Flagstaff City Council on stormwater fee hike to fund flood response: 'We're almost there' (2023)

Since August, the Flagstaff City Council has been evaluating financial plans to keep the city’s stormwater management department afloat. The matter has evoked ample feedback from residents and the business community, and during Tuesday’s work session, Council took another round of staff presentation and public input, deciding ultimately to extend the public discussion through Feb. 14. while citing a desire to thoroughly explore all options.

“This conversation needs to keep going with all information in hand,” said Councilperson Miranda Sweet. “We’re almost there.”

Burdened by increased levels of service and a need for infrastructural improvements caused by catastrophic post-wildfire flooding, the stormwater department is currently drowning in demand with insufficient funds to keep up. The question of how to buoy the department into the future has largely revolved around the best way to balance a stormwater fee adjustment — which would extract funds from Flagstaff residents and businesses — with other funding mechanisms, such as state and federal grants or injections from the city general fund.

The stormwater rate in Flagstaff is currently $3.74 per ERU — or 1,500 square feet of impervious surface. There are about 100,000 ERUs across over 20,000 billed customers in the city, and, according to Schenk, these ERUs are split fairly evenly across residents and businesses.

The average Flagstaff resident is responsible for three Equivalent Rate Units, or ERUs, and pays a monthly fee of $11.22. The average restaurant is responsible for 14 ERUs at $52.36 a month and the average big-box business is responsible for 220 ERUs at $822.80 a month. These rates are at the low end of the spectrum nationally. For comparison, at the high end are cities like Portland, Oregon, where the stormwater rate is about $13 per 1,000 square feet of impervious surface.

While the Flagstaff stormwater department may not approach Portland in population, “we are a relatively complex stormwater utility,” explained stormwater manager Ed Schenk. And with the added stressors of post-fire flooding brought on by the last three years of wildfires, the utility is now operating on a budget that is “unsustainable.”

The department’s current annual capital improvement budget is $600,000. Last year, the department had spent $3.3 million in flood response alone. And while Proposition 441 provided $26 million for flood mitigation in Spruce Wash, the needs in the Pipeline West flood corridor — which primarily impacts Schultz Creek and the Coconino Estates neighborhood — are still outpacing revenue.

Three approaches

With the help of financial consultants, the city has produced three different scenarios in order to bring the stormwater department into a healthy financial status. All three include some level of stormwater fee increase that, according to financial consultant Sanjay Guar, is necessary just to fund current operation and maintenance needs.

“We want to make sure rates at least cover operating costs,” Guar said. “That’s just good business practice.”

Variability in the financial plans mostly concerns capital improvements — infrastructure projects on stormwater systems that are unable to handle the current post-fire flood conditions.

The first scenario proposes to keep stormwater fees at a minimum by limiting infrastructure projects. Still, at the end of six years, the average resident’s monthly rate would increase by about $9.30, the average restaurant by $43.40 and the average big-box business by $682.

The second scenario aims to fund more infrastructure projects, but puts emphasis on the hope that the city can obtain state and federal grants to kick in funding. After six years in this scenario, the average resident’s rate would increase by $12.93, the average restaurant by $60.34 and the average big box by $948.20.

In the third scenario, the stormwater department would look to make sure that the rate provides the department with enough financial independence to pursue all recommended infrastructure projects without the need for grant funding. After six years of this scenario, the average resident’s rate would increase by $15.60, the average restaurant by $72.80 and the average big box by $1,144.

During previous discussions, the Flagstaff Chamber of Commerce came out as staunchly against the proposed fee increases and requested more time to pursue funding opportunities for the state and federal legislatures. That labor has been fruitful.

Last week Chamber of Commerce policy advisor Joe Galli went down to Phoenix alongside Flagstaff Mayor Becky Daggett and Sweet to lobby the Legislature for an inclusion of roughly $9 million in appropriations for Flagstaff in House Bill 2286. Their efforts were successful, and if this bill passes, Flagstaff will see state funding to help compensate for stormwater needs.

Galli also requested that rather than a fee increase on the backs of Flagstaff residents and business, city council redirect some money from the general fund to the stormwater department, continue to lobby for state and federal funding, and consider a “sunset” fee structure that would see fees go down after enough time has passed for the dire needs of flood response has passed.

He said he was feeling “encouraged” by the way the city council was approaching the possibility of outside funding.

“The need is vast,” Galli said. “But I think since we were here last and I had a chance to speak with you, several things have changed. The federal government put $925 million into the Emergency Watershed Protection Program. They also gave the United States Forest Service $200 billion to fix the problems on the forests.”

“We got another shot in the arm,” Galli said. “Let’s make the most of that opportunity.”

Better to make sure we’re self-sufficient then rely on state and federal funds, said Michele James, executive director of nonprofit Friends of Flagstaff’s Future.

“We support scenario three,” James added. “It addresses all the necessary capital improvement projects, thus reducing the overall flood response costs and operation costs in the long term. If federal grant funding is provided to the city for any or all of the seven projects that are outlined, Council could revisit and lower the overall rates in subsequent years to reflect that reduction in need.”

But reduction in need is not guaranteed.

“Climate scientists predict conditions in northern Arizona will continue to worsen, resulting in drier forests, larger and more intense wildfires, and increased precipitation in the form of rain,” James added. “Proactive action by the Council now will reduce the cost and property impacts in the near term and the long term and increase the city’s resiliency.”

In the long run, it’s easier to lower rates than raise them, Schenk said, bring light to an argument for raising them higher now then lowering them in the event of a “windfall” from grants or other appropriations.

Times are changing

These various dynamics — a scheduled “sunset” of fees after an increase and the possibility of future state and federal funds — were enough to convince Council that more time was needed to discuss the best path forward.

“We have a budget retreat this Thursday and Friday where I’m sure we will be exploring other ways to add dollars to our stormwater needs,” Sweet said. “I believe it is prudent that we take these things into consideration and work on all angles to get our needs met.”

As for the residents in the Pipeline West flood corridor, getting their needs met is still a good ways out. In large part, remediating flooding in the Coconino Estates neighborhood can be traced to one major project, which is the improvement of the Highway 180 Schultz Creek culvert, and which the city is working “as quickly as possible,” Schenk said.

“We hope to have a final design for end of April, early May at the latest,” Schenk said. “Due to that we will not be able to complete before monsoons unless there’s a true act of God and we can get a construction company and that can construct that quickly.”

To make matters worse, the same emergency mitigations utilized last monsoon season might not be available in the season to come. Resources are simply stretched too thin across both the city and Coconino County, which is dealing with its own post-fire flooding issues in the Pipeline East flood corridors.

“Last year the flood control district did provide us with 1.1 million sandbags; those roughly cost $2.70 per sandbag,” Schenk said. “I have heard from the [county] flood control district that we should not expect that level of support in the future.”

For Coconino Estates resident Tom Pearson, this reality is a grim indictment of governmental function.

“To me, you have two sacred priorities and that is public safety and infrastructure to allow the community to function,” Pearson said. “And this, I believe, pertains to both of your sacred duties.”

He added: “I talked to Ed late last year about the plan for the culvert. To tell us that we need to start filling those sandbags because we’re going to need them again tells me that you have let us down on your sacred duty.”