obispo, a small beach town in California with a large tourism base, charges $3 to $4 per hour depending on location and duration; Provo, Utah, a university town, charges $3 per hour; and Colorado Springs, a university city in Colorado, charges $1 to $1.50 per hour, depending on location, with additional payment required each time you move your vehicle.  Locally, downtown rates are also below the market, as private operators such as American Valet, Northern Arizona University and others charge $3.00 to $4.00 per hour.  This shows that Flagstaff's current rates are not in alignment with both regional and local standards.  Additional parking fee comparisons are provided in the attached rate study. 

The proposed adjustment will help align revenues with expenses, maintain reserves, and bring rates closer to regional and local standards. A portion of the new revenue will support enhanced municipal services in the parking district being requested by the Flagstaff Downtown Business Alliance (FDBA). These services would be used for maintenance and improvement of public rights-of-way in the ParkFlag District, including graffiti removal from parking kiosks and signage, trash and pet waste cleanup, pressure washing sidewalks and improved snow and cinder removal during the winter and spring months. 

The ParkFlag program has made several changes and data-driven decisions since its launch, including: 

• 2019 Program Changes 
  • Modified downtown management hours, which reduced annual revenues by over $150,000. 
  • Reduced permit fees to better align with community needs. 
• COVID-19 Suspension 
  • One-year suspension of the paid parking program during the pandemic. 

Despite the program changes and suspension of paid parking, ParkFlag has restricted $2 million in the lockbox fund, reserved for the future development of additional parking. City staff are working on multiple negotiations underway intended to provide new parking inventory in the near future.  

Approval of the staff proposed parking rate change will strengthen ParkFlag's financial foundation while enhancing the downtown areas for the community. 

High Performing Governance

• Serve the public by providing high quality customer service
• Maintain the organization’s fiscal stability through strong financial policies and best practices
• Implement and communicate innovative and efficient local government programs, new ideas, and best practices

Sustainable and Innovative Infrastructure

• Deliver outstanding services to residents through a healthy, well-maintained infrastructure system

Goal E&C.2. Achieve carbon neutrality for the Flagstaff community by 2030.
Goal LU.10. Increase the proportion of urban neighborhoods to achieve walkable, compact growth
Goal LU.12. Accommodate pedestrians, bicyclists, transit riders, and private cars to supplement downtown’s status as the best-served and most accessible location in the region.

Decrease Dependence on Cars, DD-3: Encourage Flagstaff residents and visitors to walk, bike, roll and take a bus. 
This proposal supports the City’s Carbon Neutrality Plan by encouraging shifts to more sustainable modes of transportation.  Higher parking rates may motivate some downtown visitors and employees to choose alternatives such as biking, ride-sharing, or public transit.  ParkFlag will continue to offer the VIP Commuter Pass program, which provides free bus passes to downtown employees, and will also continue promoting carpooling and highlighting bicycle rack locations on the ParkFlag website.  These measures align with the City’s goals of reducing vehicle miles traveled and fostering a cleaner, more sustainable downtown.

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