Flagstaff water commission: stormwater utility remains on course despite rising capital costs

FLAGSTAFF, Ariz. — The Flagstaff Water Commission on Oct. 16 heard a midterm financial review showing the city’s stormwater utility remains largely on track despite substantially higher capital costs.

Consultant Sanjay of Water Resources Economics told commissioners the 2023 rate study projected a 12% annual rate increase through January 2028 and that revenues have grown because the number of equivalent residential units (ERUs) rose about 17% over three years. "We have a lot more ERUs, 17% over the 3 years, so that's a $4,000,000 increase," Sanjay said. He also said capital spending has grown faster than expected, producing a larger cash‑funded capital program; the three‑year cash (rate‑funded) capital projection rose by roughly 32%, about $5.1 million.

The consultant summarized the net effect as roughly balanced: higher revenues and slightly lower operating or debt service in some areas offset larger capital needs, leaving an ending balance change the presentation showed at about $435,000. "You're still on the course," Sanjay said, adding a technical memo with details was available.

Why costs rose: commissioners asked whether the added capital reflected new projects or price escalation. Staff and the consultant attributed most of the increase to construction inflation. "I would say it's a little bit of both, but mostly it is construction inflation," Ed Shank, stormwater section director for the City of Flagstaff, said, noting construction costs have increased markedly since pre‑COVID levels.

Projects named in the discussion included Mead Lane — a Coconino Estates drainage project the city expects to finish this year — and the long‑planned Rio de Flag flood control project. Shank said the city has secured a local match for the Rio de Flag project and is still negotiating necessary agreements with the Army Corps of Engineers and BNSF; timing for construction remains uncertain. He said the Rio de Flag portion of capital costs is largely debt‑driven and that there may be additional city costs to be allocated across funds or paid from other sources.

Strategic plan progress: Shank presented a midterm review of the stormwater strategic plan (2023–2028), listing nine strategic objectives and two‑plus years of progress. Items the presentation credited as complete or substantially advanced included Schultz Creek post‑wildfire capital work, substantial completion of a roughly $40 million Spruce Wash project suite (expected complete by spring 2026), dredging in the Rio de Flag at Cheshire, pre‑fire watershed risk assessments (including Observatory Mesa and Mount Elden south slope work), conceptual designs for the Big Fill Lake/BNSF backwater area, and a Shadow Mountain detention basin design.

Operations and warning systems: Shank said the utility operates one of Arizona’s largest early‑warning networks (more than 30 gauges) and has grown stormwater maintenance capacity. The city has expanded staff by about 2.5 full‑time equivalent (FTE) positions in operations — to roughly five FTEs (one supervisor and four operators) — and has adopted new standard operating procedures, updated inspection forms for regional basins, and moved drainage investigations into the City Works computerized maintenance system (now Trimble Unity).

Floodplain mapping and insurance: Commissioners asked how completed or planned mitigation would affect FEMA flood maps and insurance rates. Shank stressed there are multiple floodplain definitions (FEMA Special Flood Hazard Area, administrative floodplain, rural floodplain overlay) and that FEMA’s Risk Rating 2.0 actuarial model has made insurance pricing less transparent. He said some local remapping — for example, Coconino Estates/Shoals Creek — could benefit property owners, while other remapping (Spruce Wash) is more complex and will depend on FEMA reviewers and updated hydrology.

Public safety tools: The commission discussed flood alert sirens installed for Sunnyside; Shank described the current manual activation process during monsoon season whereby staff monitoring gauges call county emergency management to sound sirens. He said typical travel times for runoff from the mountains to the city vary (about 30–60 minutes depending on saturation), and that in high‑intensity local storms the National Weather Service or the county would likely issue flash‑flood warnings first.

What’s next: Staff said the presentation is a dry run for a Nov. 4 presentation to Flagstaff City Council and that the technical memo and slides will be posted with the council packet. Commissioners asked for additional details on project scopes, funding splits, and potential future city obligations for the Rio de Flag project.

Votes at a glance: The commission approved minutes from its Sept. 18, 2025 meeting by motion and second; the motion carried with all members present voting in favor.

Local context: The presentation emphasized post‑wildfire flood mitigation (Schultz Creek, Spruce Wash), continued investment in gauges and early warning, and a shift toward larger, rate‑funded cash capital programs. Commissioners asked staff to clarify which costs will remain with the stormwater enterprise fund and which might be covered by other funds or external grants as projects move toward construction.