City Council Meeting - FINAL


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  10.C.       
Meeting Date: 01/03/2023  
From: Edward Schenk, Water Services Manager - Stormwater

Information
TITLE:
Consideration and Approval of Contract: Ratification of a Contract for Professional Services with Water Resources Economics in an Amount Not to Exceed $65,000 for a Stormwater Utility Rate Adjustment Study
STAFF RECOMMENDED ACTION:
  1. Staff recommends Ratification of a Contract for Professional Services with Water Resources Economics in an Amount not to Exceed $65,000 for a Stormwater Utility Rate Adjustment Study; and
  2. Authorize the City Manager to execute the necessary documents.
Executive Summary:
The Stormwater Utility is funded through a Stormwater utility rate implemented in 2003. The City began working with Water Resources Economics (WRE) to conduct a stormwater utility rate assessment in the spring of 2022. The purpose of the arrangement was to determine the necessary rate income needed to support post-wildfire flood response, flood mitigation, capital improvements, and operations and maintenance of new regional flood control detention basins.

WRE conducted work and assisted staff to present utility rate scenarios to the City Council on October 25, 2022 and November 15, 2022 at City Council meetings. At the November 15 meeting the City Council directed staff to return on January 31, 2023, to present additional model scenarios. Staff has continued to engage WRE in preparation for the upcoming presentation to City Council. The overall cost of for the services will exceed $50,000, thereby, necessitating that City Council ratify the underlying arrangement.
Financial Impact:
The $65,000 "not to exceed" compensation for the contract will be charged to 206-08-331-1250-0-4206 in the Stormwater Fund's operations program in Fiscal Year 2022-2023. As this contract was not budgeted for as part of the FY2022-23 budget, capital reserves in 202-08-370-3177-0-4421 will be utilized for budget appropriation purposes.
Policy Impact:
Consideration of the level of funding for Stormwater operations and flood mitigation capital projects.
Connection to PBB Priorities/Objectives, Carbon Neutrality Plan & Regional Plan:
Priority Based Budgeting Priorities
  • Sustainable, Innovative Infrastructure: Deliver outstanding services to residents through a healthy, well maintained infrastructure system
  • High Performing Governance: Enhance the organization’s fiscal stability & increase efficiency & effectiveness
Regional Plan:
  • Goal WR.2.2 Maintain and develop facilities to provide reliable, safe and cost-effective stormwater services.
Carbon Neutrality Plan
  • Community Resilience: Ensure all mitigation actions improve Flagstaff’s ability to adapt to the future.
Community Resilience: Strengthen existing community systems to create resilience to both short-term shocks and long-term change.
Has There Been Previous Council Decision on This:
  1. On August 23, 2022, the City Council adopted Resolution 2022-44, a Notice of Intent to increase Water Services rates or rate components, fees or service charges.
  2. On October 25, 2022, during the City Council Work Session, staff and WRE presented results of the Stormwater Rate Adjustment Report and current scenarios for utility rate increases.
  3. On November 15, 2022, during the City Council Work Session, staff and WRE presented three (3) utility rate scenarios based on recommendations and requests from the October 25 meeting. City Council deferred a decision until January 31, 2023 and requested further utility rate scenarios.
Options and Alternatives:
  1. Ratify the Contract for Professional Services with Water Resources Economics in an Amount Not to Exceed $65,000 for services provided and additional adjustment study modeling, scenario building, and reporting; or
  2. Reject the Contract which would delay the presentation of the additional information at the January 31, 2023 Work Session.
Background/History:
The Stormwater Section was created in 2003 as a separate utility. The utility has undergone many changes since its inception, including, a drastic increase in expenses and level of service following the Museum Fire of 2019 and Pipeline Fire of 2022. Staff has asserted the need for an increase in the rate because of the cost to respond to those fires, inflationary pressure, increased infrastructure maintenance needs, and continued flood response costs. For example, the ability to fund the Highway 180 at Schultz Creek Culvert projects and the ability to maintain flood basins as they collect sediment and debris from the fire burn areas. This necessary maintenance will include the Killip School Regional Detention Basins, Schultz Creek Basins, Francis Short Pond Basin and Park Way Basins. 

WRE was engaged to evaluate the utility rate and has conducted research and made presentations to the City Council. Now, the City Council has requested additional information which will raise the overall cost of for the services above $50,000, thereby, necessitating that City Council ratify the underlying arrangement.
Key Considerations:
Current Stormwater utility rates are insufficient for continuing pre-monsoon season flood preparation or monsoon flood response. The services provided by WRE to conduct a rate study is required for adjusting Stormwater rates in an equitable, transparent, and planned fashion.
Attachments
Contract for Professional Services


    

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