Consideration and Adoption of Ordinance No. 2021-19:  An ordinance amending Chapter 5 of the City Code pertaining to the establishment of fees for fire department services outside the City Limits.

Staff requests that City Council adopt clarifying language to improve the implementation of 5-01-001-0001 FIRE PROTECTION; COUNTY ISLANDS; AND OTHER SELECTED UNINCORPORATED PROPERTY. The ordinance provides clarity by specifying that the assessed value to be used for the purposes of determining fees is the same category of assessed value used by the City for determining taxes.  Additionally, code language that had expired due to sunset provisions is removed. 

The use of the Primary Net Assessed Value (Limited Cash Value) has the potential to lower City revenues 15%. An offsetting factor is the current assessed valuation is increasing by approximately 5% annually.

The ordinance will bring consistency to the determination of fees for service consistent with the manner the City determines taxes.  The Primary Net Assessed Value (Limited Cash Value) will be used to compute fees vs. the Secondary Net Assessed Value (Full Cash Value).

Priority Based Budget Key Community Priorities and Objectives
High Performing Governance -Enhance the organization's fiscal stability and increase efficiency and effectiveness
 Safe and Healthy Community-Provide public safety with the resources, staff, and training to respond to community needs

Regional Plan
Goal PF.2. Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics.

Since 1986, the City Council has from time to time amended this code section.  Most recently in November of 2018,  The City Council affirmed the 18% surcharge and changed the City Code to also use the 18% when billing for responses to non-contracted parties.  Additionally at that time, the City Council changed the use of the Consumer Product Index as an annual contract inflator to a flat 2% increase annually.

A.  Approve the proposed ordinance and provide staff clarity on the use of assessed value.
B. Leave Chapter 5 of the City Code and direct staff to continue to use the Full Cash Value assessed value.

The City of Flagstaff has approximately 200 contracts with private property owners for Fire/Rescue/Emergency Medical Services to parcels outside the city limits.  Additionally Two Fire Districts (Locket Ranch Fire District and Westwood Estates Fire District), contract for services via an intergovernmental agreement (IGA) for services. 

For the purposes of calculating the fee, City practice has been to use the Secondary Net Assessed Value (sometimes referred to as the Full Cash Value) as provided by the Coconino County Assessor.  Beginning in the 2015 tax year, changes in Arizona Tax Law were implemented due to the voter approved amendment to the state constitution known as Prop 117.  This measure compelled Cities, Towns, and Fire Districts to use the Primary Net Assessed Value (sometimes referred to as the Limited Assessed Value.)  In discussing the Lockett Ranch IGA with the City, it was pointed out that the methodology used by the City still used the Full Cash AV.  In discussing this issue with the Finance Director Brandi Suda, she confirmed that the City had used the Full Cash AV but also converted to the Limited AV as required by Prop 117.

 

Staff believes the intent of the City Code is to apply a fee that is composed of applying the combined Primary and Secondary Tax rate to the same AV methodology used by the city and paid by (city residents) as applied to the protected contracting party and then add an 18% surcharge.