Sedona Residents can expect a slight reprieve on their monthly bills from Arizona Water Company following a 5-1 vote by the Sedona City Council on Oct. 28, to suspend collecting a 3% payment from AWC and instead providing that 3% as a credit on users’ bills.
“For the smallest residential users, the city’s franchise fee credit would reduce the overall bill by about $1.13 a month and $13.62 a year,” the council agenda packet reads. “For the larger residential user, the city’s franchise fee credit would reduce the overall bill by about $10.86/month and $130.32 a year. For the hotel with a pool, the city’s franchise fee credit would reduce the overall bill by about $401 a month and $4,812 a year.”
“By waiving the 3% franchise tax … basically, that’s equivalent to mitigating 45% of the increase of the $6 million imposing on imposed on Sedona customers,” AWC Vice President of Rates and Revenue Nick Liu said to council
Sedona voters last November approved Proposition 481, a 25 year franchise agreement for AWC to use the city’s public rights-of-way to supply water to residents, and the 3% franchise fee is the city’s compensation for AWC’s use of the public rights-of-way and easements.
The city will forgo what had been about $200,000 annually before the rate increase, an amount that would now be approximately $300,000, according to City Attorney Kurt Christianson, who added that the funding was going to the city’s general fund and that the monies previously were earmarked for fire hydrants “and still is technically earmarked for fire hydrants, but we have not actually used it for,” those in the last seven or eight years.
How that loss of $300,000 in revenue will be planned by the city has not yet been determined and will be addressed during future budget discussions.
“We have no areas of the budget to make up for that and aren’t increasing a tax somewhere else,” Deputy City Manager Lauren Browne subsequently wrote.
“The ACC, which I want to remind members of the public is an elected body, and every election since they’re staggered terms, you have the opportunity to vote with your voice,” Interim Mayor Holli Ploog said. “I think the ACC was vindictive against Sedona. … This is the first time in known memory that they went against [their] staff recommendation. The staff did not recommend that $6 million be attributed solely to Sedona. They followed the commission standard practice, which they actually implemented themselves to spread this across all their customers, and they had to take an action specifically to change a procedure and a process and a philosophy specifically to harm our residents.”
Following the council’s vote, Ploog stressed the action is “to support the residents against this egregious action by the ACC.”
ACC Chairman Kevin Thompson [R] painted the differential rate for Sedona customers as “a strong signal” to “all water companies, local governments, and residents moving forward that if you require special conditions or place limitations on infrastructure based upon aesthetic preferences, you may be responsible for those extra costs,” he wrote a July.
Other AWC customers across its Northern Group saw their bills get hiked by 34% by the ACC’s decision.
Councilman Pete Furman was the dissenting vote and one member of the public spoke in support of the 3% credit with no one speaking against it.
“I’m reminded that my understanding of this rate increase and the way the ACC works is that [the franchise fee] is recouping money that’s already been spent,” Furman said ahead of his vote. “It’s a reminder to us all that running cities and providing services, whether it’s AWC providing it or we’re providing it through our wastewater. We’re going to face this here a few months as we talk about the wastewater increase. For the small residential user, $1.13 a month isn’t going to be noticeable.”
Christianson said the franchise fee is currently the only mechanism the city has with regards to AWC’s customer bills.
“I do support this amendment, because I do think it is an offset of what was an unfair increase,” Councilwoman Kathy Kinsella said. “The reason the increase is unfair, in my opinion, is because the ACC overstepped its authority. … We’re a government that I think can try to act responsibly in trying to offset some of that damage. And this damage isn’t just about 3 or $4 in somebody’s pocket. It’s damage to the credibility of how governments analyze, assess and implement.”
The impetus for the franchise fund was as the city grew to help fund more fire hydrants.
“But the city’s done just a fantastic job and more so Oak Creek Water and Arizona Water and Big Park Water and the other companies to work with us as we improve areas, to add fire hydrants,” SFD Chief Ed Mezulis said to the NEWS following the vote. “There may be some spots in town where there may be opportunities to partner to improve water infrastructure, and [we have] not really determined spots yet.” But there “might be an opportunity for kind of a public-private partnership with some of the water companies to identify areas that might be able to expedite some projects that will improve fire flow.”
Mezuils said he sees opportunities to improve fire flow in the city by updating to a “modern infrastructure” in wildcat subdivisions that predate the city’s 1988 incorporation in Uptown and along 179.
