At their Jan. 20 meeting, the Gila County Board of Supervisors heard presentations about the numerous projects necessary for recovery and mitigation due to last September and October’s floods, and the costs involved. They also discussed the potential of a bond issue to provide immediate cash to fund these projects. Maryn Belling, the executive director of United Fund of Globe-Miami, also provided an update on the local nonprofit’s flood relief activities.
Following the regular Board of Supervisors meeting, the supervisors reconvened for a work session regarding flood recovery projects and financial resources. The purpose of the work session was informational only, with no action taken.
County Manager James Menlove introduced the discussion by pointing out that the county's former public works director and assistant county manager Homero Vela has been working to identify potential flood-related projects. Menlove noted that timing issues are critical, as work must be done within deadlines imposed by the Natural Resources Conservation Service. The county is meeting on a weekly basis with NRCS representatives to keep the process on course.
“We have the pressure of time and the pressure of money going on right now.” — Homero Vela
Vela began by acknowledging that the county is under two kinds of pressure: time and money. However, he framed these constraints as an opportunity, because NRCS cost-sharing enables the county to undertake “durable, permanent projects.”
Vela noted that the county’s prior experience with the Telegraph Fire has provided partially completed designs that can be reused, although storm damage has altered some conditions on the ground.
Vela presented a slide listing the projects he identified as critical, along with their anticipated funding sources.
These projects include road repairs, bank stabilization, flood warning systems, and improvements to crossings vulnerable to washouts in locations including Copper Hills and Six Shooter Canyon, as well as restoration in Russell Gulch. Vela specifically mentioned maximizing flow across Russell Gulch and Ice House to make sure the crossing doesn’t get washed out in the future.
Another project involves improvements to the county’s flood warning system, which is a small dollar amount that will cover installing two additional rain and flow gauges in Ice House Canyon and Russell Gulch. The new proposed gauges would include radar-based flow measurement to assess water depth without placing equipment directly in the flow.
Finally, a wall project at Cobre Valley Regional Medical Center is listed, but this will be fully funded by the hospital rather than the county, and the hospital will be responsible for meeting NRCS requirements.
Vela said NRCS projects will be completed by contractors under a contract manager-at-risk model. County crews would only address minor, immediate storm-related issues that qualify for reimbursement. Supervisor Tim Humphrey pointed out that county crews have their normal work to do, and flood-related work could strain their capacity.
Supervisor and Vice Chairman Woody Cline pointed out that a berm in Dripping Springs is critical. Vela said this is not on the project list because the berm is located in the middle of a floodway, causing water to divert around it and create risk. The berm presents some challenges, including that it will need to be relocated and that it is located on land owned by the Bureau of Land Management. Vela said the team felt this project would be difficult to complete within 220 days, so it wasn’t included on the NRCS list. Supervisor Cline urged Vela to look more closely at this project.
Listed alongside the NRCS projects, but separate from them, Russell Gulch sediment removal is a $1.2 million project to be implemented by the county, without a cost share. Funds for that project are expected to come from the Arizona Department of Forestry and Fire Management. The project is expected to be submitted for funding approval that week. The Russell Gulch project is being pursued with DFFM so that it can go ahead quickly, without waiting for NRCS funding.
Next, Vela presented projects that are expected to be funded through reimbursements from the Federal Emergency Management Agency or Arizona’s Department of Emergency and Military Affairs. These include emergency protective measures — much of which has already been completed — as well as costs involved in the immediate response to both storms.
Vela explained that FEMA requires a fixed project list for each storm event. The September storm project list has been finalized and cannot now be expanded, although costs can change.
For the October storm, FEMA has not yet visited to conduct an applicant briefing, which normally starts the clock ticking. That visit is expected to happen this week. Potential projects for the October storm list include sediment removal, damaged roads, and collapsed driveways and culverts. The county will need to determine how to prioritize these projects and how to allocate funds to them.
With regard to debris management, Vela said extensive testing is required, including testing sediment for 13 different metals, hydrocarbons, asbestos, and other contaminants. A $185,000 contract has been already issued for testing.
Preliminary results from Russell Gulch indicate the levels of metals and hydrocarbons are below detection levels. Testing has also been conducted at Kellner Pit and near the landfill. At Kellner Pit, an odor was detected, which triggered E. coli testing. If necessary, it will be treated with chlorine bleach.
The sediment piles total more than 14,000 cubic yards, and the cost for hauling them to Kellner Pit or Castle Dome would exceed $2 million. Instead, the county is considering spreading it on county-owned land adjacent to the landfill. This approach would reduce hauling costs and create a designated future sediment placement area. Some sediment might also be relocated to the fairgrounds.
There are also two piles of household debris totaling over 700 tons, which includes extensive asbestos and has to be hauled to Apache Junction.
The projects on the NRCS list and the FEMA/DEMA list total around $38 million, but will ultimately cost the county a fraction of that amount, after reimbursements.
NRCS typically covers 75% of eligible project costs, but work has to be completed within 220 days once funding is approved. Vela expects that approval to come in about three to four weeks. After reimbursements, the cost to the county for the NRCS projects will be about $7.9 million.
For work reimbursable by FEMA or DEMA, DEMA will normally pay 75% of the costs of approved projects. If a FEMA disaster declaration is obtained, then FEMA would cover 75% of costs and DEMA would pay an additional 15%, bringing the total to 90%.
This is why the FEMA decision is being appealed at the state level — the financial impact of the FEMA denial is hitting the state much harder than the county, Vela explained. For Gila County, the impact of a FEMA denial would be a difference of about $300,000, which Vela pointed out is a small number compared to the total costs involved.
For FEMA and DEMA-related projects, the county’s share could reach approximately $5.3 million. For planning purposes, Vela advises that county leaders assume they will have to take 100% responsibility for FEMA-related costs until reimbursements are received.
The county’s immediate cash flow requirements amount to $7.9 million for the NRCS projects and another $5.4 million for FEMA/DEMA-related projects, plus an additional $750,000 for engineering services and $150,000 for other professional services, for a grand total of approximately $14.2 million.
Project management costs are not included in this figure and could add another $1 to $3 million.
NRCS is expected to make reimbursements within about 30 days, but the county needs to have cash available as project costs come in. FEMA/DEMA reimbursements could take much longer — probably years.
The county is seeking financial support through the state legislature, hoping for an amount in the order of $25 million. However, whether any funding will be forthcoming won’t be known until June, when the state passes its budget.
Given this timing, these potential state funds will not be available within the 220-day window for completing NRCS projects, and thus don’t help with the county’s immediate cash flow needs.
Mark Reader of Stifel Institutional, a financial advisor to the county, presented an option for the county to consider. Reader has worked with the county in prior years on bond issuances for public infrastructure, and said he understands how seriously the board approaches taking on debt.
Reader laid out several objectives that would guide any potential borrowing. He said the county should limit any new debt obligations as much as possible while evaluating all available options, and that the goal should be to pay the debt off as quickly as possible as reimbursement checks come in. Borrowed funds should be kept in interest-earning accounts while they are being spent.
“These projects have to get done. And having the money available to do them in 220 days is extremely important, because we’ve had to give government money back before because we were unable to complete projects in 220 days.” — Supervisor Humphrey
The county currently has about $24 million in outstanding debt, including about $13.4 million tied to Arizona’s Public Safety Personnel Retirement System. Reader said the county has been careful and largely operates on a pay-as-you-go approach to capital improvements. The county’s bonds are revenue bonds, and the county is double-A rated — a rating that is unusual for a rural county, and will help it obtain lower interest rates, according to Menlove.
Reader described the county as having good management, good liquidity, limited debt outstanding, and strong bond covenants when going to the market.
To cover the immediate cash needs for flood-recovery projects, Reader discussed the potential of borrowing in the range of roughly $15 million to $18 million. Revenue streams that could potentially be pledged — effectively as collateral — include excise tax revenues of about $5.6 million, local state share revenues of about $5.3 million, about $2.5 million in vehicle license tax revenue, and about $4.4 million a year in revenue via Payment in Lieu of Taxes.
Walking through an example scenario, Reader said that if the county were to issue an $18 million bond, it could initially be structured with a 10-year amortization, though the county could choose a longer or shorter term. With a 10-year amortization and an estimated interest rate of 4.25%, the annual payment would be about $2 million a year.
Given the county’s current debt status, this would bring its total debt service to about $4.3 million, leaving about $13.5 million in operating flow, according to Belling, who is also the county’s finance director.
The county would have the option of paying down the debt at any time with 30 days’ notice and no penalty, similar to a line of credit. The ability to pay down early would help the county remove the debt from its books as quickly as possible.
Menlove said the debt service would affect the county’s approach to employee compensation, making it difficult to provide employee raises and structure the county’s finances to support employees as has been done in the past.
“There’s just no way around it — we can’t throw $2 million on top of our current budget without it impacting us in a significant way.” — County Manager James Menlove
However, Menlove highlighted the importance of the flexibility the county will have in how much money it ultimately draws down. Even if the county pursued $15 million or $18 million in financing, it might only need to draw $5 million for cash flow.
The supervisors agreed on the following timeline:
In order to meet this timeline, county leaders will need to determine conservative estimated numbers within about a week. Reader said the county could start with a higher number and then reduce it, but could not increase above the published amount later.
Supervisor Humphrey raised a concern about projects needing completion by September and asked whether the county could begin construction before bond funding is available.
Belling said the bond resolution could be structured to allow the county to reimburse itself from bond proceeds, called a reimbursement resolution. This means the county could pay project costs using cash on hand and later reimburse itself from the bond proceeds.
Maryn Belling spoke in her role as executive director of United Fund to provide an update on assistance being delivered to residents and businesses affected by flooding. She said United Fund has successfully distributed approximately $1.97 million to about 85 businesses and households.
A total of about $2.2 million has been pledged, and United Fund has distributed all funds that have been actually received.
For residents affected by the flooding, household assistance is being administered through the Salvation Army. The upper limit for direct household support has been increased to $30,000 per household. This funding is being targeted at the most urgent needs identified for each household, including cleanup, demolition, rebuilding, and, in some cases, closing costs for a new home when an existing residence is no longer habitable.
“The Salvation Army believes that they have identified successfully all of the eligible households.” — Maryn Belling
Belling said assistance will continue through 2026 as needed.
For businesses, the first round of assistance allowed eligible businesses to receive up to $5,000 initially, with the potential for an additional $30,000 if they met specific funding criteria. These distributions were handled through Local First Arizona. Some disbursements extended into 2026 as the process was finalized and documentation was completed.
Belling also noted that additional assistance is available through the Small Business Administration in the form of low-interest loans for both businesses and individuals.
“If more need comes up, we’re more than happy to continue supporting the community in any way possible.” — Maryn Belling
United Fund maintains a ‘frequently asked question’ section for both residents and businesses on their website.
Belling emphasized that all administrative costs, including expenses associated with working with Local First Arizona, have been absorbed by United Fund and have not been paid for with donated dollars.
It was acknowledged that additional funding might be needed to help residents and businesses fully reestablish themselves. Supervisor Humphrey noted that there may be a need for an additional $1 million, and asked whether borrowed county funds or state or federal money could legally be used for that purpose. However, borrowing money to finance non-county projects would raise legal concerns, including potential issues with the IRS, according to Belling.
Members of the Gila County Board of Supervisors: Chair Steve Christensen (District 1), Vice Chair Woody Cline (District 3), Supervisor Tim R. Humphrey (District 2). All members were present at this meeting.
To view this meeting online, click here.
To view documents related to this meeting, click here.
Comments
No comments on this item Please log in to comment by clicking here