Discussion of issues and options with Council to seek direction for both programmatic and project funding.

The Fire Department’s Wildland Fire Management Division has provided protection to our watersheds and water infrastructure for the past 22 years.  With the passage of the Flagstaff Watershed Protection Project (FWPP) bond in Nov 2012, some program funding shifted to the bond project work.  We anticipate that 100% of the FWPP bond will be spent by December 2020.  Staff is seeking direction for continuing the protection of watersheds and infrastructure with sustainable funding.   This includes both on-going programmatic work as well as completion of the FWPP Phase III work (Mormon Mtn/Lake Mary).  Staff will discuss options for implementing a new fee and November 2020 election consideration. 

Water-service infrastructure includes our forests.  Protection of these areas from destructive wildfire, insect infestations, damage/loss from climate-change, and post-fire flooding are critical to the:

• protection and functioning of water infrastructure;
• the delivery of clean, reliable, safe water to our citizens;
• the controlled collection and safe transportation of storm-water runoff.

Damage to, or loss of, our forests will have a profound impact on our community’s water system.  Collection, treatment, and distribution sources will be disrupted, triggering enormous economic and livability hardships on our citizens.  This can be avoided by proactive investment in the protection, retention, and management of our forests.  Areas that have undergone proactive forest treatments (i.e. – thinning, debris disposal, and/or prescribed/managed fire) are healthier and more resistant against to damaging agents, providing a barrier to the spread of these agents.  Such areas enhance public safety and safe-guard community well-being.   Within our community and immediate area, the Woody Fire (2005), Hardy Fire (2010), and Slide Fire (2014) have dramatically demonstrated the value of these treatments. In addition, the Schultz Fire (2010) and Museum Fire (2019) show what can happen when such treatments are not in-place or not-yet completed.  
 
Council Discussions
 
Council has supported a Wildland Fire Management program for 22 years.  More recent Council action included the proposal of a ballot measure for watershed protection to provide funding for the FWPP through a secondary property tax bond.  This measure was passed by the voters.  Council has received numerous updates on the FWPP in addition to the responsibility of approving contracts and budget for the project. 
 
In January 2019 Council updated its Council Goals and Objectives to provide its top objectives.  Under the Environmental and Natural Resources goal, the objective was updated to read: Develop sustainable funding for Flagstaff Watershed Protection Project (FWPP) Phase 3 and ongoing maintenance.   At the February 2019 Budget Retreat, staff presented on this objective and discussed options for the FWPP and a sustainable program and received direction to bring options back for further discussion and further direction. 
 
During the June 11, 2019 work session there was a discussion of ballot questions for the November 2020 election.  Council provided direction to create a committee to look at FWPP ongoing funding.
 
Community Involvement
 
Inform – The link between water and forests, and water-service infrastructure has been stressed since at least 2011 when discussions regarding a potential watershed-type forest project first commenced.  Focus on this topic has not abated since that time, and discussions have included individual members of the community, stakeholders, partner groups, service organizations, appointed/elected officials, and others.  These discussions have also included, and recently centered on, the threat posed by damaging fires and flood events, and the imminent need to address funding issues related to the continuity of the community’s Wildfire Management program to sustain needed and on-going protection efforts.  
 
Consult – Watershed and forest treatments, designed to protect and restore those landscapes, have been, and will continue to be planned and implemented with our many partners, to include NAU’s Ecological Restoration Institute, the US Forest Service, US Fish & Wildlife Service, AZ Dept of Forestry and Fire Management, stakeholders, adjacent property owners, and other City staff.     
 
Involve – The community has engaged for in this effort for the past 22 years, directly involving individual citizens, neighborhoods, and interest groups.  Many City Staff, to include Water Services, Fire, Sustainability, and Public Works, are also involved.    
 
Empower – Action on this topic will allow continuation of credible and proven science-based watershed protection and forest restoration/hazard fuel management standards and knowledge.  It adheres to guidelines established in the Greater Flagstaff Area Community Wildfire Protection Plan (City & County – 2005, with updates in 2012 and 2018), and remains consistent with forest treatments designed and implemented by the Greater Flagstaff Forests Partnership (1999-present) and the City of Flagstaff Wildland Fire Management program (1998-present), meets the goals of the State of AZ 20-Year Strategy (2007), meets Environmental Planning requirements, and is consistent with the actions identified in various Forest Stewardship Plans, and addresses Council and Regional Plan Goals.   
 
Community Benefits
 
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.

Financial Considerations
 
Staff will be presenting options for Council to consider and provide direction.  Management Services and Fire Department staff discussed options to bring forward for the discussion.  Currently, the WFP is funded through the General Fund, Environmental Management Fee, and FWPP Bonds.  To implement a successful WFP, staff recommends a $1.3M program that addresses staffing, contractuals, commodities, capital replacement and funding for local/state/federal grant opportunities.  Fees being considered will vary based on the level support from General Fund and Environmental Fee as well as the consideration to bond for the FWPP project.  The following options will be outlined in the presentation:
 
Municipal statement fee, based on water consumption.  A fee based on water consumption allows for a variable cost to the customers based on their use and impact to the systems.  Customers with higher demand on the systems would pay a higher proportion.  This fee would bill customers monthly at a rate per 1,000 gallons.  Preliminary monthly impact to residential customers would be $2 to $3 based on water consumption at 3,500 gallons.  The preliminary monthly impact to other customer class would be $5 to $7 based on water consumption at 10,000 gallons. 
 
Municipal statement fee, based on meter size.  A fee based on meter size allows for variable costs to the customer based on the meter capacity impact to the system.  Water meters range from a size of .75 inch to 10 inch.  All customer classes would be billed the same rate based on meter size.  Preliminary monthly impact would be $4 to $350 based on the meter size.
 
Municipal statement fee, at a flat rate. This would be a fee based on customers receiving a municipal bill and would be comparable to the current Environmental Management Fee ($4/month/bill).  Each customer pays the same flat fee.  The flat fee is not based on demand or capacity impacts to the system.  Preliminary monthly impact would be a flat fee of $3 to $7 per monthly statement.
 
Consideration for bond funding through a 2020 ballot measure.  In 2012 the community passed a ballot measure for fund $10 million for Forest Health and Water Supply Protection.  Current projection is that $8.5 million would be needed to complete the Mormon Mountain and Lake Mary project.  Currently, the city has approximately $60 million in secondary property tax capacity to issue debt over the next 20 years and maintain a flat rate for the tax. 
 
Next Steps
 
The next steps will be based on Council direction.  Should the Council want to consider the adoption of a new fee, staff will complete a full financial analysis, begin community outreach, and work to bring the proposed fee back to Council for potential adoption next spring.  Should the Council want to consider a ballot measure for the November 2020 election, a committee will be created to develop a proposal to bring back to Council.