Public Hearing, Consideration and Adoption of Ordinance No. 2017-30:  An ordinance of the City of Flagstaff amending Title 12, Floodplains of the City Code, by amending Chapter 12-02-002-00033 “Schedule of Stormwater Management Utility Service Charges and Fees” by City Council of Flagstaff, Arizona adopting the “2017 Amendments to the Flagstaff City Code, Title 12, Chapters 12-02, Stormwater Management Utility," to update Stormwater Service Charges (Rates).

This action adopts an ordinance increasing Stormwater service charges (rates) to $2.26 per equivalent runoff unit (ERU) for three years and then reducing the service charge to $1.76 per ERU.  An equivalent runoff unit equals 1,500 square feet of impervious area on a property.  A Stormwater service charge increase is necessary to adequately fund capital improvement projects contained in the Stormwater five year plan..

The proposed service charge increases will allow Water Services to complete capital projects as outlined in the Stormwater Financial Analysis and Rate Analysis Report dated November 3, 2017.  The Stormwater service charge will increase to $2.26 per equivalent runoff unit effective February 1, 2018 and remain at that level until January 1, 2021 when the rate would reduce to $1.76 per equivalent runoff unit. Estimated revenues increases based will be $386,400 in FY 2018, $724,776 in FY 2019, and $617,404 in FY 2020.

None.

Council Goals:
 

• Provide sustainable and equitable public facilities, services and infrastructure systems in an efficient and effective manner to serve all populations areas and demographics.

 
Regional Plan:
 

• Goal WR.5.4. Develop any necessary stormwater infrastructure improvements consistent with City of Flagstaff stormwater masterplans or studies as adopted by City.

No.  However the City Council reviewed this proposal in detail at the Council Work Session on November 14, 2017.
 

Adopt Ordinance No. 2017-30 as proposed.
Amend and adopt Ordinance No. 2017-30 and direct staff to modify the capital improvement plan and drainage maintenance program.
Do not adopt Ordinance No. 2017-30 which would delay capital improvement projects and reduce the drainage maintenance program.

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 design project.  USACE is actively seeking to retain a firm to complete the design plans and construction documents.  There is a Federal-local funding match requirement for this work.  The City of Flagstaff (City) will be required to pay the USACE $1.75M upon their completion of final design.  We expect they will ask for the funding summer 2018.  To maintain the Stormwater Fund over the next three fiscal years, we will need to increase revenues approximately $2.0M. 
 
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 reduce the drainage maintenance program.  Stormwater has a current CIP budget of $600,000 per year and drainage maintenance of about $300,000 per year.  This limited CIP funding is being used to fix other flooding problems throughout the City.
 
The proposed Stormwater rate increase intends to fill the short-term funding needs for Stormwater Fund so that we can maintain the CIP and drainage maintenance, as well short-term funding for the Rio de Flag project.  Therefore, to meet the short-term funding needs of this important project, a Stormwater Rate Increase is being pursued.

When staff developed the Stormwater Financial Plan and Rate Analysis we set forth objectives to develop a service charge (rate) structure to address the following:

• Maintain the capital improvement program
• Maintain the annual drainage maintenance program
• Provide for funding of the Rio de Flag project
• Maintain adequate fund balance

Regular service charge reviews and modifications are necessary to maintain a stable financial position for the Stormwater Utility.  Service charges allow the Stormwater Utility to invest in capital improvements the address life and safety issues.

Involve/Inform:
Staff presented the proposed service charge (rate) increase to the Water Commission on October 19, 2017. 
Staff presented to the Friends of the Rio de Flag during their monthly meeting on November 2, 2017.
Staff presented to City Council at a Work Session on November 14, 2017.
Staff will hold a Community Outreach Forum on November 29, 2017 in the Council Chambers.