8.
City Council Work Session
- Meeting Date:
- 11/14/2017
- From:
- Chris Kirkendall, Stormwater Manager
- Department:
- Water Services
Co-Submitter:
Rick Tadder
TITLE:
Discussion of Water Services Temporary Stormwater Rate Increase to Fund Large Capital Projects
DESIRED OUTCOME:
Discussion only
EXECUTIVE SUMMARY:
Last spring the United States Army Corps of Engineers (USACE) informed the City of Flagstaff that there is a Federal-local funding match required to continue the work on the Rio de Flag Flood Control Project. Since the Stormwater Fund is limited in its ability to provide this funding, a temporary Stormwater rate increase is being pursued.
INFORMATION:
Over the last several years, the Rio de Flag Flood Control Project has been on hold due to lack of Federal funding to complete the final design of the project. This past spring, the United States Army Corps of Engineers (USACE) received funding to complete the final design. They are actively seeking to retain a design firm to complete the final plans and construction documents. There is a Federal-local funding match requirement for this work. USACE notified City staff earlier this year that based on the funding calculations; the City will be required to pay the USACE $1.75M sometime next summer.
The Stormwater Fund does not have the capacity to fund these expenditures. Stormwater would need to eliminate the current Capital Improvement Program (CIP) for multiple years as well as eliminate most of the drainage maintenance program. CIP budget of $600,000 per year and drainage maintenance is about $300,000 per year. This limited CIP funding has been used to fix other flooding problems throughout the City.
This proposed temporary Stormwater rate increase is intended to fill the short-term funding needs for Stormwater Fund so that we can maintain the CIP and drainage maintenance as well as the Rio de Flag project. Therefore, to meet the short-term funding needs of this important project a temporary Stormwater Rate Increase is being pursued.
Water Services and Management Services staff worked on a financial plan and rate analysis to determine what temporary rate increase would be necessary to keep the Stormwater Fund CIP and drainage maintenance as currently planned. Stormwater rates are based on an equivalent runoff unit (ERU) which equates to 1,500 square feet of impervious surface area on a property. Staff is proposing a temporary rate increase to $2.26 per ERU starting February 1, 2018 and remaining in effect until January 1, 2021 when the rate will revert to $1.76 per ERU.
In January 2018, Council will have a discussion with staff about funding the City contribution for the Rio de Flag construction, which estimated to be $36M. Staff will provide recommendations for the overall project funding with a consideration to put a measure on the ballot the fall 2018.
The Stormwater Fund does not have the capacity to fund these expenditures. Stormwater would need to eliminate the current Capital Improvement Program (CIP) for multiple years as well as eliminate most of the drainage maintenance program. CIP budget of $600,000 per year and drainage maintenance is about $300,000 per year. This limited CIP funding has been used to fix other flooding problems throughout the City.
This proposed temporary Stormwater rate increase is intended to fill the short-term funding needs for Stormwater Fund so that we can maintain the CIP and drainage maintenance as well as the Rio de Flag project. Therefore, to meet the short-term funding needs of this important project a temporary Stormwater Rate Increase is being pursued.
Water Services and Management Services staff worked on a financial plan and rate analysis to determine what temporary rate increase would be necessary to keep the Stormwater Fund CIP and drainage maintenance as currently planned. Stormwater rates are based on an equivalent runoff unit (ERU) which equates to 1,500 square feet of impervious surface area on a property. Staff is proposing a temporary rate increase to $2.26 per ERU starting February 1, 2018 and remaining in effect until January 1, 2021 when the rate will revert to $1.76 per ERU.
In January 2018, Council will have a discussion with staff about funding the City contribution for the Rio de Flag construction, which estimated to be $36M. Staff will provide recommendations for the overall project funding with a consideration to put a measure on the ballot the fall 2018.