Consideration and Adoption of Ordinance No. 2025-18: An Ordinance of the City Council of the City of Flagstaff, amending the Flagstaff City Code Title 7, Health and Sanitation, Chapter 7-03 City Water System Regulations of the City of Flagstaff City Code by amending Section 87-03-001-0011 Water Main Capacity Charges.
 

1. Read Ordinance No. 2025-18 by title only for the final time
2. City Clerk reads Ordinance No. 2025-18 by title only (if approved above)
3. Adopt Ordinance No. 2025-18

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.
 
City Council adopted a Notice of Intention to increase fees on June 3, 2025 pursuant to Arizona Revised Statutes Section 9-511.01. The Notice of Intention was published in the Daily Sun newspaper on June 23, 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. The second public hearing is scheduled for the September 2, 2025 City Council meeting.

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

• 3-inch was mistyped from $57,279 to $81,456 and needs to be corrected to $81,459
• 4-inch was mistyped from $95,484 to $84,459 and needs to be corrected 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.

On June 3, 2025 Council adopted Resolution 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.
 

• Adopt the Ordinance as recommended by staff and informed by the Rate Study
• Do not adopt the Ordinance. The Council may elect to retain the Capacity Fees as they are. 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 undercollecting 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 provides details of the calculation of water capacity fees. The fees adopted by the Council contained an error in the redlines for the 3" and 4" capacity fees 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 the appropriate rate for 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.