OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Mesa City Council Study Session - November 6, 2025: Water Fees, Utility Rates, ARPA, Homelessness

Council Study Sessions — Thursday, November 6, 2025
BodyMesa, Arizona
SessionCouncil Study Sessions
DateThursday, November 6, 2025
StatusFILED
Video Record
0:00 / 3:06:14

Transcript — Verbatim
0:00

Welcome to the Mesa City Council study session for November 6, 2025.

0:05

Councilmember Duff will be joining us later.

0:07

Otherwise, all council members are present.

0:09

So with that, we'll begin with a presentation on what water and wastewater capacity fees, recommended utility rate adjustments.

0:18

So that's one A.

0:20

Ryan and Chris.

0:40

All right, good morning, Mayor and Council.

0:43

We just wanted to give a a brief update uh on the capacity fee and the utility rates before they are uh introduced on uh November 17th.

0:54

So my name is Brian Richel.

0:56

I'm the Office of Management and Budget Director, and along with me uh who's gonna talk about the capacity fees is Chris Hassart, who is the water resources director.

1:05

And what we'll do is we'll start off with the uh water and wastewater capacity fee update.

1:11

Okay, thanks, Brian.

1:12

Good morning, Mayor, Vice Mayor Council.

1:14

Um, so as Brian mentioned, I want to give a quick overview on the capacity fee.

1:19

We've talked about this in in great detail already um on various occasions, but there's a couple updates we want to bring forth to you this morning.

1:28

Um first a quick overview um of of why we developed this fee.

1:33

Um it's to really raise 400 million dollars over the next decade or so, and this is to fund all growth, water and wastewater growth infrastructure that's needed.

1:43

Uh as we've talked about before, um, as we stand today, all of our systems are sized appropriately for our existing customer base.

1:52

So if we weren't expanding um anymore in the city, if we weren't developing any vacant parcels, we wouldn't have the need to build any new pipelines, expand plants, anything like that.

2:02

So this 400 million dollars uh developed through our integrated master plan is really focused on new infrastructure for for growth.

2:11

Um also again, this is a one-time charge.

2:14

So as a new development comes in, it would pay a one-time charge, which is the capacity fee, and it would be for their portion of this future growth.

2:24

So what we really want to get into today is some of the developments we've had over the last several weeks, and it's really outreach to the development community, those stakeholders, and having in-depth discussions with them, um, answering their questions and so forth.

2:40

So you can see from these bullets, this is a representation of the different development community representative stakeholders that we met with.

2:48

We had a couple in-person meetings.

2:50

Um, there was also other communications.

2:52

But we what we talked about is really the intent of the fee with them.

2:57

We went over in detail the methodology we use for the capacity fee, and then of course, we answered any questions uh in order to try to address their concerns.

3:08

So with that.

3:11

So in those discussions, it it really became apparent that the development community stakeholders, they were they were holding pretty firmly to uh a process different than the capacity fee.

3:25

So there's a separate statute that that speaks to development impact fees.

3:30

It's similar, it's uh I would say it's in the same family, but it's a different process.

3:35

Uh it's not the process that best fits our objectives here in Mesa.

3:40

Um, so they they stuck pretty firmly to that, didn't offer too much in the way of compromise, but there was an exception.

3:48

There's a single family home builder that does a lot of work here in Mesa.

3:52

They're pretty pop prominent home builder.

3:55

And they did offer um constructive feedback.

3:59

They did um feel that Mesa is justified in the in the path that we're taking with the capacity fee, they understood it.

4:06

And they also offered some some middle ground solutions that we could work with.

4:11

Uh so in the spirit of that, uh, we're here today to offer two modifications to the draft ordinance.

4:19

So Chris, before you start, maybe you can explain the difference between I know we're moving forward with the capacity growth fee, but the impact fee.

4:27

How what's the timelines on the two and and how one maybe supersedes the other?

4:33

Is there some sure mayor and council?

4:37

Let me first say that they don't they're they're they're different but similar at a conceptual level, they're very similar in that it's to have uh future development uh pay for itself um as it impacts the um infrastructure for for the utilities.

4:52

So at that l at that sort of very high level, they're conceptually the same.

4:56

They're just a way to do the fee under two different statutes.

5:00

Um the impact fee statute has a more I would describe it as a more rigid process, and it has a very long grandfathering process in which um it's it's basically a two-year oversimplification, it's a two-year grandfathering process.

5:13

And right now, since the city has no impact fee, it would grandfather in zero for for two years for many people.

5:20

And so um most cities obviously have an existing impact fee, so when they grandfather in for two years, that you're really grandfathering in an old impact fee in amount, not zero.

5:30

And so that obviously means for if we were to go that route for two years, development wouldn't be paying for um their impact on the infrastructure, and so uh that obviously was one a factor, one of the factors, and looking at what what was the appropriate route to bring to council.

5:45

And so um the capacity fee is uh there's other municipalities that have it, and it's as we've discussed before, it's been upheld um in a case involving the city of Lag staff.

5:57

And mayor, I'll just add that um we've we've heard the feedback from council that there's interest though, because impact fees cover a broader spectrum of services besides just water and wastewater.

6:09

So staff um based on some of that feedback that council would like to see those other areas uh looked at.

6:16

We we will be entertaining um a study to begin the process next year to introduce impact fees in the future.

6:24

So just know that it's not an either or now we wouldn't have an impact fee for water and wastewater and have a capacity fee if we were to go that route, but that that's a long process.

6:35

It'll take about a year to do the study, have it and get council approval on that, and then as Jim alluded to, the uh two-year grandfathering um process that that occurs.

6:45

So we're really talking three years um that um this develop development, new development would not be uh paying for itself or paying anything uh towards this, it would be subsidized by existing homeowners and ratepayers, and so we just did not think that was fiscally responsible for the city to allow that to happen.

7:04

Good.

7:04

Thanks for explaining the timelines.

7:07

Right.

Discussion Breakdown — Share of Meeting
Homelessness█████████████████████████████████33%
Water And Wastewater Management████████████████████████████████32%
Fiscal Sustainability█████████████13%
Community Engagement████████8%
Public Safety████4%
Public Engagement██2%
Affordable Housing██2%
Housing█1%
Parks and Recreation█1%
Summary of Proceedings

Mesa City Council Study Session - November 6, 2025

This study session covered three major items: water and wastewater capacity fees and utility rate adjustments, an update on American Rescue Plan Act (ARPA) funds, and a comprehensive presentation on the city's response to homelessness. The council also heard current events and conference reports.

Discussion Items

  • Water and Wastewater Capacity Fee Update (1A)

    • Director Brian Richel and Water Resources Director Chris Hassart presented an update. The capacity fee aims to raise $400 million over ~10 years for growth-related water and wastewater infrastructure. The fee is a one-time charge for new development to ensure growth pays for itself.
    • Staff met with development community stakeholders. Most were resistant, preferring an impact fee process (which has a longer grandfathering timeline). However, one prominent single-family homebuilder offered constructive feedback and suggested middle-ground solutions.
    • Two modifications to the draft ordinance were proposed: (1) grandfathering any development that submits a completed permit application before January 1, 2026, exempting them from the fee; (2) offering a 50% discount on the fee for 3/4-inch and 1-inch meters for the first six months, benefiting single-family homes and small businesses.
    • The fee for a typical single-family home (3/4-inch meter) is set at approximately $9,500, placing Mesa in the lower-middle range compared to neighboring cities (e.g., Tempe $4,000–$5,000, Gilbert $18,000, Phoenix up to $30,000 in some zones).
    • The alternative of an impact fee would delay cost recovery by about three years (one year for study, two-year grandfathering), putting the burden on existing ratepayers.
    • Next steps: Introduction of the ordinance on November 17, council adoption on December 1, effective January 1, 2026.

  • Utility Rate Adjustments (1A continued)

    • Staff presented a recommended rate adjustment for water, wastewater, solid waste, gas, and electric. With the capacity fee, the overall residential increase was reduced from an initial 5.5% to 3.5% (service charge + usage), equating to an average monthly impact of $5.77 for a typical customer (6,000 gallons/month).
    • Councilmember Adams proposed a scenario to avoid any residential increase this year by shifting the burden entirely to commercial and commercial landscape customers. Staff agreed to run multiple scenarios (zero residential, zero residential + multi-unit, and others) and report back at the next study session on November 13.
    • Vice Mayor Summers raised concerns about unintended consequences: higher commercial rates would increase costs for HOAs (landscape), potentially lead to water waste, and affect city buildings paid from the general fund (sales tax dependent).
    • Councilmember Spilsbury advocated for the current incremental approach, noting other cities are adopting Mesa's model to avoid large future spikes.
    • Staff noted that the notice of intent (NOI) limits the maximum rates; they will bring analysis to the November 13 study session to allow possible adjustments before introduction on November 17.

  • ARPA Fund Update (1B)

    • Finance Director Irma Ashworth reported the city received $105 million in ARPA funds, all obligated by the December 31, 2024 deadline. As of September 30, 2025, $92 million has been spent, leaving $13 million to be spent by December 31, 2026.
    • Completed projects include: PD Real-Time Crime Center, 911 mental health response, energy commodity cost relief, United Food Bank distributions, Business Builder at the Studios, and premium pay for essential workers.
    • Active projects: downtown Wi-Fi broadband (~90% complete), restaurant incubator, Leaf/East Valley Men's Center expansion, Hellman House transitional housing, Phoenix Rescue Mission heat relief, and the Off the Streets program (Windemere/Sunair).
    • Interest earned on ARPA funds totals $4 million. This interest is being used for payroll on construction contracts after the obligation deadline, unanticipated infrastructure costs, and furniture for the Sun Air facility ($750,000). At program closeout, any remaining interest will transfer to the general fund.
    • Councilmember Goforth requested dollar amounts by project, which staff provided separately.

  • Homelessness Response Overview (1C)

    • Lindsay (Office of Homeless Solutions) along with court staff (Danica Sanchez, Sean Flam) and public safety liaison Jason Flam presented a detailed overview.
    • History: Prior to 2018, the city relied on cite/release and arrest cycles. Community Court began in 2018 after the Martin v. Boise ruling. The Off the Streets (OTS) program started in May 2020 using COVID CARES funds. The Office of Homeless Solutions was established in 2022. The Grants Pass ruling in 2024 lifted shelter requirements for enforcement.
    • Trends: Number of Mesa residents seeking homeless services has risen steadily. Countywide data shows for every 10 people placed in housing, 19 new individuals become homeless. Eviction rates in Mesa are rising; estimated ~10,000 for FY2024 (two months missing). Rents and mobile home lot rents have increased sharply.
    • Programs:
      • Community Court (pre-adjudication): Participants work with navigators to address root causes (IDs, housing, treatment). Recidivism rates improved: from 15% in 2023 to 5% in 2024 for community court; from 19% to 11% for SMI (seriously mentally ill) court. Graduation numbers decreased due to higher readiness standards.
      • Heat Safety: In 2025, the city operated portable AC loan program (48 households served), heat safety transport service, 22 cooling locations, and an emergency AC replacement program (64 units). Heat-related deaths decreased from 55 (2024) to 34 (2025 as reported). Resurrection Street Ministries had over 13,000 visits (3,257 unique individuals; 88.5% unhoused, 483 age 60+, 98 under 18).
      • Street Outreach: 12 Phoenix Rescue Mission navigators operate 7 days/week up to 16 hours. From July–September 2025, they engaged 719 people; placed 31 in PRM residential, 77 in other shelters, 24 in permanent housing; 96 entered recovery programs (Feb–Sep). Transportation provided 431 times.
      • Off the Streets Program: Currently rents 85 rooms at Windemere Hotel. Moving to Sun Air property (64 rooms) in spring 2026. Positive exit rate is 85% (clients move to next positive housing step, not back to homelessness). The new property will have enhanced security (fence, single entry) and will serve seniors, families, and domestic violence survivors. Single women experiencing homelessness (over 90% have domestic/sexual violence history) will qualify. Single men not in these categories will be referred to East Valley Men's Center or other resources.
    • Councilmember Adams questioned tracking by race; staff noted it is HMIS system data used to ensure balanced service and combat perceptions. Councilmember Spilsbury praised the program's human approach. Councilmember Duff highlighted the 85% success rate and the holistic program model.

  • Current Events and Conferences

    • Councilmembers reported attending: United Food Bank Breakfast, Greater North Fulton Chamber Summit, EVIT Foundation Breakfast, Shamrock Food Warehouse grand opening, groundbreakings, and community events. The Veterans Day parade is Tuesday, November 11. The annual BBQ Classic takes place in downtown Mesa November 7-8.

Key Outcomes

  • Capacity Fee: Staff will bring the draft ordinance for introduction on November 17 with the two proposed modifications. The fee is set for adoption December 1, effective January 1, 2026.
  • Utility Rates: Staff will present scenario analyses (zero residential increase, zero residential + multi-unit, etc.) at the November 13 study session. Based on that direction, the rate ordinance will be introduced on November 17. The Notice of Intent sets maximum rates that can be adopted; increasing commercial rates above the NOI would require a new 60-day notice.
  • ARPA: All funds are obligated; remaining $13M must be spent by December 2026. Interest earnings will cover unanticipated costs; remaining interest will go to general fund after closeout.
  • Homelessness: Council acknowledged the programs and their effectiveness. The transition from Windemere to Sun Air will continue. Staff will provide data on Mesa residency of OTS participants as requested.
  • Next Meeting: Study session on November 13 at 7:30 a.m. to review utility rate scenarios.

Meeting Transcript

Welcome to the Mesa City Council study session for November 6, 2025. Councilmember Duff will be joining us later. Otherwise, all council members are present. So with that, we'll begin with a presentation on what water and wastewater capacity fees, recommended utility rate adjustments. So that's one A. Ryan and Chris. All right, good morning, Mayor and Council. We just wanted to give a a brief update uh on the capacity fee and the utility rates before they are uh introduced on uh November 17th. So my name is Brian Richel. I'm the Office of Management and Budget Director, and along with me uh who's gonna talk about the capacity fees is Chris Hassart, who is the water resources director. And what we'll do is we'll start off with the uh water and wastewater capacity fee update. Okay, thanks, Brian. Good morning, Mayor, Vice Mayor Council. Um, so as Brian mentioned, I want to give a quick overview on the capacity fee. We've talked about this in in great detail already um on various occasions, but there's a couple updates we want to bring forth to you this morning. Um first a quick overview um of of why we developed this fee. Um it's to really raise 400 million dollars over the next decade or so, and this is to fund all growth, water and wastewater growth infrastructure that's needed. Uh as we've talked about before, um, as we stand today, all of our systems are sized appropriately for our existing customer base. So if we weren't expanding um anymore in the city, if we weren't developing any vacant parcels, we wouldn't have the need to build any new pipelines, expand plants, anything like that. So this 400 million dollars uh developed through our integrated master plan is really focused on new infrastructure for for growth. Um also again, this is a one-time charge. So as a new development comes in, it would pay a one-time charge, which is the capacity fee, and it would be for their portion of this future growth. So what we really want to get into today is some of the developments we've had over the last several weeks, and it's really outreach to the development community, those stakeholders, and having in-depth discussions with them, um, answering their questions and so forth. So you can see from these bullets, this is a representation of the different development community representative stakeholders that we met with. We had a couple in-person meetings. Um, there was also other communications. But we what we talked about is really the intent of the fee with them. We went over in detail the methodology we use for the capacity fee, and then of course, we answered any questions uh in order to try to address their concerns. So with that. So in those discussions, it it really became apparent that the development community stakeholders, they were they were holding pretty firmly to uh a process different than the capacity fee. So there's a separate statute that that speaks to development impact fees. It's similar, it's uh I would say it's in the same family, but it's a different process. Uh it's not the process that best fits our objectives here in Mesa. Um, so they they stuck pretty firmly to that, didn't offer too much in the way of compromise, but there was an exception. There's a single family home builder that does a lot of work here in Mesa. They're pretty pop prominent home builder. And they did offer um constructive feedback. They did um feel that Mesa is justified in the in the path that we're taking with the capacity fee, they understood it. And they also offered some some middle ground solutions that we could work with. Uh so in the spirit of that, uh, we're here today to offer two modifications to the draft ordinance. So Chris, before you start, maybe you can explain the difference between I know we're moving forward with the capacity growth fee, but the impact fee. How what's the timelines on the two and and how one maybe supersedes the other? Is there some sure mayor and council? Let me first say that they don't they're they're they're different but similar at a conceptual level, they're very similar in that it's to have uh future development uh pay for itself um as it impacts the um infrastructure for for the utilities. So at that l at that sort of very high level, they're conceptually the same. They're just a way to do the fee under two different statutes. Um the impact fee statute has a more I would describe it as a more rigid process, and it has a very long grandfathering process in which um it's it's basically a two-year oversimplification, it's a two-year grandfathering process. And right now, since the city has no impact fee, it would grandfather in zero for for two years for many people. And so um most cities obviously have an existing impact fee, so when they grandfather in for two years, that you're really grandfathering in an old impact fee in amount, not zero. And so that obviously means for if we were to go that route for two years, development wouldn't be paying for um their impact on the infrastructure, and so uh that obviously was one a factor, one of the factors, and looking at what what was the appropriate route to bring to council.

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