Prescott approves water service for 107-room hotel, 90-unit apartments, subdivision phase
PRESCOTT, ARIZONA — November 7, 2023

Prescott approves water service for 107-room hotel, 90-unit apartments, subdivision phase

Water issues subcommittee approved three development water service applications while identifying policy gaps regarding variance budgeting and water availability calculations that require further review.

Water subcommittee approves three developments while flagging policy gaps in DNO calculations and variance budgeting

The Prescott Water Issues Subcommittee met November 7, 2023, to consider three water service applications and an extension request. All were approved with 2–0 votes, but the meeting surfaced a troubling inconsistency in how the city applies its 50% budget rule to variance appeals—a flaw Council Member Shiska identified on the spot and staff acknowledged requires immediate policy correction.

The subcommittee also heard a broad acknowledgment from Public Works that the current methodology for calculating available water from the city's Designation of Assured Water Supply (DNO) is unreliable and contains "too many moving parts." Staff signaled a shift toward annual reporting to council on actual water usage versus DNO allocations, deferring year-to-year development budgets to council discretion rather than predetermined formulas.

Key Speeches

"I thought that when you went for a variance and the variance was approved that the water wouldn't come out of the current budget." — Council Member Shiska

"You are correct, you are correct per water policy it would not come out of out of the budget." — Brian Reese, Public Works

"I appreciate that Brian. I think it's kind of crazy to not take it out of something we're just kind of leaving it in The Ether in net so to speak." — Council Member Shiska

"The methodology with to be perfectly honest was probably not the best to start off with." — Brian Reese, discussing the DNO-minus-usage calculation method

Timeline

Opposition

No organized opposition to the three water service applications. Two public comments were made:

Support

Staff and both subcommittee members (Shiska and Montoya) supported all three applications. No formal public comment in favor was recorded. The Comprehensive Agreement #1 report was received without objection.

Project Details

Case 1: WSA 23-36 – Aspire Sport Hotel

Case 2: WSA 23-40 – Lake View Plaza Apartments

Case 3: City Contract 25-2944 A1 – Sterling Bridge Subdivision Phase 2 Water Agreement Extension

Vote Breakdown

All votes were 2–0:

Members Present: Montoya, Shiska
Member Excused: Council Chairman Ring (noted as excused; however, he was present for at least portions of the meeting, as evidenced by his question during WSA 23-40)

Note: Individual vote attribution not stated in transcript; votes were reported as "pass 2-0" or similar.

Outcome & Next Steps

All three water service applications approved and forwarded to council for final consideration. The Sterling Bridge extension was approved by the subcommittee itself and forwarded to council. Conditions or modifications were not explicitly stated.

Policy Referrals:

  1. 50% Rule and Variance Exemptions: Council Member Shiska identified that approved variances should not deduct from the current budget per the water policy, but staff was calculating them as though they would. Brian Reese acknowledged the error as a "blind spot" in policy implementation. This will be addressed in the water policy review and brought to the Mayor's Ad Hoc Water Committee.

  2. Water Availability Methodology: Staff is moving away from the DNO-minus-usage calculation method (subtracting previous usage from a baseline DNO to determine available water pool), citing too many variables and unreliability. Instead, staff will prepare annual reports to council showing actual water usage versus the DNO, allowing council to determine a reasonable development allocation on a yearly (or more frequent) basis.

  3. Extension Duration Guidelines: Cathey Rusing and Shiska noted that the three-year extension for Sterling Bridge was based on ad hoc developer request rather than clear policy guidelines. Staff agreed to develop clearer standards for extension duration, which will be brought to the Mayor's Ad Hoc Water Committee for policy recommendations.

Comprehensive Agreement #1 10th Annual Report: Received without action. Full report to be posted on city website by end of week. No vote required.

Controversies & Context

The 50% Rule Variance Inconsistency

Lake View Plaza Apartments submitted an application for 11.78 acre feet of water annually. The remaining residential budget for the July 1–December 31, 2023 period was 22.3 acre feet, making the project 52.8% of that remaining budget. Water policy 14 prohibits any single application exceeding 50% of the remaining semiannual budget unless the applicant appeals the rule.

Brian Reese presented this to the subcommittee as a variance situation requiring developer appeal. However, Council Member Shiska challenged the presentation, noting that per the water policy, an approved variance should not be deducted from the current budget. Reese acknowledged immediately: "You are correct, you are correct per water policy it would not come out of out of the budget so technically yes you are you are definitely correct."

Shiska added, "I appreciate that Brian. I think it's kind of crazy to not take it out of something we're just kind of leaving it in The Ether in net so to speak."

Michael Taylor, representing the applicant, also noted that this policy gap had been flagged during the Mayor's Ad Hoc Water Committee's water policy review process and was expected to be addressed in future recommendations to council.

This error underscores a fundamental implementation gap: the subcommittee was calculating the project's impact as if it would reduce the available budget, contrary to the policy text that exempts approved variances from budget deduction.

The DNO-Minus-Usage Methodology Breakdown

In item 5 (General Announcements), Brian Reese disclosed that staff is abandoning the method used to calculate the "available water pool" for development. The 2022 water policy established a baseline water figure (approximately 1,900 acre feet) by taking a previous Designation of Assured Water Supply (DNO) and subtracting usage at the time the policy was adopted, then further subtracting water used since.

Reese stated: "The methodology with to be perfectly honest was probably not the best to start off with. When you say the methodology Brian you mean the methodology for establishing that number in the first place exactly that's that's really what I'm what I'm seeing when looking into it and digging into it is that the methodology starting off and kind of utilizing a previous dno as a Baseline and kind of using a new dno and saying maybe the difference between those numbers we can somehow utilize this as as water that we have available for development has a lot of moving Parts in it way too many moving parts that to feel confident that's a good number that you can just start subtracting from."

The revised approach:

Reese noted that staff is working with City IT and WORM consultant Herb Dishop to update the Water Operations Resource Model with current billing data, cross-check spreadsheet-based allocation tallies against WORM outputs, and identify discrepancies. The goal is to gain confidence in the tool before using it to inform policy recommendations.

Council Member Shiska affirmed the direction: "I appreciate the update and I know that I've uh hectored you guys about that for a long time so I it's nice to know that uh you're incorporating that and going to try and provide something future I think the better we are to kind of see what we're drawing off generally is good."

Lack of Clear Extension Duration Guidelines

The Sterling Bridge Phase 2 extension request prompted a secondary policy concern. Mike Crims (TC Development) requested a three-year extension, which he characterized as "a reasonable request as a as opposed to an arbitrary number." He cited economic headwinds and hoped the market would recover enough to justify development within three years, though he acknowledged it was partly a guess.

Cathey Rusing asked: "Do you I mean do you foresee that three will be enough time for you to either kind of adequately move forward or maybe decide that you you can't move forward essentially?"

Crims replied: "The three years is a guess to be honest with you but we would like to develop it and things are actually coming back right now pretty good as far as pricing is concerned and supplies are concerned."

Cathey Rusing and Shiska both noted that the water policy currently lacks clear guidance on extension durations, allowing developers to propose ad hoc timeframes. Shiska said: "I would say that uh this is another example of um something that when we structured the water policy that we didn't contemplate probably as well as we could have and I would certainly love for you guys to kind of put your heads together and think this through a little bit so we can kind of you know my thinking is what that committee does is help us be Watchdogs over this policy so that we can really understand where our blind spots might be or our holes in our thinking... I'd like to have a little bit crisper guidelines so that you know we understand it better so I have no opposition with this moving forward to council for a more robust conversation."

The subcommittee approved the extension and recommended it for council review, but flagged the need for clearer extension duration policy to the Mayor's Ad Hoc Water Committee.

Seasonal Slowdown in Permits

Brian Reese noted that residential and non-residential water applications were running well below budget utilization. Cathey Rusing asked whether this reflected seasonal fluctuation or a longer-term slowdown.

Reese said staff was unsure but noted a permitting slowdown and that several anticipated projects had been delayed. "It does definitely seem like it slowed down a bit um I'm not sure if I got George here and he can talk to us a little bit more about what they're seeing at the permitting Center but it does seem like we've come into a bit of a Slowdown on the permitting."

This observation underscores the uncertainty in projecting development demand and justifies the move toward year-to-year reporting rather than fixed multi-year allocation schemes.

Duration

Other Notable Items

Comprehensive Agreement #1 10th Annual Report: Leslie Graser presented an update on the tri-city groundwater monitoring and modeling partnership in the Big Chino Basin. Key findings: MW4D monitoring well shows stable water levels (281 feet below land surface in 2018, unchanged through 2023); streamflow monitoring equipment sustained damage in late February/March storms; crop surveys in Williamson Valley show increasing ranchette development (small residential properties with pasture/horses on 2–5 acre parcels); modeling work on schedule with parameter estimation ongoing. Council Member Shiska asked whether stable water levels portend good news for aquifer health; Graser cautioned that one well represents only a single data point and that the full model integration would be needed before broader conclusions. Dr. Krupnick asked about the cause of a 2022 water-level offset in the graph; Graser said it was unclear but could reflect a dry spell or subsurface flux. The full report will be posted on the city website by week's end.