Others present: City Manager Josh Copley and City Attorney Sterling Solomon.

The following individuals addressed Council in opposition of the increased minimum wage:
 

• Jesse McGirl
• Lisa Korokiewicz
• Frank Branham
• Nancy Branham
• Laurie Bosse
• Stuart McDaniel
• Monica Attridge

The following comments were received:

• Urge Council to call a special election in May.
• Give businesses a chance to adjust and give the City time to develop their enforcement.
• Most Flagstaff restaurants pay well, it is difficult if they have to pay more to the tipped employees.
• The passage of 206 and 414 is not sustainable.
• Think about the small family-owned businesses in town.
• The City alone will have a $75,000 to $100,000 cost for the increase not to mention the funding needed for the department to regulate and monitor.
• The impacts of the increase in minimum wage to the disabled community is vast.
• Individuals with disabilities have built relationships in the community, have jobs in the community and a sense of belonging in the community; many of them will have to leave Flagstaff and the things they have worked so hard to achieve.
• 76% of Flagstaff supports a special election to amend the wage increase.
• Many people voted for 414 but are now very concerned about the outcome.
• Assistive services cannot reduce staffing ratios because they are mandated by the State as are most of the costs; this increase will shut those services down and leave a vulnerable population without resources.

Written comment cards in opposition to the minimum wage increase were submitted by the following:

• Anthea Hajjar
• Gus Miller
• Valerie Langin

Gabor Kovacs addressed Council and expressed a need to unify the City and the country and focus on things that hold communities together.

David Cole addressed Council to object to a parking ticket he recently received.

Mayor Evans explained that former City Councilman Nat White brought this item to the attention of the Council. There are some amazing athletes in Flagstaff. She asked for the NAU Men's Cross Country Team to stand and be recognized. The team secured the first victory of the NCAA Division I National Championship which is the first national title for NAU as a cross country program and the first NCAA Championship for a Big Sky Conference school outside of football.

Mayor Evans and the Council came to the podium to read and present the team with a proclamation.

Mr. Copley explained that there is no formal presentation on this item, it is a time for Council to discuss and provide direction to staff if desired.

The following individuals addressed Council in favor of a resolution opposing the Dakota Access Pipeline:

• Dawn Tucker
• Susan Wesley
• Tyler Barnard
• Marlena Garcia
• Adam Shimoni

The following comments were received:

• This issue is extremely relevant today since President Trump has issued an Executive Order to advance the approval of the pipeline.
• A resolution would demonstrate that Flagstaff stands with those water protectors and indigenous communities.
• Friends of Flagstaff's Future urges the Council to support a resolution opposing the Dakota Access Pipeline.
• Mainstream media is not giving the full picture; the protests are mostly beautiful and cohesive.
• It is important to stand with the City's indigenous brothers and sisters.
• This issue is inter-connected with issues happening in Flagstaff.
• Flagstaff needs to acknowledge that the pipeline is not just a native issue, it affects everyone in every single way with what it will do to the water.
• Flagstaff must send a very strong message of support for the indigenous communities.
• Government and society needs to prioritize the needs of the people over the needs of money.
• Council is an extension of the people and the people are asking the Council to represent them in opposing the pipeline.

Gabor Kovacs addressed the Council in opposition of a resolution opposing the Dakota Access Pipeline stating that it is an issue that is political in nature and not relevant to Flagstaff.

Written comment cards in favor of a resolution opposing the Dakota Access Pipeline were submitted by the following:

• Claire Silvernale
• Angela Espinoza
• Frankie Beesley
• Stefano Cualva
• Elea Ziegelbaum

Councilmember Putzova offered that she had brought this item forward in the past and a majority of Council at the time was not interested in moving it forward. She explained that it is important for Flagstaff to take a stance on this issue that the community asked for. The issue is broad; it is environmental, it is human, it is about respecting treaties. She would like for the Council to bring forward a resolution and she requested that it includes meaningful and actionable steps the City can take. She requested that the closing clause include the severing of ties with institutions that finance the pipeline for as long as they finance the pipeline.

Vice Mayor Whelan stated that she is in support of a resolution; it is a meaningful way to make a clear statement with strength and compassion. Councilmember McCarthy stated that he, too, is supportive of a resolution that opposes the pipeline. He would like further discussion on the content.

Councilmember Barotz offered that there is a large contingent of people who have and continue to urge Council to provide a resolution in opposition of the pipeline. Mayor Evans offered that she is looking forward to the Council moving forward with the resolution and crafting the language. It is about respecting the rights of treaties and sovereign nations.

A majority of Council is in favor of moving this item forward and request staff to bring back a draft resolution.

Mayor Evans declared a conflict of interest and left the dais at 7:03 p.m.

Sustainability Manager Nicole Woodman provided a PowerPoint presentation that covered the following:

DISCUSSION
RATE CASE OVERVIEW
IMPACTS OF RATE CASE
COMMERCIAL
RESIDENTIAL
RESIDENTIAL SOLAR
SUSTAINABILITY PROGRAMMING

Councilmember Overton asked how the rates would affect the City's public, private partnerships. Ms. Woodman explained that those agreements and partnerships are locked and are not affected by a rate change.

Director of State Affairs and Compliance for APS Greg Bernosky continued the presentation.

APS RATE REVIEW: ENSURING A SUSTAINABLE ENERGY FUTURE FOR ARIZONA
RATE REVIEW OBJECTIVES
KEY DATES IN REGULATORY PROCESS

Councilmember Putzova asked Mr. Bernosky to focus on some of the key concepts; she would like to understand the mandatory demand charges and the issue with the net metering charges. Mr. Bernosky stated that there was a separate proceeding related to solar policy that was recently resolved that is somewhat related to the APS case. The APS case focused on rate design and revenue needs but had a placeholder for the solar proceedings. Now that the solar proceeding has concluded, those policies will be incorporated into the case.

Councilmember McCarthy asked if the existing policy is if a solar customer sells APS a unit of electricity they do so at the same rate that they pay when they buy the electricity. Mr. Bernosky agreed stating that the electricity is compensated at the retail rate. Councilmember McCarthy then asked if the new policy is that the solar customer will pay a certain dollar amount per kilowatt hour and when they sell it back to APS they will no longer get that dollar amount back but rather a percentage of it. Mr. Bernosky explained that the decision created a methodology so each utility now has to take all the numbers they have to create that compensation rate and the commission has to make a decision to agree with the number and that will set the price going forward. It is a percentage but it has not been set yet. When APS filed their testimony that rate came out to about 11.5 cents for the export rate.

Councilmember Barotz asked for Mr. Bernosky to describe the APS proposal in his own words. Mr. Bernosky stated that APS is asking for a rate increase based on residential and commercial rates that are on average about a 5.74% increase. APS has to balance the cost of all investments with rates that are fair and equitable for all customers. There is still a portion of solar users energy needs that have to be met by the grid, so the infrastructure, generation, transmission and distribution and everything that goes into that home is still necessary because that system will stop producing at some point. The gird and resources have to be there; APS recognizes the value that those systems bring but also have to recognize the other costs as well.

Councilmember Barotz stated that the proposal includes rate demand and rate charge; she asked for a basic understanding of those terms and how that will change with the proposal and why is that good for the customer. Mr. Bernosky stated that there are already 120,000 customers who are voluntarily on the rates just mentioned. Councilmember Barotz confirmed that the proposal would make it mandatory for all customers. Mr. Bernosky confirmed and stated that time of use is part of the demand rate that is important. The time of use window has a higher cost during on-peak times and lower cost during off-peak times. APS has proposed a time of use proposal of 3:00 p.m. to 8:00 p.m. The demand rate is the billing component for how much energy a customer is using for a one hour period during on-peak times. The demand charge is the charge associated with the rate.

Councilmember McCarthy asked if he is correct in understanding that with demand rate billing APS charges less for energy used but the added demand fee is a separate charge. Mr. Bernosky stated that he is correct in that the per kilowatt rate is lower, the demand rate is based on the total maximum kilowatts used during that peak time. Councilmember McCarthy asked if there is a fee or a change in the charge per kilowatt hour. Community Affairs Manager for APS Jenna Rowell stated that the bill would have a fixed service charge based on the rate plan, then there is the usage; the proposal is that the unit cost for that energy would actually be lower and the bill would include a demand charge. There is a rate set that is dependent on usage between the 3:00 p.m. and 8:00 p.m time period for a one hour interval that will determine the demand charge.

Senior Attorney with the Arizona Corporation Commission Maureen Scott stated that there is a wealth of information on the APS rate case on the Arizona Corporation Commission website and it will provide up to date information on the status of the case. APS filed their original application and direct testimony in June 2016. The staff and interveners in the case filed direct testimony on revenue requirements in December 2016. There is another filing coming up the end of the week on rate design and staff and interveners will be filing their direct testimony responding to the APS proposed rate design. Staff will then come back and give their views on what the rate design should look like.

Councilmember Barotz stated that there was an article in the Arizona Republic on January 13, 2017, that indicated that the staff at the Arizona Corporation Commission and the Residential Utility Consumer Office both recommended no increase. Ms. Scott stated that it was part of the testimony in the revenue requirement case and was based upon the review of the application. She added that it is likely to change because other parties have filed on the issue and all the filings are taken into consideration and may have an impact on the staff recommendation. The rate design phase is the later part of the case. The parties have entered into settlement discussions and they are open to all the interveners to discuss. During the settlement process the original numbers could be subject to change.

Ms. Scott offered that the Commission invites residents to submit public comment; it can be submitted verbally or in writing. The Commission reviews those comments and they are part of the record. Deputy City Manager Shane Dille stated that Commissioner Burns had suggested the possibility of holding a public forum in Flagstaff; he asked if there has been any response to that idea. Ms. Scott stated that she is not aware but it is likely when a Commissioner requests a public comment period to be held in a particular location that it is carried out. Mr. Dille offered that Flagstaff would be willing to host the event should it be amenable to the Commission.

The following individuals addressed Council in opposition to the APS rate case proposal:

• Larry Holland
• Bobby Ecclestan
• Derek Turner
• Hadassah Ziegler
• Brian Siebert
• Seth Holland
• Adam Bruce
• Lucy Mason
• Tom Chabin
• Janet Regner
• David Carlile
• Alan Francis
• John Viktora
• Paul Wagner

The following comments were received:

• If APS has their way businesses like Rooftop Solar will be a thing of the past.
• The APS proposal will affect rooftop solar companies negatively.
• Rooftop solar has become more affordable and more people are able to install them; new people will not want to come on if the APS case goes through.
• Rooftop Solar has expanded to California because there is so much uncertainty in Arizona and it is unknown if the business will continue to be viable in Arizona.
• Solar is good for the environment and it is good for the economy, do not change that.
• APS is a partner and the grid is important, this is simply about profits.
• The net metering charges will put a halt to rooftop solar growth.
• The proposed changes will affect businesses and the opportunities for homeowners to be more sustainable.
• If APS gets rid of net metering it takes away all incentive for customers to go solar.
• Flagstaff should take a stand at the Arizona Corporation Commission in opposition of the APS rate change.
• APS recently paid $4 million to the campaigns of now seated Corporation Commission members.
• The proposal is confusing and there are so many layers, it is impossible to understand.
• APS is failing to adapt to the needs of the customers.
• New solar businesses are hesitant to come to Arizona because of the legislative decisions and the attitude of the utilities.
• Support the solar companies that want to be in Arizona.
• Council needs to take a position on the rate case.
• Solar customers have paid for the investment on their home and when they produce an extra kilowatt APS takes that and sells it to their neighbor at retail price; the proposal will now make the solar customer pay for that extra kilowatt when they need it back.
• Net metering and no demand charges make solar viable for users at the residential level.
• There is a concern about the impacts of the changes on low income users in Coconino County.
• The question to ask is if the rate case is an incentive or disincentive for solar.
• These changes have a direct impact on the feasibility of a solar system and the ability for a customer to recoup their investment.
• Go slow and see what happens with the investigation.
• Had the proposed rate design been in place when previous systems were installed it would be far less likely that a customer would move forward.
• Oppose any fundamental change that would make solar less feasible for residential customers.

A written comment card in opposition of the rate case was submitted by Andy Fernandez.

Councilmember Putzova expressed disappointment in the presentation and stated that the City should engage and oppose the rate case. APS is comfortable buying Commissioners because it is legal and that is a problem.

Councilmember McCarthy stated that he is still confused about the proposal and asked that APS better define the terms so they can be easily understood by the public. He stated that he is open to engaging with the Corporation Commission but does not want to support a broad statement of opposition but rather specific things that the City is opposed to. He feels that more information is needed before a resolution could be drafted.

Councilmember Overton stated that if the Corporation Commission could hold a hearing in Flagstaff there would be good interest and participation from the public. The complexities make it difficult to formulate language for a resolution. It would not be unreasonable for the City to present the thoughts of the community at the hearing.

Councilmember Odegaard offered that if the Corporation Commission could hold a meeting in Flagstaff the Council and the community could voice their concerns and have more of a direct impact. It is always challenging when rates have to be increased and it is not an easy thing to do but is often times necessary. He would be interested in a policy that allows solar to be used more readily in the community.

Councilmember Putzova requested that staff very succinctly explain the demand charge and get to the core of what the proposal is requesting.

Mr. Dille offered that it would be good to understand what the community should expect if a hearing comes to Flagstaff. Ms. Scott offered that when the Commission holds a public comment at a location they invite members of the public and invite them to make comments. The Commission would listen to what is said and may ask questions. Additionally, there may be someone there who can speak more technically to questions. Another option for participation is called intervention. The deadline has passed but the Commission will often entertain a late intervention request. Intervention allows the City to participate as a party in the case. Mr. Solomon stated that if intervention is something the Council would like to consider it would be a discussion for executive session.

Vice Mayor Whelan stated that the Council would like to engage with the Corporation Commission and they look forward to a possible hearing in Flagstaff.

A break was held from 9:17 p.m. through 9:25 p.m. at which time Mayor Evans returned to the dais.

Interim Assistant to the City Manager Gail Jackson stated that Federal Lobbyist Bob Holmes and State Lobbyist Richard Travis are on the phone and are available for any questions. Ms. Jackson provided a PowerPoint presentation that covered the following:

STATE & FEDERAL LEGISLATIVE UPDATE
FEDERAL EXECUTIVE ORDERS

Councilmember Overton stated that there is a lot of momentum with some of the Executive Orders recently and asked if there are ways the City might capitalize on them with capital improvement projects. Mr. Holmes stated that one of the things President Trump has proposed is a trillion dollar infrastructure plan to work on roads, bridges and airports. It is definitely an opportunity for the City. He does not think Crongress will approve a trillion dollar plan but there will be an opportunity for infrastructure and is something the City should be watching for. Councilmember Overton stated that the City is well prepared to have things in order to move forward and there may be projects in the que and ready if and when the time is right. It will be important to watch this closely and lobby hard for the City.

Councilmember Odegaard stated that it is important for the Council to pick one project that is ready to go other than the funding. Mr. Copley has identified the Fourth Street Bridge as a priority. He asked if there is anything that should be done to this regard in preparation for the lobbying trip in March. Mr. Holmes stated that it is a great idea to pick one project and focus on that. On the federal level, the one thing that holds things up is environmental reviews. The other thing that is very important is getting on the State's five-year plan; that will help when the City is lobbying for federal funds.

Ms. Jackson continued.

HOUSE BILLS
SENATE BILLS
ADDITIONAL ITEMS

Mr. Travis stated that a series of RICO bills dropped and more are anticipated. If property is seized from a defendant upon conviction the property is sold for cash, the victims are made whole and the balance goes to the arresting and prosecuting agencies. Flagstaff receives funds every year from this fund. There has been a movement to take a look at those practices on how that money is distributed. The bills run from stopping those funds to more reporting and more oversight. Most jurisdictions have a board that oversees the allocation of these funds. Cities have not been singled out as being part of the problem but whatever solution is being discussed will be universal state wide and would have an impact locally.

Councilmember Barotz asked about the bill that would allow candidates to collect petition signatures electronically through an online portal. Mr. Travis stated that he believes this bill is included with a series of other election bills; more and more electronic signature bills are coming through as technology advances.

Councilmember Odegaard asked about the minimum wage bill and if it has any traction. Mr. Travis explained that the bill will probably move through but there will not be any final action until the Supreme Court decision and opinion are issued.

Councilmember Putzova reported that she attended the ECONA and NAIPTA meetings last week. The ECONA staff heard Council and future meetings will be more policy focused. NAIPTA has a lot going on and they are in the process of updating their five year plan.

Councilmember Putzova requested a FAIR item for a discussion about expanding the use of reclaimed water for non-recreational purposes where potable water is being used.

Mayor Evans extended thanks to the snow plow drivers that did a phenomenal job of keeping the streets clear and open. Councilmember Odegaard added that the downtown area looks great.

Coucilmember Barotz clarified the FAIR item she requested is a review of the board and commission member Council appointment process.