City Council Meeting - FINAL


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  10.A.       
Meeting Date: 11/15/2022  
Co-Submitter: Brad Hill From: Edward Schenk, Water Services Manager - Stormwater

Information
TITLE:
Consideration and Adoption of Ordinance No. 2022-32:   An ordinance of the City Council of the City of Flagstaff, amending the Flagstaff City Code, Title 12, Floodplains, Chapter 12-02, Stormwater Management Utility, by amending Section 12-02-002-0003, Schedule of Stormwater Management Utility Service Charges and Fees; providing for repeal of conflicting ordinances, severability, penalties, authority for clerical corrections, and establishing an effective date
STAFF RECOMMENDED ACTION:
At the November 15, 2022 Council Meeting:
1) Open the Public Hearing
2) Read Ordinance No. 2022-32 by title only for the first time
3) City Clerk reads Ordinance No. 2022-32 by title only (if approved above)
At the November 29, 2022 Council Meeting:
4) Continue the Public Hearing
6) Read Ordinance No. 2022-32 by title only for the final time
7) City Clerk reads Ordinance No. 2022-32 by title only (if approved above)
8) Adopt Ordinance No. 2022-32
Executive Summary:
This meeting serves as the first read of Ordinance 2022-32 and provides a public hearing for said Ordinance. This action adopts an ordinance increasing Stormwater service charges (rates). An equivalent rate unit (ERU) equals 1,500 square feet of impervious area on a property. Stormwater service charge increase is necessary to adequately fund pre-monsoon season flood preparation, flood response, operations, maintenance, and priority capital improvement projects. 

Staff developed stormwater rate alternatives for Council to consider which including a staff recommended option of increased capital projects through rates, and other options including an option for limited capital projects through rates and debt financing with a rate funded match for potentially grant funded capital projects, and an option for very limited future capital based on only highest priority projects in the next three years. These options are listed in the draft Ordinance as well as in the attached presentation.
Financial Impact:
The City is recognizing the need to establish appropriate stormwater rates that will allow for the Stormwater Fund to remain solvent following flood response and Capital Improvements from post-wildfire flooding as well as regular operations of the Stormwater Utility. An increase in stormwater rates is needed in order to meet future operating expenditures, provide funding for priority capital improvements and provide sound fiscal management to the Stormwater Fund.
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:
On August 23, 2022, City Council adopted Resolution 2022-44, a Notice of Intent to increase Water Services rates or rate components, fees or service charges. 

On October 25, 2022, during the Council work session staff presented results of the Stormwater Rate Adjustment Report and current scenarios for rate increases. 
Options and Alternatives:
Alternatives are being considered to provide various levels of service to the community with the understanding of enhanced operations and maintenance due to recent flood events and new infrastructure.
  • Adopt Ordinance No. 2022-32 as proposed.
  • Postpone the public hearing to a date certain and the adoption of Ordinance No. 2022-32 and provide staff direction.
  • Amend and adopt Ordinance No. 2022-32 and direct staff to modify the capital improvement plan and drainage maintenance program.
  • Do not adopt Ordinance No. 2022-32 and have staff delay capital improvement projects and reduce the drainage maintenance program.  This action will greatly limit staff's ability to continue to address flood preparation, response, and necessary maintenance with the current ($3.74/ERU) Stormwater rate.
Background/History:
The Stormwater Section was created in 2003 as a separate utility. The utility has undergone many changes since its inception with a drastic increase in expenses and level of service following the Museum Fire of 2019 and Pipeline Fire of 2022. The need for an increase in the rate is in relation to these fires, inflationary pressure, increased infrastructure maintenance needs, and continued flood response costs. This rate was evaluated by an outside consultant, Water Resources Economics, and was reviewed by Staff for appropriateness in terms of community level of service.
Key Considerations:
Current Stormwater rates are insufficient for continuing pre-monsoon season flood preparation or monsoon flood response.  Current rates are insufficient for funding the Highway 180 at Schultz Creek culvert. The City has several basins to help mitigate flood levels in our community and are expected to collect sediment and debris from the fire burn areas.  Current rates are insufficient for the large increases in maintenance costs that will be incurred from the construction of the Killip School Regional Detention Basins, Schultz Creek Basins, Francis Short Pond Basin and Park Way Basins. 
Expanded Financial Considerations:
Current Stormwater rates are insufficient for continuing pre-monsoon season flood preparation or monsoon flood response.
Current rates are insufficient for funding the Highway 180 at Schultz Creek culvert.
Current rates are insufficient for the drastic increase in maintenance costs that will be incurred by the new Killip School Regional Detention Basins, Park Way Basins, and Schultz Creek Basins.
Community Benefits and Considerations:
Establishing a fiscally secure Stormwater Fund will provide for flood response and post-fire long term mitigations that will reduce repetitive funding. The Fund will continue to support the Rio de Flag Flood Control Project, FEMA regulatory compliance, and stormwater development review.
Community Involvement:
A public notice and the Stormwater Rate Adjustment report was made available to the public on September 16, 2022.  A Stormwater page has also been created to provide additional information on the rate adjustment.   Staff has reached out to the community for opportunities to provide a roadshow presentation to groups.  Community forums were scheduled to allow for the public to attend in-person or virtually.  This rate adjustment had several public meetings and previous Council discussion on October 25, 2022.
Attachments
Ord. 2022-32
Stormwater Rate Report
Stormwater Rate Presentation


    

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