Environmental Services Commission - Regular Meeting

Alright. It's 06:30, and I'm calling the 02/05/2026 Environmental Services Commission meeting to order. We'll first start off with the roll call. Commissioner Letterman? Present. Thank you. Commissioner Laxon?

Present.

Thank you. Commissioner Margolis? Present. Commissioner Hainosh? Present. Commissioner DuPertis? Present. Thank you. And commissioner Tyson?

Present.

Thank you. Everyone is present. Good evening. Welcome to the Environmental Services Commission meeting. I first wanna take this opportunity to welcome our council liaison to the commission, council member Jared Newnhouse. Welcome. Council member Newnhouse previously worked with the ESC as a council liaison from 2018 to 2019, and we're happy to have him back with us. And we'll hear from him a little bit later on in the agenda. So talking about agendas, may I have a motion to approve the agenda?

Move to approve the agenda.

Thank you, commissioner Letterman. May I have a second?

Second.

Commissioner Hainosh, are there any changes or modifications to the agenda or motion that anyone would like to recommend? Alright. Hearing none none. Sorry. The agenda is approved as motioned.

We'll move to oral and written communications. Oral and written communications are now open. Remember that there's a three minute time limit per person and thirty minute total per meeting. Public comment is shall be limited to matters relating to City of Bellevue government and to subject matters encompassed within the power and duties of the commission. Persons participating in commission meetings must not engage in speech or conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of any meeting. Disruptions may include and are not limited to failure of a speaker to comply with the commission bylaws concerning public comments. Scott. Nope. Hold on. Before we go there, one more blurb.

In compliance with Washington state campaign laws regarding the use of public facilities during elections, no speaker may support or oppose a ballot measure or support or oppose a candidate For an election, which includes your own campaign, any speaker who begins discussing topics of this nature will be asked to stop. Now, Scott, are there any written communications?

There are no written communications.

Alright. There are also no one registered for oral communications. So at this point, I will invite anyone in the audience who would like to speak. If you'd like to do so and you're attending remotely, please use the raise your hand feature in Zoom, or if you're joining by phone, press 9. If you're in the audience, please raise your hand. There's no one. Alright. That was quick. Then we'll move on to, council updates. Council member Newhouse.

Thank you so much. No update for me, this evening, but, just wanna thank you for the warm, welcome. It's a pleasure to be back at, ESC, after being at you know, if you've been on the council for two terms, eventually, you're gonna start, you know, circling back to some other commissions and boards. But, we have such an outstanding, utilities, department doing such incredible work at the city all the time. Thank all of you for your commitment to to to the city and for the good work that you're putting in here.

I'm really looking forward to getting to know all of you. I did speak to, mister Lee before coming here as well, getting his perspective on where things were, with the commission. He wanted me to say hi to everybody. But, but thrilled to be a part of it. I'll be re be providing updates as as we move forward, but it's my first one. So, but I really appreciate the warm welcome and and look forward to working with all of you. Unless anyone has any questions about anything going on at the city recently, I'd be happy to answer any questions. I will throw that out there. But if not, I'll save my updates for for next time.

Alright. Thank you. Any anyone have any questions for council member Newhouse? Alright. Thank you. Scott, any staff reports today? No staff reports this evening. Alright. We're just booking along here. Four minutes in. We're already on item number six. Let's go with the approval of minutes. May I have a motion to approve the 01/08/2026 meeting minutes?

I move to approve the minutes.

Thank you, commissioner Tyson. May I have a second? Second. Thank you, commissioner Letterman. Are there any proposed changes or modifications to the minutes from any commissioner?

No. If not, then the minutes are approved as motioned. We have no unfinished business, so we're gonna move directly into new business this evening. Tonight is a slight, it's a little bit different than our regular meetings and that we will have an a public hearing within our new business agenda, which is the draft 2026 stormwater management plan, program plan update, and public hearing. We'll get a, update.

We'll then have a public hearing. And then after the public hearing closes, then any commissioners may then also, discuss, and ask questions. So with that, we're gonna start the public hearing portion. Alright? I wanna remind all those who wish to speak at the public hearing, please sign up on the sheet provided on the table by the door if you haven't already registered online.

Also, if any audience members, you don't need to sign in to speak. However, those signed in or complete the online speaker registration will get to go first. The purpose of this meeting, the draft 2026 stormwater management program plan update in public hearing, is to allow public comment on the draft 2026 stormwater management plan. The plan updates the actions taken in 2025 and those to come in 2026 to implement the National Pollutant Discharge Elimination System municipal stormwater permit requirements. The commission's role is to summarize the comments received and provide them to city NPDES coordinator for consideration.

After the public hearing is closed, the commission will comment on the draft SWMP plan. Both the public comments and the commissioner's commission's comments and recommendations will be provided to the NPDES coordinator for consideration to include within the stormwater management program plan. Don, I think you are up.

So I'm one of the operations managers. Been with utilities for quite some time. I've been involved in storm water since 2008 with the city for twenty five years in total. I am your city's NPDS coordinator, the National Pollutant Discharge Elimination System. This is a permit that allows for storm water to be, discharged into our streams and lakes.

It's given to us by ecology. I'm gonna give you an overview of our permit very quickly tonight, kind of the history, how we got to where we are, then we're gonna dive in a little bit to our 2026 stormwater management program plan. There's a lot of acronyms when you're talking about ecology, so bear with me. Okay. So a brief history of the permit.

Very high level of the permit requirements for this term, and then we'll have a few slides on the program plan itself. And I don't think we have anybody for the public hearing. I didn't hear anybody, so we'll skip that portion. Okay. So in 2007 is when we got our first permit, the NPDS permit. We're considered a phase two city. This was based on a 1990 census. We barely made it into the phase two world. Phase one cities are like Seattle, Tacoma. They have a little more stringent requirements than we do with this permit.

The permit's a five year permit, and as I said, allows for discharge to the waters of our state. It's issued by Ecology under the federal clean water act. Every state has different parameters in their permit. It's a progressive permit. It builds off of the the previous permit, so every iteration gets a little more stringent. My guesstimate, is that eventually the phase two and the phase one permits will merge together, and we'll have just one permit for the state. And if you're doing the math, in 02/1319, they had extensions, so that's why it doesn't work out to a perfect five years there. And our current permit term is '24 through '29. What does it do for us? We have to re update it annually.

We have to submit it to Ecology no later than March 31. It covers our five year term, so all the requirements in there, and we do an update every year. It allows for public involvement and participation to to weigh in on our stormwater management program, provides guidance to our staff as kind of an outline on how to run our compliance programs, and provides an outline to the public on how we manage specific to our NPD obligations. And then the formatting of the stormwater management program plan follows the permit itself. K.

So nine sections in the permit, planning, public education outreach, public involvement, mapping, illicit discharge detection, controlling runoff, stormwater management, source control, and then the operations and maintenance section. So these are the key nine programs. I'm gonna go through a series of slides. We're gonna touch on each of these. I'm gonna be rather quick. If you have questions, just feel free to stop me, and I'll be happy to address your questions. So the way these slides are laid out, in the black is the requirement. In the blue below it is what we're doing to meet that requirement. On that second bullet, I don't know why it says ecology feedback. That was a typo on my part.

Sorry about that. So to convene a team, we have a watershed management planning team that that responds to not just this plan, but other plans in the utility department that access our our planning team. This year, we'll have to respond to a series of planning questions. I haven't looked those questions up, but we'll be looking those up here real soon. We have to continue our low impacted development principles and best management. We've been doing this. Our code supports it. We have to update and implement our tree canopy goals by 2029 for this permit cycle. We already have tree canopy goals in Bellevue, but they're not specific to the stormwater utility. So we're working with, parks and our folks over in sustainability to get those in alignment.

And then towards later in the permit, we have to complete another stormwater management action plan or SMAP. This is a small localized area where you focus in, think 300 acres or less, and you you write prescriptive stormwater measures for that area to try to improve it. So this will be our second one that we're gonna be doing this permissive.

And question on that. The the second bullet, those are questions from Ecology that

Yeah. So Ecology will have a series of questions for us in March Okay. That they'll put out and ask us to respond to. They have not yet put out? I have not seen them yet.

Okay. Last

time they did it, it was just really basic planning questions. You know? Tell us all the different, you know, environmental plans you have going on in your city, how they all nexus is for the stormwater world, how they all tie together. So So in our public education and outreach, we have to annually select a target audience, that we go after each year or for a set number of years. Just recently, we decided that we're going to, target homeowners and teens with regard to car care.

And we hired a high school intern that helped us kick this program off, and it was very successful. That was late last year, and now he got accepted to UW. So now he's our college intern, which is nice. So we're just starting that up now, and we're just getting that implemented. And then later in the permit term, we'll have to put evaluation out on how we did in the with that behavior cam change campaign. So we'll measure it as we go along. Public involvement. So today's meeting serves that purpose. As you see, we don't get a ton of public involvement around this permit. We've tried various methods over the years.

You guys have asked for us to to continually reach out. Not the most exciting topic for the public to weigh in. I do get some comments periodically. You do have it posted on our website, and I usually get, you know, four to six comments just off of the website. People have questions down that route. And we'll post the final version, no later than the thirty first of this year. Okay. So for mapping, every year, we have to submit all the known locations of where the pipes discharge to the streams and lakes. Our GIS team prepares that for us. I was talking about the tree mapping earlier.

So there's also another clause in here this time around where we have to map tree canopy specific to stormwater management purposes. So not just the overall city tree canopy. So we're trying to figure out exactly what that's gonna look like right now. I think we're just gonna start with utilities only property first, and then maybe in the future, we'll merge in some parks property into that. Think open spaces, green spaces.

By 2028, we have to map all the tributary basins with flow control and treatment. So think all basins that have some sort of detention tank, pond, or some sort of treatment system. We have to map where those are. And then what ecology is trying to figure out is which areas have treatment, which areas don't is what they wanna use that information for. And then we have to map our overburdened communities in relation to all the other maps that we're putting together.

And I understand the city has produced a map that we can use as an overlay to help with this. In the sense of this permit, it would be environmentally overburdened communities. So communities of disproportionate wealth, communities that, you know, are having that don't have the latitude that other communities have to be able to, you know, come more polluted areas. It's it's kind of a hard one to do in Bellevue, but we do have I mean, we have a a couple of areas around Bellevue where we when we do the overlay, it does kinda shine through. And, like, typically, they're up in the the Factoria and the the Crossroads area.

So the illicit detect discharge detection elimination program. So this is spills. So anytime we have a spill in Bellevue, it gets reported to utilities, and we have a team that goes out and responds to that spill. And if it's a spill that gets into the city's stormwater system, then there's a series of letters that we have to write to ecology on what happened and what we're doing to prevent it and how we cleaned it up. We have about two to 300 of these a year that happen in Bellevue.

And then as part of this requirement too, they ask that we screen 12% of our MS four. That's the municipal separate storm sewer system. It's basically the public storm water system in Bellevue. We don't have a combined sewer system like Seattle does where we have wastewater and storm water going in the same place. So we do 50% of this annually.

Why 50%, not 12? Because we're already looking at 50% of our structures annually. And so while we're in there, we look for any signs of illicit discharge. So runoff from new development, redevelopment, construction sites, these are, the folks down in development services on the 1st Floor here when somebody comes up for a building permit, and they work with them to make sure that they're meeting the requirements of the stormwater language through the the ecology manuals. The manuals have a flowchart that kinda walks you through what you have to do with regards to how big your property is, how much pervious surface you have, and it it calls out the different stormwater requirements.

We try in Bellevue to use green stormwater infrastructure first before we go to more traditional traditional concrete type structures out there. Our code supports this, and we're gonna be looking at our code again this year to make sure that the language is up to date. There's a couple of little words here and there that are out of date that we need to fix. And then no later than June 2027, we'll be adopting the new stormwater manual, so the 2024 version. We're currently on the 2019 version.

So this is new to the permit cycle this year. It's called stormwater management for existing developments or the retrofit clause. This basically says that we have to go back and look at the city owned system and retrofit the city owned system to include additional treatment where we can up to the tune of 24 equivalent acres. It's pretty large, actually, once you start thinking about it, 24 drainage acres. You know, it's hard to build structures in Bellevue in the middle of the street.

It costs a lot of money. So the we have a team that's looking at this. We think we can do 50% of this through operational efforts. The other 50% are gonna have to be physical upgrades out in the out in the field there. And these are not new structures, but that come in, you know, if we decide to build a new street, something like that. These are retrofits. So something that we have to go back and change and upgrade. So we're currently at about 25% of our required equivalent acres, and I'm working with our engineering folks, planning folks to try to figure out where we're gonna get that other 50%. But we got a lot of lot in the works right now. I'm not gonna talk through particular projects yet because they're still just in the very high level planning phase. So maybe next year, some projects for you that we could we could discuss a little bit.

And, question, what kinda operational

So you get credit can you do for So you get credit for going above and beyond. So, like, we have a aggressive pipe cleaning program in Bellevue ahead of our video program. So we get credit for all the pipe we clean because it scrubs the sediment out of it. We get credit for our street sweeping that we do above and beyond what's required in the permit. So it's it's anything that goes above and beyond your your typical requirements. And they have about six, eight categories in there that you can get credit for. We get some credit out of our parks department for their forest management work they do. Remember, it's a citywide permit. It's not a utility permit, so I can go all the way across the city looking for things. And then there's another clause in there, that operational s map.

If we do that s map plan that I was just talking about and then we go above and beyond in that particular area so if we have, you know, a source control effort specific to that area, we can get another 50%. I'm working with ecology to try to figure out all the details on this. So this is our source control program. It came around in the last permit term. So this goes out to our businesses, not in the businesses, but around the outside of the businesses, looking for anything that could spill into the stormwater system and talks to our businesses about how to protect those.

So secondary containment, good housekeeping, things like that. Often, we do get invited inside the business when we're there that says, hey. Can you come take a look inside and see what you think about our operation inside too? So, we take advantage of that when people are willing to do that and open up their garages and say, what if I put it here? Would that be fine? Yeah. We have about 15 sites that we look at in this program, and we're required to do about 20% of inspections a year, which comes down to about 300 sites. So we're on track to do that this time around. Okay. Operations and maintenance, probably one of the larger section of the permit.

So this is all the city maintenance staff fall underneath this as well as our private drainage inspection program. So quite a few folks, inside of this. So we're required to have a maintenance program. We have a very comprehensive inspection and maintenance program in Bellevue where we look at half of the structures every year across the city. So every other year, we're looking at every stormwater structure in Bellevue.

And then our larger structures, look at every year. And then, same as the development requirement with, adopting the permit by June 2027. This that manual also has some maintenance standards in it, so we'll be adopting those as well when we adopt that manual in June 2027. And then new to the permit term this time around is a sweeps street sweeping program focused specifically on stormwater. So we're looking at our existing street sweeping program, and it currently meets the requirements of the permit.

We're trying to retune it to be a little more stormwater oriented. And then by the '27, we have to document all our practices, policies, and procedures on how we reduce stormwater impacts. There's a list of about 15 different items here. Think SOPs, policies that are in writing. We just have to gather all those together, make sure we have everything addressed, and put them in a place that we can submit to ecology when they ask for it in 2028 probably. Then we'll have to update our pollution prevention plans, which we have about six of those around the city. Okay. That's it for the 2026 stormwater management program plan. Before I go through this slide, any questions?

No? Do you

Don, do you, have any concerns with any of I see a lot of the conditions have due dates Mhmm. By the end of this month, this year. Are there any areas that you have concerns about that we may not be able to hit the the requirements?

Not at this time. No. We're on track to meet all of the requirements. If I have one concern on the overall of this permit, it's that retrofit clause, and is that gonna get us in a situation that's gonna be expensive? But the permit says that we have to either have it fully planned out, fully funded, or built by the end of the permit cycle. So it gives us some leeway there. We don't have to have everything in the ground by then. And then my guess is they're gonna keep that same clause into the next permit cycle, so they'll just roll that through.

And then another question. I was a little surprised at the two to 300 illicit illegal dumps.

No. These are spills. Spills. Think

What are they?

Like Metro has a lot of them. You know, hydraulic lines break. I see. People spills paint when they're driving down the street. Every now and then, not very often, but every now and then, we get a bad company out there that, you know, will wash off all their paintbrushes into the storm catch basin because it's right there convenient, or we'll dump their landscaping debris into the vault because it makes a nice place to get rid of it. So not very often, but every now and then. Most of them are just accidental spills that happen. Thank you. Any other questions? Okay.

Alright. So just some accomplishments from 2025. So they did about a little under 12,000 inspections last year. They cleaned about 2,200 public structures out there. It's about 20%. It's been running about that rate for the last several years. I used to have talked about private drainage facilities. So this is where we go out to the businesses, and we actually inspect their drainage systems, underground systems. So we did about 720 of those in also and then the source control is above ground around the building, so 376 of those. And then we had out of the two to 300 spills we had last year, we had 227 of those that actually became illicit discharges and were reported to ecology.

And then, bottom bullet there, proud to say we completed our last behavior change campaign, which is called the dumpster outreach behavior change campaign, which is a five year campaign. It was regional based. It was put on by Lori Devereaux and her team. It turned out to be a great success for the region, and other cities have adopted it and are using it as their new behavior change campaign to meet their permanent requirements, which is kinda nice. That's all I got for you.

I'm gonna call inaudible.

So if I can add this is Chad Beck for those that are on the call. I'm the assistant director for operations and maintenance, part of our utilities leadership team. And one of the things you might have noticed as you listen to this conversation or in the presentation that Don gave is that he said in a couple different instances, we're already doing this, or we already have a plan that accomplishes that. And that's not a coincidence. One of the reasons why we are so compliant or forward leaning is because Don, in particular, is a leader in the region.

So many of the regional committees and groups that help to inform and participate with the Department of Ecology to form these different regulations or guiding principles or best practices, Not only is Don involved in those conversations, but in many cases, he's leading as the chair or the vice chair. He's a trusted professional in this industry. And so when they're looking for, hey. What should we be doing in this area? He's a trusted voice, and we are a beneficiary of that because he works for the city of Bellevue.

So, I asked him to include some of that information in the in the presentation, but very much like Don, he's too humble to do that. So I have no doubt that when he comes back next year, he'll have even more information along that same tune, and I didn't wanna miss the opportunity to highlight the excellence that he brings to the city of Bellevue. So thank you, Don.

Thanks, Jug. Appreciate it. Thank you for that audible.

Say the same thing. It's really important for us, I think, to get that exact perspective of how we are performing as a city relative to our peers, relative to the region, because it's hard to get that from anywhere else. So we really appreciate when you give us that input, and I'm not surprised at all. I am just continually impressed by what you all are doing here at the utilities department, so thank you. Thank you very much.

You're welcome. Yeah. Bellevue is considered a regional leader in the world of stormwater, and, yeah, we do a lot to outreach across the state and help others.

And I will also add, I think some of his expertise really came through in his speaking points. It was evident, you know, how conversational and informative you are in this space. And I was thinking, oh, we're so lucky to have him on our team. You know? So I really appreciate all the work that you're doing for the city of Bellevue

Thank you.

And the region.

Appreciate you having me tonight.

Alright.

Although there does not appear to be any public in person here, I'm gonna go through this just in case someone dials in. So may I have a motion to open the public hearing?

I move to open the public hearing.

Thank you, commissioner Letterman. May I have a second? Second. Commissioner Margolis, today is February 5, and the time is 06:59 for the public hearing portion. Scott, has there been any written testimony received for tonight's public hearing?

There is no written testimony.

Thank you. And like I said, there's no one here in the room, so I'm gonna see if there's anyone else in the audience that is joining by Zoom or by phone. If you're joining by Zoom, please press the raise hand button. If you're joining by phone, press 9 to initiate the raise hand function. There is no one. Alright. So then we're going to conclude the public comments, and may I have a motion to close the public comment section?

Move to close public comments.

Thank you, commissioner Letterman. May I have a second?

I second.

Tyson. And this concludes the public hearing portion, and the time is 07:00. So at this point, I'll just ask I know we've already raised our questions during the presentation, but if there are any other commissioners that have additional feedback or comments for Don on the draft 2026 stormwater management program plan, now would be the time. And since we have a few commissioners on the line, I'll just ask commissioner DuPertis. Do you have any questions or comments?

No. Thank you.

Okay. Commissioner Laxon.

No. Thank you. Just thank you for all the work that you and your team do.

Thank you, commissioner Laxon. And anyone else in the room? Alright. Thank you, Don. Thank you. See you next year. Alright. Then with that, we we are gonna move to the wastewater system plan update.

Good evening, commission. Eric Lafrance, planning manager for utilities. You may recall last, I believe it was October, I came and presented kind of a general overall what is a system plan. We have three system plans that are going on right now. One for water, one for surface and storm water, and then this one for wastewater. We've already been back to you to talk to you about the water specifically and the surface and storm water. And then tonight, Emily Flanagan is here to talk to us about our wastewater system plan. And with that, I'll let her kick it off.

I think I'm in the same boat. Okay.

So then I think you have to share.

Yeah. Go back to Zoom and do share in the bottom there. Just grab that screen. Now here.

Thank you. Appreciate it. Hi. I'm Emily Flanagan. I'm a senior planning engineer in utilities.

And tonight, I'll be talking to you about the water system plan. So the purpose of the meeting tonight is to provide you with information about the wastewater system plan. I will not be asking the committee to provide a decision or approval or anything. This is just to give you guys an update on what's going on. During this presentation, I'm gonna give you an overview of the wastewater system plan process and, tell you a little bit about our wastewater system plan just to remind everyone and talk about one of the big parts of our wastewater plan, which is preparing for all the population growth we're expecting here in Bellevue.

And to familiarize you guys a little bit with some of our system policies, I'll be coming back later as we're farther along in the system and and have more policy conversations, but this will be kind of an introduction of some of

the topics that we'll be going over.

So our existing wastewater system plan was adopted back in 2014. System plans are generally updated about every ten years. There's not a regulatory requirement on that timeline, but that's kind of best practice. And so it's time. There are regulations in place that dictate what's in the wastewater system plan.

So both the state, the county, and city have a code that talks about what should be in the system plan. So our system plan, in general, these are kinda some of the higher topics. It's a it's a thick document, so we won't talk about everything. But, we describe what the existing system is and summarize our operations and maintenance programs and processes. We document service levels, provide financial information and strategies of how we pay for it all, and we develop the long term capital strategy, which is one of the big outputs of this is kinda planning what we're gonna be doing for the next twenty years.

So right now, we're kind of in the middle of it. We have been working to document and describe our existing system, and we're also updating our system models. We have hydraulic models for our sewer system that help us see where we have capacity issues and and that sort of thing. Over the next several months, we'll be developing that twenty year capital strategy, reviewing and documenting utility policies and programs, and we'll also be coordinating with other agencies and engaging with community about the plan, making sure that we get some input from the the customers. And the schedule includes review and approval of the plan occurring about halfway through next year.

So we're in the first portion here. So this might be a little review for many of you, but, our wastewater service area covers more than just the city of Bellevue. We also serve Medina, Clyde Hill, Yarrow Point, Hunt's Point, Beau Arts, and a small portion of unincorporated King County. So the when you see the wastewater system maps, they don't look exactly like the Bellevue map. The system includes more than 500 miles of sewer main.

We also own the stubs in the right of way so about 130 miles of those. We have 36 pump stations and 10 flush stations. So our job as the Bellevue utility is to collect and convey the wastewater. We don't treat the wastewater. We partner with King County, which treats the water regionally throughout the area.

This is King County's map. And you can see that, about 8% of our service area flows north up to Brightwater for treatment, and the majority flows south to Renton to the south treatment center where it gets treated. It's an important partnership we have with King County, and we work regularly with them through various regional committees on issues to help make sure we have a voice at that table and and can see stuff that's coming in on the horizon. One of the big sections of the report is on the operations and maintenance program and all that they do. They do a lot for our system.

All the preventive maintenance work, they are the keepers of the data. They see the stuff on the ground that helps us make decisions about how we're going to maintain our system. They also run important programs like the fats, oil, and grease programs and industrial waste programs, and they help us prepare for emergencies by coming up with plans on what to do if we have big windstorms or snowstorms or other problems that help keep us serving our customers even through those challenging times. So like I said earlier, a really important part of the plan is reviewing our system and making sure that it will meet our needs now and in the future. The city comp plan policy UT seven says we should size our system for future demand.

So we're working to update Bellevue's sewer hydraulic model to look at both the existing and future flow conditions. And as you can see here, the Bellevue comp plan is projecting 50% growth by 2044, and a lot of that's really focused in the Downtown Wilburton and Bell Red area. So what does that mean for our sewer system? Well, we're working hard right now to to look at how that increase in flow is gonna hit our system and and what we need to do to prepare for it so that the sewer system isn't what's limiting the growth that we need to see happen. Another big change since the last, system plan is middle housing, and it's important that our assumptions in the model, consider middle housing.

Oh, the

comp plan so we don't know exactly what's gonna happen with middle housing. So we're we're going off of what the planning department has has assumed at this point. So they're assuming about 2,400 middle housing units that will be constructed by 2044, and that comes out to about 10 units per neighborhood per year coming in, and they they're assuming an even distribution throughout the city. Now that's what we're gonna model and put in our system as we try to predict loads, but we don't really know what's gonna happen. This is a new thing.

And so at the same time, we're setting up tracking systems so we can see where this is happening. Is it happening faster than we thought? Is it happening slower than we thought? Is it all happening in certain neighborhoods where maybe it just pencils out financially for that to happen? So we'll be able to adjust our assumptions with real data in the future, but we just don't have it now. So that's our plan at this point. Yes, please.

Yes. Me. Their assumption of 2,400, how how are they coming to that conclusion?

I I yeah. So I'm not a 100% sure how they got to this. I know that a lot of the municipalities have been talking to each other, and many of them don't know. So I Okay.

So you have answered my question.

We

don't really know.

We don't really know. The the common estimates between other municipalities and us are, you know, somewhere between five to 25% could be turning over. I mean, it's a pretty big range of what they're assuming. And I know some when I talk to the staff in the planning department, they think it's more likely to be happening kind of in the buffer areas around some of our higher development areas, but they don't know for sure. I know other municipalities have looked at maybe just the areas that are the older, smaller houses on big lots are the ones that are gonna hit this. So it's a lot of uncertainty, and that's why we're tracking it.

How do we plan with that level of uncertainty?

So the other thing is you can put some bookends on it. The reality of this type of housing on our sewer system is it'll it'll cause an impact, but it's not gonna be the same as, like, when you start changing it into high rises or other higher density stuff. The actual impact on the sizing of our system is not gonna be as significant even if we had a pretty big range because of the nature of this type of of growth. And I can talk a little bit more about that later. But, yes, it's important to kind of think about the sensitivity of that assumption when you make it. Right?

How many middle housing units would it take then for there to be significant? Yeah.

Yeah. We haven't finished the modeling yet.

Okay. That

that would good. That would good to know. Yeah. Yeah. Put it at the point where this is Yeah.

Yeah. Okay.

You bet.

So in case any other commissioners may be as ignorant as I am, the term middle housing is new

to me. Sorry. Yes.

Is that just the conversion of single family housing to multiunit with a certain cap?

So the state passed house bill eleven ten and thirteen seventy seven, which basically be before that, the the cities were able to set the zoning. We would say this neighborhood's single family. This neighborhood's multifamily. We're gonna have downtown over here. And there was concern at the state level that we weren't meeting the housing needs of the region.

And so they made a blanket bill that basically said per single family household or per parcel, you can have a minimum of four units. So what we had as one house is now we're allowing four houses in that, and it changes the equation for utilities immensely. Right? Like, we assumed whole neighborhoods were single family and transportation and Yes. Garbage and I I'm focusing on the utilities. But, yes, it it it has a huge impact on city planning where we had assumed it was one house per lot. Yep. And now you can put in four, and or sixth.

Six under Yes. Certain

Under certain and in some places, they can't because they don't meet other requirements of setbacks. And there's some, you know, loopholes or changes, but that's the gist of it is that it's now we kinda got superseded by the state that they can put in

more houses. Okay. Thank you.

Yes.

Yeah. Mhmm. And and I put this photo in. This is my neighborhood, and there's a lot of these going in where you have a large house with an attached dwelling unit, and then behind that is a small, small, separated unit. So they put three or four on what had been a single family house. And that's I live in the city of Seattle, and it's been pretty common there for a little bit. You're starting to see what that looks like.

But but the net effect is this is

a very new new, and and Bellevue only updated our codes to beat this last year. So it's still very new.

But they're starting to get applications and interest in, and we're trying to keep tabs on where that's coming.

And and as, Emily mentioned earlier that we don't as utilities, we never wanna be the one that's putting a brakes on growth, but there is a clause in the middle housing legislation that does allow us to say, if we get surprised and we see more growth and all of a sudden it did tip it over, we're not gonna see sewer backups because we're gonna be able to say, I'm sorry, Until we can upsize this pipe, we don't have the capacity to issue any more permits for this area. And so we do have that pressure release valve, if you will. And and so we'll be okay. And we'll plan as best we can, and we'll respond as best we can if we get surprised.

Just a quick clarification. When you said 10 units per neighborhood?

It was 10 units per neighborhood per year. Per year. If to get that 2,400 middle housing, it was looking at the single family neighborhoods, and it would be about 10 per neighborhood per year up till 2044. So they kind of assumed an even spread of it, not big peaks and valleys at this point.

So

as we're planning for capacity in sewer pipes, the population loading is a part of it, but the bigger driver of size is inflow and infiltration. And so what is inflow and infiltration? That's when you get flow that's not wastewater coming into your sewer system, and that can come from groundwater or stormwater. These photos on the right kinda give you a little snapshot of what that could be. Pipes get old, and they start to get cracks in them or the joint split, and now groundwater can flow into your sewer pipe.

And now you're having to convey that groundwater, and on a really wet winter, you get more. Some neighborhoods are older, and they have their downspouts hooked up into your sewer system. So you see smoke there. We'll do smoke testing in neighborhoods where we put smoke in the sewer pipes. And if you see it coming out people's drain pipes, you know that they're hooked up to the wrong line.

And so they're the biggest driver for our capacity is actually these INI flows, not necessarily the sewer loading. We have been working to address this. We since the last wastewater system plan, four basins have had a deep dive investigation done on them where we set up a bunch of meters all over the basin, and we try to figure out which you can see in that photo or the figure of the pipes. It kind of identifies which pipe sections in that basin have the most INI coming in. The red being ones that are like, oh, these are the leakiest ones in the basin, and green, these are doing okay.

So we can focus our repair works in areas that get us the most bang for the buck. And then we also do the smoke testing in CCTV to try to see where the issues are. And then there's the hydraulic modeling. So right now, in the ground in Redmond, we have a little over nope. Sorry. Bellevue. I apologize. I've been at Bellevue for a year. I worked at Redmond for ten, and sometimes it slips. I really apologize.

We're in Bellevue. The we have about 20 gauges in the ground right now that are actively collecting flow data in our sewer systems, and we'll use that data to help us calibrate our model for the existing conditions. It can also help us identify how much I and I we're seeing, and this is a little hard to see since we haven't had a super wet winter, but this example on the right, you can see the green humps going up and down across the screen. And and those are the flow, and each low point is a night, and each high point is the day. And people wake up, and they turn on their showers, and they use the bathroom, and they do the dishes, and it goes up.

And then at night, they go to bed, and it goes down. And so you get these very pretty regular trends in how the storm water comes through the system. And you can kinda see in the middle there, the two middle humps go up a little bit. They're a little higher than the other ones, and that was a rain event. We had a little rain that day, and it actually shows up in our flow.

So if we get lucky this winter, we'll get a couple of really big storms and the flow will be able to calibrate how our system responds to that flow with those changes in humps. So, we're doing the process of calibrating the existing model. We're looking at the populations to predict the future flow. And then ideally, we won't be the ones holding up growth when it happens. We'll be ready for it, and we have sized our system to handle all of that growth that we're we see coming.

So if we coordinated with repair teams across the city, we could wake up people at different optimal times and balance

that. Yes.

We could. Shay, it it can be really interesting watching, you know, you get different trends on the weekends than during the day, and we'll all see weird blips during the Super Bowl this you know, you'll know when it's halftime. Yeah. It's it can be pretty fun. I was kinda hoping we'd have this a week later. I could have shown you some of that. But, yes, there's there's definitely patterns to how people behave, and you see that in your sewer flows. An important sewer program that we plan to continue is the sewer extension program. The city has about 1,500 parcels that are still on septic. These systems can fail and can lead to water quality issues when they do fail.

They also limit growth. You can't build middle housing on a place with a septic. Like, they have you have to maintain the same, septic, loading on those systems. And so, we will continue to be, gradually extending sewer out to these neighborhoods so that we are fully serving our service area.

You can talk to them about

it. So the parcels that you see in red are the sewer the unsewered parcels in our city. And there there's some surprising areas that you're like, thought that would have been like Eastgate. I thought that would have been on Seward, but it was older King County, King County permitted development, and it doesn't have Seward.

Is that more section?

I think many of you guys are familiar with the lake lines. The wastewater utility owns about 14 miles of sewer line along the shoreline of Lake Washington. These pipes were installed mostly in the nineteen sixties and are reaching the end of their expected lifespans. In 2024, we completed the Lake Washington Lake Lines Management Plan, which lays out the approach to replacing this aging infrastructure. And that plan will be adopted as part of the system plan.

So as we as we approve this, a lot of the stuff that was worked on there will get adopted. Currently, we're working on the Lakeline's implementation plan, which was kind of the next step after the management plan, which, will include drafting a couple of policies around the Lakeline's work, and we plan to bring those policies back to ESC later in the year. So and those policies will get adopted in with our wastewater system plan.

Was there a decision on the lake lines as far as what approach we were gonna do to replace? We're gonna go back in the lake. We're gonna pull it up on the

Yeah. So the lake lines master plan broke the lake lines up into six different service reach like, kinda reaches and looked at three options for each. You know, put it back where it is, bring it up onshore, or put it up in the right of way. And each of those areas, they came up with a recommendation that made sense for that area. So it's not all the same for all of it.

Some of it is up onshore. Some of it's up in the right of way. The implementation plan is taking it Maidenbauer Bay was ranked as kind of our highest priority, highest risk area, and we're starting the work of breaking that area into projects because you don't do it all as one. And we're looking at the feasibility of the the approach recommended in that management plan. So we're we're starting that that work. And, on that one, it is recommended to go up into the right of way. So we're we're looking at that.

And maybe, Scott, is that gonna be part of the CIP plan that we're gonna be looking at this year? All the money that's needed for that Lakeline replacement?

It's a little early. Early?

Okay.

Yeah. The Yeah. The c stages. The CIP I'm working on the sewer CIP too and not part of the wastewater system plan right now, but it it will have some of the preliminary design and design of those sections, but we don't get to construction yet. K.

Asset management. So since the 2014 wastewater system plan, the utility has invested in building a more robust asset management program. This work has included condition assessments, defining service levels, and prioritizing renewal and replacement based off a risk. So an example of that, you can see in this photo, it's it's pretty small, but those are all sewer pipes in the system. And they're color coded by their risk based off of their age, condition, where they'd spill to.

All this work from doing CCTV inspections and and lots of stuff from the asset management work. And so we're gonna capture all that effort and kind of roll it into this wastewater system plan. It's a little bit new from what we'd had in the last wastewater system plan. Okay. So the result of the work discussed in the previous slides is used to help us develop the twenty year capital investment strategy.

I wanna note that the wastewater system plan will not be requesting budget approval to do these projects. You guys will still see CIP budgets coming through every two years like normal. This is just kind of laying out how we're gonna approach building up our our capital program, and it takes all these pieces. We look at that capacity modeling, and we look at growth, and we're like, where are we gonna need bigger pipes or bigger pumps or more to be able to serve our area? We look at all the studies we've been doing with the INI studies, the Lakeline's management plan, all these other investigations we've been doing, and they've identified some projects that we're gonna need to do.

We look at the asset management program and all the rehab repair work that they have budgeted in, and then we listen to our operations and maintenance guys. Those guys are out there every day. They see it. They know what's working and what's not, and they give us recommendations for what needs to get fixed. And so we take all of those pieces together to help build up the strategy of how we're going to keep our system at the right service levels for the next twenty years, and that's kind of a a big portion of our wastewater system plan.

The wastewater system plan content is generally fairly prescriptive. Like I said, we get some requirements from the county and the state of what needs to go into that. But we will be reaching out to the community in the 2026, and this work may end up being a little more educational than input depending on what we hear from people. As you guys heard tonight, sometimes it's hard to get the public input, but we'll be out there trying to to reach out to them. As Eric said at the beginning of this, all three utilities are doing their system plans right now, and that can get confusing to the public as well when you they get something saying, oh, we wanna talk to you about stormwater.

Oh, I wanna talk about water. Oh, I wanna talk about wastewater. They're like, I just talked to you guys about this. So we're trying to coordinate that outreach and understand that we're all asking similar questions. So right now, we've set up a single website that says utility system plans. And from there, they can go look at water and sewer and wastewater separately. Sorry. Sewer and wastewater. Stormwater water. So we're we're making an effort to try to pool resources a little bit and make a clearer message to the public as we ask for engagement. Hopefully, that will, pay off.

What are the specific engagement tactics are you planning on using other than having a a page on the website?

At this point, we're gonna the page on the website, I'm working with our community outreach person. They can do some postings on some of the social media pages about this. We can do, tabling both virtual and in person so you can set up some times where people can talk to you on a Teams call if they can't make it into city hall. And then sometimes just having yeah. Putting them in there and telling people that we're doing the work because people read that. My my auntie lives in Bellevue, and I get calls like, I was reading. What do you know about? And I have to go talk to people to find out. So, yes, I know people read those.

Yeah. That's

The digital bill insert. Right?

What that is? Yeah. Yeah. Yeah. Yeah. What

about any kind of coordination with neighborhood associations?

I can look into that. Yes. That's good. Thank you.

As we are developing our system plan, we're also reaching out to the neighboring agencies to confirm we have an understanding of ownership and operations along our boundaries. So we have a lot of interlocal agreements with different, agencies around us on who is responsible for cleaning, who has ownership of some of these systems that maybe don't follow jurisdictional lines. In the appendix of the wastewater system plan, we keep copies of all of those agreements. So it's kind of good practice just that we make sure they're all up to date and and signed and and we're in agreement. We've had a couple of small changes since 2014, like the South Cove area is now Izakwa instead of us.

So there's a couple of places that have changed that need to get updated from from last time. As this goes through and we get through a draft, it goes through approvals at King County, at Department of Ecology, and with city council. So it'll have, multiple kind of regulators checking up off on it. And the next steps you can expect to see. So we're in 2026 right now, and I'm giving you an early briefing of this.

I'll be back in q three to talk to you about some of the Lakeline's policy that I kinda hinted at in one of those slides. And we'll be bringing back a draft plan in early twenty twenty seven, which would be talking to you more about some of those policies and programs that I talked about and and get your guys' input on those and understanding. And then we'll be doing community engagement in 2026 and 2026 with the hope of going to approval about mid twenty twenty seven. So I appreciate you guys taking in all of this information. I know some of it may be a bit repetitive for many of you, but, appreciate you taking the time to hear what we're up to.

And if there's any questions, I'm happy to answer them.

Alright. Let's open it up for questions. Commissioners?

Yeah. I have a question. As always, you guys do an awesome job too, so thank you for a really great presentations. Very informative. And, Eric, I talked about this before.

Knowing that you guys are doing all three water plans concurrently, I'd really like some consideration for a one water approach that you can just sort of thread these three plans together. For example, we know that water use per capita has dropped over the last decades, and that has helped the sewer capacity, right? And so I think if people know that and you mentioned that you're planning your public outreach, and so maybe we do public outreach for all the water plans together if it works out so people can really see those connections, that their water use does impact sewer use, what they do with little storm water capture systems could help offset some watering when we get dry winters like this. So it is something to consider. We're an ideal utility because we've got all three systems, all three water systems under our control versus having a separate water district, and then a city has storm water and that sort of thing.

So I just think it's an opportunity. And if you could consider it, that would be great.

Just thinking about the community engagement and wondering I do customer research work. And so but I don't know how it works for this kind of context. Can you provide incentives and just literally go out and recruit specific kinds of groups, the exact groups you want feedback on from and solicit?

Yeah. Emily mentioned that in both water and sewer, the state agencies, it's pretty prescriptive about, you know, you have to we have to make sure we're collecting what we should be collecting. We have to make sure we're providing safe water. The one utility that we have that has more flexibility is the surface and stormwater. And so that outreach looks a little different because there are more options, more questions.

So we've actually, we put an online survey. We've asked people to self identify as being willing to be part of a focus group. We're actually gonna be compensating the focus group participants. We're hoping to get a non English speaking focus group and an English speaking focus group. So we're reaching out to those populations.

We're working with the office of to try to to try to get to those underrepresented populations that we have. And and so, yeah, stormwater is a little bit more robust because there's other questions that stormwater asks, you know, because stormwater affects our natural systems more than the sewer. We collect the sewer, and it goes to self treatment, and then it goes to the sound. But the stormwater affects all of our streams and our lakes locally. And so we do see a different kind of outreach for stormwater.

I guess what I'm wondering about I mean, you guys do amazing work. Not as whoever's doing it, but it's it the the recruiting sounds fairly passive. And so what I'm wondering about is is there other ways to be more targeted and proactive about defining exactly who are the groups who wanna go after and actively going out and recruiting people and providing incentive, the way you would do it customer the way I would do customer research for other kinds of settings.

And that's and I I agree. And that's some of our tabling. Like, I believe Crossroads had an event last fall, like an international event, and we tabled for our stormwater system plan out there. So we had staff out there and asking people what do they appreciate about our natural systems, and we had kids with stickers and putting it on. And so we're we're trying to get to those populations that we don't normally hear from. But I hear what you're saying about active.

Yeah. To me, that's a very like, who wanders by? Can I get you to do some stickers as opposed to let's plan out, like, who are the people we need to get feedback from? And then let's let's there are techniques to go out and, like, find people and pay them to come talk to you. Yeah. And I don't know on the pay them part what's what's allowed or not or what I mean, I understand it's a different context than I normally work in, so I don't know it. But that's what I'm wondering about. Are there other techniques that are less passive? Because, yeah, I don't otherwise, something on your website. If I for projects that I would work on, that's just depending on

what I'm doing. Like, you're gonna get

well, combination, you're gonna get not very many responses, or you're gonna get a very skewed set of people who are gonna kinda come through that way.

Mhmm. Yeah.

Yeah. And, you know, unfortunately, rate payers in general don't have a lot of knowledge of these systems that we all rely on. So even to ask some basic questions, what strikes me is you have to give them a lot of information, like, what's the difference between wastewater and stormwater? Oh, wait. And then they have to calibrate.

So it seems like the the question would be, where do you really need the public's input? Like, what's the benefit and, you know, why in those few specific areas? And then maybe look at, are there certain ratepayer groups that are most impacted or positively or negatively, look at the challenge from that perspective. But it just seems like kind of going to the general public, you know, it goes right over their heads. Right?

And it goes over my head too. You know, I stopped by one of the activities at Crossroads just to see how it was being implemented. And I was listening to the descriptions, and it's just it's just kind of complex. And, people don't need to know it so they don't. And then you try to explain it, and then they're like, wait. Why are we I just turn on the faucet. I just flush the toilet. I don't really think about these things, though. I think really getting down to the bull's eye of what are you looking for. What's that input that's critical to the city to know and then focusing efforts there. Right.

My mind the reframing in in my head, at least, is it's not it's I know community engagement is the term of art I know that you use, but it's it's a research project. And so if there are key questions we wanna answer, how would we go about getting those answers? Mhmm.

And and we're getting that's one of the reasons why we're using focus groups because that allows us some time to do some education before we ask for a response. And then to help recruit for those focus groups, not only are we relying on the online survey, but we're actually doing postcards to targeted neighborhoods to try to actively recruit some of those people onto the website.

Yeah. Those are some good we give them some information before they arrive to the focus group, keep it boiled down, but some background to kind of give an appetite or two months to come that they come in knowing a little bit of the terminology to be able to provide more thoughtful responses.

Commissioner DePertis.

I think the essential tension is that you're describing a really complicated stochastic forecasting system I'm trying to frame it in deterministic ways. And I maybe we can put our heads together. I don't have a good answer for how to do that. But just to comment that you're I'm glad you're on our side. And your approach here is spot on, and it's not falling into affairs.

K. I have a couple other questions not related to public outreach.

K.

One is, can you remind me, is my recollection correct that the wastewater component is the largest component in on the water bill for most utility customers? And if that is true, maybe I missed it. But on this on this system plan, is there anything I know we we basically push all the wastewater to the north and south treatments that King County operates. Do we does Bellevue have any influence in trying to manage the rising cost of the wastewater treatment given that it's such a the largest component of the utility bill for each customer?

So so Emily did mention that we are actively members of of, committees that the county has set up Mhmm. For their customers, essentially. And so we are we are very active on those committees. I'm I'm currently serving on a committee for the regional wastewater system plan for King County. I'm Bellevue's representative.

And so as part of that, just being involved, we have those meetings, monthly. And and the number of times I hear our customers, not just Bellevue, but other water districts, sewer districts, you know, talking about rate pressures with King County. Today, there was a meeting where we looked at the forecasted increase for the cost of our wastewater. I believe a little over half of our sewer bill goes directly to King County to pay for those treatment services. And so, yeah, we we are actively participating in in any way we can to help King County understand the importance of rate pressures on our on our customers.

Great. And then my other question is kind of more farfetched. It sounds like our role here at the city utility department for wastewater is to essentially make sure that we have all the infrastructure to push the wastewater north and south, and that's our role. And does the city look into and is this this is it the role of the city youth department to look into, are there other ways to handle wastewater other than treatment? And I say this only because I happen to read an article of some university researchers researching how to deal with wastewater.

It's not necessarily all get rid of it and clean it. There was actually, like they're, like, filtering and taking stuff like ammonia out of it to go and use as fertilizer. Is that something that the city's utility department should play a role in thinking about other ways to manage wastewater?

I think it's something that we consider, and and what we lose in those situations is the scale, the economy of scale, the King County. And and I will say that King County is in an in an unenviable position of new regulations happening because the cost to address things like ammonia are in the hundreds of millions of dollars at their treatment plants that they now have to consider building something new because we didn't have something to take out ammonia before. And so those it's cheaper to do all at one place. And so that's something that we continually look at. Is it and it usually comes back.

Yes. Much cheaper to do that. But we are open to things like small scale systems. It's not a treatment, but I do know that one of the things they're looking in Wilburton neighborhood is something called district energy, where they're looking at pulling the heat out of our wastewater stream to help, create, energy and heat buildings.

We we do allow also in our building permitting to do things to reduce how much waste is going. So there's things like using gray water for flushing toilets where, you know, you it goes down the sink, but then it goes back and you can flush the toilet with it. You know? And it requires different plumbing codes, and we allow builders to use that if they want. We don't require it, but it's an option, and some people do take advantage of those types of, kind of more green designs.

And as you guys mentioned, you know, water conservation leads to reduced, sewer usage, so there's, you know, a trend in that. And then just for us as a municipality, addressing those INI or infiltration and inflow issues that I talked about. You know, it's not only helping us by not having to convey it, but then it doesn't need to be treated as well. Right? So it's twofold win for us and King County.

So that that stuff is definitely under consideration. And and when we coordinate with King County, we're looking at this cost benefit is almost doubled. Right? Like, it's a cost benefit for us with the pipe sizing costs, and it's a cost savings for them with less treatment. So you kinda have to consider even though it's not we have one budget and they have one budget, it's one customer paying for both. Right? So you gotta think about what's best for the customers.

Alright. Thank you very much.

Thank you. Alright.

Next up is the utilities financial policies review.

Find out. Stop sharing. Stop sharing. There you go. Back to the green share. Yeah. No problem. There you are.

I did it. Okay. Yeah. Alright. So, it's not lost on me that it's $7.45, and I'm the last person on the agenda. So just to start out with, I I told my wife earlier this week that I would be presenting on utility financial policies. And and for context, she works at Seattle Children's Hospital. So there's no competition every evening and who has the cooler job and the better stories, and I'm never gonna be able to compete. You know? She she once got to work with a a child for years until they were five years old, and they got to finally eat their first plate of pancakes.

Right? So that that's what I'm competing with. So so when I told her I'm I'm talking about financial policy, she kinda looked at me and said, I I'm excited for you. I promise. But but that being said, I'm gonna do my darndest to, give these policies the attention and the love that they deserve.

I've been doing this work for a while now, and the longer that I do this work, the more I realize how important this topic is for for managing what we value and sometimes come to, forget is is the value of long term financial sustainability for our utilities. So I will, consider these these thoughts. The city's financial policies provide a blueprint for building a sustainable and resilient water system in the face of climate change and economic uncertainty. They are the foundational pillars that we use to build trust with our customers because they communicate our management philosophy to provide clean and affordable water today and for future generations. They establish financial guardrails and resources to respond to emergencies before they happen.

They provide a long term investment strategy for managing asset renewal and replacement instead of hoping for free money or favorable borrowing terms when you need the money now. The water industry is facing significant pressures from climate resiliency, natural hazards as we experienced last month in this area, long term water supply, and access to low cost capital. And these policies help the city of Belle Bellevue manage these challenges instead of putting our heads in the sand and becoming part of the problem. So it's something I'm I'm passionate about and excited to talk to you about today even though my wife had to lie about it. So so yeah.

So the city developed its operating and capital budget over an every other year process. So at the beginning of each budget cycle, we come to the commission to provide a primer on the budget process and the city's comprehensive financial policies. No action is is required from the commission tonight. Rather, our goal tonight is to pull the curtain back on the budget process and to show how we integrate these policies into the budget and rate proposals that you will see later this summer. You can interrupt me throughout the presentation.

I'm thinking about ten to fifteen minutes of content. We'll spend the first three minutes or so talking about the timeline that gets us from here to November as far as the budget process goes, and then I'm gonna change gears, chain and start a new chapter and talk about how we will go through the financial policies, step one. Step two, show how we integrate those policies into the budget process. Finally, we'll wrap up with what are those next steps that you will see, over the next three months as it relates to the city's budget process for utilities. So the graphic on screen provides that overall timeline, for the city's budget process for the 2027, 2028 budget.

You can see it takes us a little over a year to go through the budget process for the city. We officially kicked it off last month, and city council will meet later in this month or March to begin providing strategic direction on the priorities for the citywide organization. Now over here at utilities, we actually have to get a running start on the budget process. You can look see the the yellow box there. We started last year.

We have to go ahead and begin developing a long term asset management forecast before the budget process starts, and look and we have to start looking at preliminary rate adjustments as we get feedback from our wholesale suppliers. I'm gonna move to that green box. Beginning in March, leadership within utilities will begin evaluating incremental budget proposals, which may include new positions, onetime studies, or new programs, and also look at updated rate projections for each utility. At that time, we're planning for April to come to the ESC and provide a year end update of the 2025 financial reporting. It gives us a basis of here's our start line for looking forward over the next two years.

And then we'll provide an early outlook forecast in May to the commission. And that early outlook is showing what we know in April, which is pretty limited. We'll have a better idea of what King County is forecasting for treatment costs, and we'll have a better idea of what Cascade is forecasting for water supply costs. Beginning in June, I'm gonna move to that next box. We're planning on two work sessions with the commission to review those incremental budget proposals, both on the operating and on the capital side.

Then in July, we'll come back and show to you all the rate forecast if we were to adopt all those incremental budget proposals. That's gonna be I would say July is your first real check on this is, getting close to final what we're gonna see in rate projections. Around Labor Day, we'll come back and provide to you the, preliminary budget and rate forecast that would be presented to the city manager. You know, we're we're the cake's getting cooked a little more every time we come talk to you all. And then and then in September, we're planning on a preliminary budget hearing with you all to go through what we think is the final, rate forecast.

The rate hearing would be in September. And then in October I apologize. In that's correct. In October, we're looking for, the meeting to close out the ESC's role in the budget process for your actual recommendation or or opinion on the budget process and rates. So that's the calendar.

Now on to the exciting stuff. The city's policies play a crucial role in the budget process because they provide critical guidance that informs both long term and short term rate making. These financial policies are adopted by city council and published in the city's biennial budget. I am a big proponent on you know, if you're gonna do something, write it down. Documenting financial policies is a best practice, from the government government finance officers association, and it's a best practice because it outlines to the public the city's management philosophy on how it chooses to manage risk and how it chooses to respond to the ebbs and flows of of financial management.

They also communicate, how we, measure, adequacy to our financial measures, performance measures, and how we manage reserves, both operating and capital to respond to cost overruns or just changes in in revenues or spending. We're gonna spend a little time here. I I think this is the most detailed slide that I have. We have a lot of financial policies, and and they're like my kids. I don't have this many kids.

I have two, but they're I love them all. So the city had adopted its latest policies in in November 2024. I'm gonna focus on those policies directly related to utilities. The first row are are a set of general policies that define the financial management goals for the water, sewer, storm water, and solid waste utilities. And I'm gonna go through these very briefly.

One, they provide, guidance that we need to do long term fiscal stewardship. So in other words, we plan for beyond a two year budget process. We look much further out. We establish rates so they are at a level where the utilities are self sufficient, and we're not dependent on other tax revenue sources like property tax or sales tax. We leverage the plans that Emily just talked about.

Those system plans serve as the guiding point for how we develop capital improvements, short term, investments over the next six year period. So we wanna integrate those system plans into the budget process. And then the last major policy on the top row is we get guidance on what level of reserves are adequate to manage just day to day financial management, but also to manage unexpected, outcomes or or emergencies. The second row is how we deal with long term asset management over, for the department. I could spend a long time here.

I'm not going to. This we establish a seventy five year outlook for capital funding strategies and asset replacement. This is unique to Bellevue. This is I you know, it's not cutting. This is bleeding edge, for water utilities.

And reason why this is the case is this policy is in direct response to the number one issue consistently facing water utilities in The US, which is figuring out how to finance capital improvements and plan for infrastructural renewal and replacement. By establishing and updating its long term outlook on asset management, the utilities department demonstrates strong fiscal stewardship of ratepayer dollars. It ensures intergenerational equity because customers pay for the replacement of the assets as they use them. These policies also outline allowable uses of of a renewal and replacement account. That money can only be used for capital purposes.

We are not allowed to use that money to stabilize rates or to provide rate relief. The policies also outline how the city approaches the use of bonds, loans, and other financing tools to help fund capital programs. In general, these policies ensure that we, receive strong bond ratings and favorable interest rates. The third row is really a set of financial policies that outline the city's growth pace for growth philosophy as it relates to new connections and infrastructure required to serve that growth. And then finally, the fourth set of policies govern how we set our rates to comply with all the financial policies above that.

So an example is our sewer cost of service today that the commission, reviewed, last month is in direct response to one of those policies, which is to ensure that our rates are consistent with principles of cost equity. In addition to cost equity, these policies provide guidance on how we develop the actual rates. One, we build in economic incentives into our water pricing to encourage conservation. We pass direct wholesale costs onto our customers so that wholesale costs from Cascade and King County, we pass directly onto our customers. The reason we do that is so that those costs do not jeopardize the ability for Bellevue Utilities to sustainably fund the local cost of the system.

These policies also require the city to, evaluate rates on an annual basis so that gives us the best chance of providing stable and predictable and gradual rate increases to our customers. Alright. I finished it. That that was that was it. The next couple of slides I have three more slides.

The next couple of slides are prepared to illustrate how my team uses these financial policies in developing the budget proposals that you will see in a couple of months. The key takeaway from this slide is to show how we integrate each of those policies into rate making. I'm gonna go from left to right here. So each year of the forecast, my team evaluates the rate revenue requirement for each utility independently, which includes our wholesale operating cost forecast, which when we design, we will pass that cost directly on to our customers, our local operating costs, contributions to our capital reserve, which are need to comply with that seventy five year asset renewal and replacement forecast. Our debt service payments need to align with our debt management philosophies, and our net cash flow will ebb and flow each year to produce stable rate adjustments over multiple years.

All those obligations are then compared against that, the denominator, which we will look at a revenue forecast assuming we don't increase rates. The first thing we want to measure is the adequacy of our existing rate revenue to support ongoing and sustainable financial operations. And it's only then once we prove that test, then we look at that as a basis of future rate adjustments. The capital funding plan is developed developed in tandem with the rate revenue requirement, and it establishes the funding sources that we would use to support a six year capital improvement program. I'm gonna start on the right side here and then go to the left.

So we we start with our seventy five year asset renewal and replacement forecast, which identifies priority investments, and then we prioritize that over the immediate six year term. And then we add to that any need needed capacity and or regulatory capital projects. Once we identify that suite of projects, I'm gonna move to the left side, we then come up with a capital funding portfolio that is directed by our financial policies and includes cash contributions from our rates, connection charges that we assess for new development that comply with the growth pays for growth philosophies of the city, any bond issuances or grants. And so we're it's a mass balance act on our capital funding plan, but we're designing that capital funding plan based on those fiscal policies. Then a lot of the capital program is funded by the rates to preserve intergenerational equity for our ratepayers.

And last slide. The last parameter we use to guide rate adjustments is assessing the adequacy of financial reserves for each utility. These reserves provide day to day cash liquidity because we don't receive revenue evenly throughout the year, and we don't pay for expenses evenly throughout the year. These reserves also manage unanticipated operating cost overruns or unexpected drops in revenue, that could be due to mild summers, changes in in investment earnings, or other factors. For each utility, there's two flavors of reserves, an operating reserve and a contingency reserve.

I'm sorry. An operating contingency. The distinction in these two reserves is that the larger of the two, the operating reserve requires city council approval to use, while the operating contingency, which is the lower of the two, can be authorized by the utilities director. The size of each of the reserves is based on the unique risks each utility faces from a revenue and expense stability perspective. Of all the utilities, the water utility has the highest revenue risk because water sales are heavily influenced by good golfing days.

If in the summertime, if we have a lot of sunny, weekends, water and lawns are getting irrigated, and we're gonna see higher water sales. And the opposite holds true. If it's mild summers, we could lose as much as 10% of our water sales in a year. Given that risk, it's not surprising that our water utility has the highest level of reserves. So conversely, while the sewer utility is the largest utility financially of the city, sewer revenue is much more predictable relative to water, so with less reserves are needed to manage that financial risk.

And then finally, stormwater revenue is the most stable of all utilities. And unlike the water and sewer utilities, there is no wholesale cost component. In other words, we have a lot more control of, and cost changes for the storm water utility. The solid waste utility oh, Andy, you have a question?

Oh, at the end. Thank you.

Oh, okay.

The solid waste utility, which is the smallest but nearest and dearest to my heart, I started my career in solid waste. The purpose of that reserve is, mostly to provide a an alternative funding source for those programs that are grant funded from the state or from the county. And if we were to lose that grant funding, we still have capacity to fund those programs for one year. So, before I close-up here, I just wanted to circle back to to, you know, challenging my wife's perspective of my job, that these policies, you know, they're they're more than just words on a paper to me. This is how we ensure that, our customers expect water to come out of their faucet tomorrow.

They can make that expectation a hundred years from now despite all the challenges this industry is facing. And these utility these policies put us put us in that position. So with that said, I will, answer any questions you have, but thanks for your time.

Thank you. Let's start with commissioner DuPertis.

So thanks for that. I think just repeating it, parroting it back. I think you need great big piles of money and want to control returns. What's what I'm not a 100% sure about is do you have access to that capital? And if not, what do you need from us?

Access to to capital on the for the asset renewal part?

You've talked about bonds. You've talked about other funding mechanisms and the factors that go into rates and a variety of other things, and we're balancing all of that to a an outcome that is best for the ratepayers in the city of Bellevue. 100% got it. What what is the gap? So we have do we need more money? Do we have enough money?

Yeah. Great. Okay. Let me let me answer that in two flavors, and I'm gonna go back to one of the financial policies the city has, is that we do not use our asset renewal and replacement account to lower to provide rate relief, in the short term. That money is set aside for both short term capital projects and long term asset renewal.

The the moment that we start taking some of that money to meet emerging current needs, we're making a policy choice there that the current generation somehow is more important than the next one. And so from a asset renewal question, Andy, I think the answer is, yes. We have sufficient capital and a plan to address, the next seventy five years of asset replacement with cash contributions from our rates. Where the pressure is from a financial perspective for the water and for the sewer utilities is the rising cost of our wholesale suppliers. We can't take money from the asset renewal fund and push it into the operating fund to help bring those costs down.

And so those costs have a direct and real impact to the rates our customers pay, and we don't have a savings account that we can use nor should we, I would argue, to pay for those costs. That is So

so what what then so so I think two ways to approach that. One, we have this uncertainty in the wholesale cost and where I I agree there's if we peel away layers of the onion, there's deferred there's maintenance capital and various other things that the people that we depend on, we don't necessarily have confidence that they fully plan for that. So the implication for us then is as the consumer is how how much above that do we need to prepare for. Right?

Yeah. I I got it. Yeah. So so so and that goes back to our goal of providing stable, predictable rate increases. And so one of the when we're seeing rates, yes, we have an unpredictable unpredictable, potentially unpredictable rate path from our wholesale providers. And so a policy choice that we can present in rate scenarios is if we provide you an an option based on a certain projected cost increase for wholesale suppliers, if there's a level of conservatism that we need to build into that outlook into our our rates that we then pass on to our customers. That that is something we can explore, but that would be an a a strategy to address the uncertainty in our wholesale forecast.

So I I think so so the question is, how have we have we done that to your to your satisfaction? And if not, are you proposing a policy shift?

If you were to ask me that question last year, I would have said yes. But, you know, we have all you've all seen the forecast from King County. They're not what we originally had known, not what was originally shared, markedly higher. And so, yeah, I I'm I'm on shaky ground when when responding to the the reliability and confidence over the next ten years of wastewater treatment costs.

But but I think that that the challenge then is that the greater that uncertainty, the more revenue. Is that the right word? What word am I looking for here? We need greater buffer to overcome that uncertainty. Right?

Because our objective then in the in the in the in the rate principles is that we want a predictable trajectory. We don't want these peaks and valleys, and I fully support that. So then the only way to overcome that is that we need to buffer and and correct me if my words aren't wrong are are wrong, but we need to buffer the rates. We need we need other funding mechanisms to make sure that we don't have to come back to the rate payers in and ask them for to accept volatility in their rates. Is that right?

Yeah. Yeah. Yeah. That would be required if we're trying to stabilize the rates and provide a kind of a steady glide path for our customers. There would have to be some buffering in certain years in our rate.

So so is that our goal?

It is one of our goals, indeed. I I'll I'll add just briefly, Scott, is, as Eric mentioned, you know, Bellevue sits on these advisory committees for both Cascade and for wastewater. I today was my first meeting as chair of the MUPAC rates and sub subcommittee. So one of the things one of our main deliverables is providing opinion and the district's and city's perspective on rate increases. And one of the goals we are trying to convey to the county is we acknowledge the that there are cost increases for for your operation. To the extent possible, the more stable rate increase you can give to us, the more stable rate increases we can pass on to our customers. The more

spiking the costs are,

the difficult more difficulty we have.

Right. So so we need to account for that spikiness because, one, they're they're they're not going to deliver non spikiness. Right? That's happy path thinking. And two, if we accept that, then we have we have to have a rate trajectory or other mechanisms to to that are that are I'm pulling words out of the air here, so correct me.

There are, let's say, rate adjacent or a proxy for rates, right, so that we can provide that linear, your rates going up x percent per year, but it has to overcome the spikiness. And then the the risk factor that you're talking about is the difference between the rate growth and the maximum of the spike. Right?

Yeah. And and, Scott, did you wanna add something? Yeah.

I I commissioner Dupuis, I I remember a similar discussion I think we had at the last budget cycle. I really appreciate your perspective on this. I think the points that Eric was making earlier about the representation that we have, not only at a council level regionally, but also at a staff level regionally, we are in key positions in regional bodies, whether it's RWQC, MUPAC, you name it, we are seated on boards that can help influence, the the rising costs that we experience that are passed through to us and the wholesale costs, whether it's King County wastewater treatment and the volatility that they experience because there's significant uncertainty in their forecasting currently. They for the first time, you may recall last biennial budget cycle produced a twenty year forecast. That is something that we've been actively working towards for quite some time regionally, trying to influence that process to drive more certainty and predictability into those regional costs that we are, by policy in Bellevue, passing through to our customers.

That is our policy to do that. So to the extent that we can influence King County's forecasting process and by being representatives at a staff and county, council level on these bodies, we are trying to, again, drive through mechanisms, methods that we can use to not suppress, but just bring more stability to the forecasting of the cost that they're passing through. They're subjected to one of the great drivers for them is regulatory costs. That is a big unknown. That is something that most recently, Cameron Guerrerole was asking for partnership and support, with, with, city of Bellevue and other regional bodies.

How can we help them negotiate and talk to the regulators and work out ways that we can kind of smooth those regulations that are driving significant costs into regional processes for wastewater treatment, for example.

I hear all of I 100% understand. So the question that I would have is, are the the regulatory pressure is creating uncertainty? Yes. You're you're 100% not wrong. The question I would have is coming back to the prior presentation around sensitivities and where I am 40% certain I heard a statistics joke.

But is the is regulatory uncertainty really the sensitivity, or is it the one estimate that I heard nearly $200,000,000 in deferred maintenance capital, really the uncertainty? And how are they going to go fund that? So from our perspective, I don't think that's terribly relevant. I want us to go participate in high tide raises all boats, and they're our neighbors, and let's help any way we can. 100%, let's let's go do that.

But from a fiscal policy, we have to assume that we don't have an indication that they're going to be successful, and we need to be we need to plan for that.

Appreciate your comments, commissioner. And what I can promise you is that over the coming many months, you'll have opportunities to revisit this, not wanting to, cut this conversation short. But as Matt alluded to, we will be bringing forward rate forecasts that will factor in as we learn more. We're just now beginning the rate forecasting process through King County. We're just getting the exposure to, if you will, their next rate forecast, and we're seeing those rising costs. Similarly, we're seeing that for the first time, some significant rising costs, in water supply due to the, cascade supply program. So, that is something that we will be bringing forward as part of our budgeting process, and we can continue to deep dive into this and ways that we can try Well,

I I and and I do. And it and 100 I fully fully get all of that. Okay. I think one of the one of the challenges, these conversations date back years and decades. So when I listen to the presentations, I have every confidence in the world that you have the know how and the sophistication to go execute against this.

My concern is that we are going to succumb to the this this I don't wanna say false narrative exactly, but the the whatever word, attractiveness, the whatever, insert word there, right, of saying, well, we can reduce rates in the short term. Please don't underspend. Ask for think think comprehensively about the worst case scenario, the mid scenario, the low scenario, and all of that. You guys are on top of that. And then give us the option to say, we need to properly we we as a community choose to properly fund our utility, and I think that's the decision decision that we'll make.

But just make sure that we have that that full that full opportunity. I think that there's a risk where we say, we're going to shift risk to the wholesaler, and then at some later point come back and say, well, the wholesale rates changed, and that's why we have volatility, and I don't wanna be in that position. I I think at this point, I'll be repeating myself. So thank you for taking that feedback.

I think Oh,

no. Think Gab was raised raised her hand. Oh, okay. Yeah.

Commissioner Alexson?

Thank you.

Just wanted to I had a clarifying question on the operating reserve target. So I think from what I heard, it was for all the water wastewater storm, water solid waste, those were based on, I believe, assessed risk by you guys. Is that revisited every, like, budget cycle, every annually? I guess, what's the cadence on that? And then do those have to be, like, adopted by council? Just want to clarify how that works.

Yeah. So so for each of the reserves, your response to your the first part of your question, the reserve amounts will change as a function of our growing expenses. And so as we incur higher local costs or higher wholesale costs, in many these reserves, they're a function of equivalent number of days or as a percent. So the overall dollar amount tends to increase in the reserves. If I understand your second part of your question is how often is the basis of reserves evaluated, it has been some time since we evaluated them and and considered adjusting them.

I've looked at kind of the equivalents across the industry. We are kind of if we do the math, we kinda land in the same spot as many other utilities, although we may get to this the the the journey differently. As an example, most water utilities I'm familiar with target their reserve as a just a straight number of days of operating and maintenance, somewhere between sixty and ninety. If you did the the long math here, even though we we have different numbers we use for the water, it ends up getting to, like, 75. So we're right there in the middle. But that's my response to the second question, Gabby. It's been a while since we did evaluate the basis. And then the third question you had was can you remind me?

I was just

sorry. Give me a question.

Yeah. These are adopted by city council. Okay. These policies. Yes.

Okay. That's helpful. Thank you.

Alright. Any other questions from any other commissioners?

That is a great job. And now we can tell your wife this is recorded so she can go back. And she wouldn't have missed it.

I'll just throw my 2¢ in that you do a great job. And I love what you do also because that's what I do for a living. And financial policies are really the rock of of what we do here. So thanks very much. Excellent.

Well, it looks like we're gonna have a very exciting few months going through it. So fasten your seat belts. Thank you, Matt.

Alright.

Then we'll move on to the next item on our agenda, which is review of the commission calendar, Scott.

And, we are balancing scheduling external factors that might drive our ability to bring something forward to you. In many ways, the, commission's calendar this year, it should be very familiar. It's a heavy budget year, and we just covered much of it in Matt's presentation. He walked through the the year and what we'll be, touching with, the commission on. So I won't repeat much of that, but focusing in in some ways on the items that are not specific to budget items.

So the solid waste contract, we've obviously gone through January and February, so far. Feels like a busy year already. But coming up next month, as we've talked about, we brought forward a utilities bill assistance update, last month, and we are working feverishly to develop concepts for consideration, by the commission next month, and we look forward to bringing that forward. That also includes, in many ways, we're very, we prioritize a one city approach. So we're partnering with human services here in the city and others, say our staff at mini city hall, to not only evaluate what we think we can do to improve and and provide better affordability financial assistance, but what are they seeing in the community?

Because they have very different lens, very different perspectives, but they're all the same community that we're trying to reach. And in some ways, what we're trying to work towards in terms of financial thresholds and things like that, we're balancing that off of them and seeing, does this align with what you see? So looking forward to that presentation, next month and really continuing this conversation with you all. And then the solid waste contract next month as well. We have a solid waste contract procurement that's getting underway.

It's just beginning, really. But we're looking forward to bringing forward a presentation next month that will provide an overview of what that process is going to entail this year and also look for opportunities to give you a chance to give us some feedback on service level preferences and things like that. Moving forward, as Matt touched on, in April, we'll bring forward the 2025 financial performance, so the year end review, how do we perform financially. We'll look at the preliminary twenty seven to thirty two CIP. We have another tentative placeholder here for contract procurement that may take place and it may not depending upon where we are in the procurement process.

But we are, just keep in mind, looking for another opportunity to come before you with that RFP design package, if you will, and maybe a day like that for you before we actually issue. Moving on, Matt touched on a lot of this, the early outlook rates forecast. You're gonna have another water system plan update in May. We have a tentative, for a possible second meeting in May for a field trip around our CIP. We have the 27 to 28 in June operating and capital budget proposals.

We'll really deep dive into what it is we're looking to in terms of investments as well as that next rate forecast before we and I scrolled right past it so you can't see the July, where it's just where we have a budget recommendation to the city manager. Moving on to the city council calendar if I can. So I would really emphasize here. This one's very fluid. And, again, it's really driven by external factors.

For example, where we are in the solid waste contract procurement, but also things like you see in May, the King County WTD rate forecast. We So just were talking about they're developing the rate forecast. As it turns out, even as recent as yesterday and today, it looks like we're gonna bring them forward or try to bring them forward to council at the April and possibly swap the sewer cost of service and rate design discussion. So that's what I mean by we're staying a little fluid and nimble if we can and look to maximize where it makes sense. We do have the solid waste procurement going forward after you see it.

It will go forward to council, of course, for their input and feedback on service delivery and the RFP design package. We'll also be bringing forward in July, the cascade budget and rates and cascade supply program update to the council. So that's that's where I'll stop tonight. It's about midway through the year at this point. There's a lot in from a budget rates and forecasting perspective as well as excited to undertake that solid waste contract procurement.

I had a question on solid waste procurement contract. How long is that term?

How long is the duration?

The, yeah, the duration of the contract that

So a little over a oh, the contract itself. That's great. That not necessarily. It's not been defined just yet.

Okay.

An industry best practice that we see is generally a lengthy contract. It's around ten years. It's it's an option. I think Renton just adopted a ten year contract with a two year extension.

Is the current one ten years?

The current one is a seven year with a seven year extension, so we're in year 12 of a fourteen year contract.

Okay. No. Thanks.

Any other questions?

Also on the solid waste contract, looks like you all are kind of almost concurrently presenting to this commission and to city council.

That's why I'm saying we're looking to try and figure out the appropriate timing, where it makes sense. And you'll see some of this slip a little bit as we adjust to account for all the moving parts of not only solid waste, but King County budget development processes. We need to bring forward some very important, equity and affordability initiatives this year. It's not only the cost of service study and the rate design that you've already acted upon that we'll be bringing forward to council for their consideration, but we are partnering and marrying that up with utility bill assistance policy options. That's that all falls under equity and affordability for the community. So we're just looking at the best way to package that and bring it forward in a way that makes the most sense.

Thanks, Scott.

Thank you.

Alright. Well, that brings us to the end of our meeting. May I have a motion to adjourn our meeting? Move to adjourn. Thank you, commissioner Hayash. And may I have a second?

I second.

Thank you, commissioner Tyson. With that, we're adjourned at 08:26.