Small-business contractors like H&R Plumbing have become the unexpected saviors of West Coast municipalities over the past year. 

After the historic five-year drought — from which most of the area has only recently begun to recover — a new challenge has arisen.

Water system operators who had forgotten the impacts of a storm surge were violently reminded. “In the last year, it rained enough to make up for what we missed in the last five,” says Horacio Franco, owner of H&R...