Consideration and Adoption of Resolution No. 2020-11:  A resolution of the Flagstaff City Council adopting a notice of intention to increase Water Services rates or rate components, fees or service charges; and setting a public hearing date on June 2, 2020.

A Notice of Intention 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, and published in the local newspaper not less than 20 days before the public hearing. A written report and cost flow analysis to support the rate increases must be filed with the City Clerk and posted on the City website at least 30 days prior to the public hearing. This report will be filed and posted by April 17, 2020.  A public hearing will be held on June 2, 2020.

This is just the first step in the process towards consideration of rate/fee changes.

**A presentation will be included in the Council's final packet**

The City is recognizing the need for a new fee to provide Water Resource Protection for our water, wastewater, reclaimed water and stormwater resources and infrastructure for the City.  The City seeks to protect these resources and infrastructure through the City's Wildland Fire Management program.  The Program's cost to provide this service is estimated at $1,300,000 annually. 

In addition, the City is looking to restructure the Environmental Management Fee currently being collected.  The fee restructure is intended to collect the same amount of annual revenues, approximately $1,200,000 annually.  The current fee is a flat $4.00 fee added to each Municipal Service Bill sent out to the customer.  The restructured fee is intended to be billed based on municipal services being billed to each customer.  
 
The proposed fee changes, if approved, are anticipated to be effective August 1, 2020.

The proposed Water Resources Protection Fee will enable the City to continue providing wildland fire management services that protect water resources and infrastructure.  It is anticipated the Watershed Protection Program funding approved by voters in 2012 will be expended by the end of the calendar year 2020. The new fee will enable watershed protection efforts to continue.  

The proposed restructure of the Environmental Management Fee will incentivize households and businesses to reduce water consumption and generation of solid waste, consistent with the Climate Action and Adaption Plan. The restructuring may result in reduced costs for single-family or small households and will help ensure multi-family housing projects pay their fair share of environmental management costs.

Sustainable, Innovative Infrastructure:  Deliver outstanding services to residents through a healthy, well-maintained infrastructure system (Specific Priority: 3.2; Regional Plan:PF.2/E.1-2)/WR1.6/LU.7-8/CD.1/T.4-6/REC.1);

Implement, maintain and further the Climate Action and Adaption Plan (CAAP) (Regional Plan: E&C.2-4).

February 7, 2020, Budget Retreat: Discussion on Wildland Fire Management and Flagstaff Watershed Protection Project.
September 10, 2019, Work Session: Discussion on Water Resource and Infrastructure Protection and Environmental Management Fee.
February 4, 2020, Budget Retreat: Discussion on Wildland Fire Management and Environmental Management Fee

• Adopt the Notice of Intention:  This will begin the formal process to bring back a fee change for adoption. 
• Delay Adoption of the Notice of Intention, direct staff to explore other alternatives:  This will delay the process and implementation of fee changes.
• Do not adopt the Notice of Intention: This will eliminate ongoing funding for Water Resource Protection and reduce the Wildland Fire Management Program in the calendar year 2021.  The Environmental Management fee will remain with the current structure.

Protecting water resources and infrastructure through a successful Wildland Fire Management program provides many community benefits including:

• Safe and reliable water supply;
• Protection of highly expensive and sophisticated water-service infrastructure;
• Effective collection and distribution of stormwater using engineered systems;
• Restored, sustainable forests;
• A healthy, sustainable business environment;
• Implementation of the Forest Health components of the City’s Climate Adaptation and Action Plan;
• Continuation of efforts identified in the Greater Flagstaff Area Community Wildfire Protection Plan;
• Continuation of environmental planning and conservation aspects of the Regional Plan;
• Continuation of effective application of the City’s Wildland-Urban Interface Code; 
• Enhanced public safety and community well-being.

Restructure of the Environmental Management Fee provides an equitable distribution of the fee base on the costs of city services. 

The community will have the opportunity to comment at a public hearing that occurs prior to the adoption of any rate or fee changes.