City Council - workshop

Ready to get started with our City Council work session. I think everyone is here except Councilor Franciosa is excused today. So we'll just go ahead and dive right into our presentation.

Good evening, Megan. I'm Sarah Hudson, Senior Policy Analyst in the City Manager's Office, acting in capacity for Russ Grayson, Chief Operations Officer. He's back on Monday. And I joined my colleagues in the Community Development Department. They'll give Ben Harry five development to the engineer. So here we talk to you about development infrastructure requirements. So we shared a very lengthy memo. So we will kind of do a light touch at the front end of this presentation with the idea that we'll leave a lot of time for questions and answers and discussion. But we do want to provide some grounding and context, just to make sure we're all on the same page. So in terms of the purpose of this discussion, I really want to dive into how infrastructure requirements affect infill housing development specifically. And we'll talk a little bit more about what that is and then I'll go into in-depth as well. There's just some unique policy considerations because infill is offered very differently than greenfield development. We do want to provide context on recent changes, including at the state level that really influence the conversation that's happening on the ground, including highlighting some key challenges and trade-offs that we're encountering on a daily basis. So where council guidance will be really, really helpful. And we do have approaches that are currently underway that we're doing this year, some kind of administrative action. So we'll kind of outline that in more detail. Amy Nunez, Today, so i'll forget the sense of that we're already moving forward to address some of these challenges, but then there's some. Amy Nunez, More you know your policy and funding considerations of concepts that we put forward, where we really like to get Council guidance on you know. Amy Nunez, We want to advance these things and what priority, just so we know how to develop work plans accordingly, so what we're really looking for tonight is some of that guidance on some of the trade offs at work encountering and. direction on kind of those longer term policy approaches. So here are some key value questions really at the heart of this discussion. And the memo has a lot more at length, but a lot of them really kind of boil down to what's on this slide. And a little later, we'll have some more specific questions that drill down a little bit deeper that are a little bit easier to provide guidance on. But just for Council to be chewing it on as we kind of go through the presentations. So some things that we're really thinking about at the heart of this discussion should infrastructural requirements be tied to project type or project impact. So for example, three units all on their own separate lots through a middle house and land division or a triplex. You're talking about three units, but they have different kind of requirements associated with them. But is the impact mostly the same? What are the considerations there? In general, should every new dwelling be required to contribute to the multimodal network? That's more or less how we operate. So that's kind of a broader question about how to think about this. When is existing infrastructure and right of way considered sufficient, even if it does not meet current standards? And kind of this balancing the need for getting houses on the ground right now, but also protecting the opportunities for development later. So that's a key trade off that we think about. And when should the infrastructure costs be shared more broadly? So we'll have to get to kind of dive into that more in a little bit. What kind of roles and responsibilities? What's the development versus the sale? So just quickly, the agenda that we'll go through today, again, we're going to try to You know, we endeavor to move through this pretty quickly just because of the read-ahead materials, but we will kind of talk about infill development, how infrastructure requirements work today, some of that content. We won't dive into the case study highlights, but we do have a few options here in case it would be helpful to ground some of the discussion to kind of look at a particular example. And then we'll get into that discussion in just a bit.

In terms of why we're having this conversation now.

So first and foremost, alignment of council goals. um really we've done a lot of work there's been a lot of success in terms of housing housing in general we've really tackled a lot of that while working through it now a lot of the things that we're dealing with are kind of more structural in nature so really kind of taking that one that next step of looking at um how do we continue to move forward council goals um changes in state policy and development patterns so with changes from the state we're just seeing that more density is allowed in existing neighborhoods that previously only considered lower density development. So a lot of times that infrastructure is not adequately support that density. So there's just, you know, again, that tension exists there. Sometimes we're just seeing limited outcomes. So I think it's helpful not to think of it as an either or. Do we want the housing or the infrastructure? We want all of the above. But in some cases we're not getting either, because sometimes the requirements just serve to be an obstacle to to move that forward. And again, kind of clarifying those roles and responsibilities that on a question of what should be funded by the development or the city, and maybe some creative. So here are the Council goals that are really kind of at the heart of what we're talking about. We want to accelerate neighborhoods, remove barriers to infill and milk housing. At the same time, we want to enhance safety and accessibility of travel options and align our systems with a growing city. So this discussion really sits at the nexus of those, and we want to talk about where we're not really able to advance that because of some of those obstacles.

Thanks, Sarah. We're going to share slides as we go through this presentation. I'm up next. So I'm going to get into a little more of the details about what we're talking about and what is infill development and start there. So there's a description of what infill development is on the slide, and it's development that occurs in areas that are already developed and served by existing and often aging infrastructure. I did look into the development that we actually do have a definition of infill development, a broader definition of infill development. It says it means development of vacant bypass lands located in areas in an area that is already developed. So pretty clear what infill is. It's usually on a smaller scale. The key characteristics are that it occurs within built-out neighborhoods. They're smaller in scale, usually about an acre in size or smaller, constrained by surrounding development. And this is an important point that Sarah just brought up. It's reliant upon older infrastructure And you'll hear this theme throughout this presentation. We're seeing today the permit staff are seeing today developments that we didn't see five, six, seven years ago. House Bill 2001 was passed by the legislature in 2019, and that allowed significantly more density within the existing neighborhoods than was anticipated when those neighborhoods were built. For transportation system, it's not that big of a deal because a lot of traffic can fit on a road. However, for sewer and water, those pipes that are buried under the ground, There can be deficiencies in providing those, not only in just the size of those pipes, but also in the age of those pipes. Some of them have been in the ground for close to 100 years in the older parts of town. It introduces higher densities than historically planned. And then because of that, and because of the scale of what we're seeing for these infill developments, which can be an existing single family dwelling turned into a duplex or a triplex, you're adding one or two or maybe three units. So spreading the cost of upgrading the older infrastructure and extending that infrastructure on a per unit basis can be challenging. And that's where we're talking about things where we don't end up, we don't get the infrastructure or the housing because it's out of balance for what we're expecting the developer to extend. The next slide, I'm going to contrast the infill development with greenfield development. We don't have a definition for greenfield development. We use that term quite a bit, but essentially what it means is larger scale developments on previously undeveloped land. The classic example of these are expansion areas where you're seeing these master plans come in. For areas that were agricultural, they were rural, we annexed them, we're extending brand new infrastructure into those areas. Other areas, and this is where it gets a little bit interesting, when you think about what I just talked about for infill development, think about the timber yards. That was actually a industrial site for a while. However, and it's being redeveloped with a significant number of dwelling units turning to residential. We would consider that to be more Greenfield just because of the scale of it, because all of that new infrastructure that's going to be built in there, it's not really looking into, it's not extending or hooking into the older infrastructure. It's large enough to almost be considered Greenfield even though it's sort of an influence. So it's, as you'll see, the complexity of the roads are very site dependent. But in general, greenfield happens on undeveloped land. Infrastructure is built to current standards, larger in scale. The constraints are low because there is an ability to install infrastructure that meets current standards. And then importantly, The cost dynamics are different than infill because there are usually many more units and the cost of that on a per unit basis can be spread out. It makes financial sense and their performance tend to work out a little bit better than the infill. In a bad context, the existing infrastructure was built under the older standards, which we just talked about, which make the infill development tricky. And the major reason behind that is because our development code, as many development codes from cities around the state, were written for greenfield development. That's the way we anticipate most development to happen. And so when we get infill, We're trying to apply standards that work very well for a master plan area on a very small scale. And we're going to talk about some details of that that we see on a day-to-day basis. And I'll stay here, and then I'll go into it a little bit later. Every single one of these infill projects is different, and it brings a completely different set of factors and challenges. So it's difficult to apply sort of a generic infill development. Next slide. So, how infill requirements work today, you've probably heard the term to and through before. We actually don't use the term term to improve isn't in the development. The concept is is expressed in the regulations. But the idea is that, um. infrastructure when it when a development happens that that develop the development extends infrastructure not only to serve the development itself so where like where a pipe would come and serve the development it also extends that that infrastructure through the frontage of the site so that the next property along the road or along along the utility corridor that can pick up the that infrastructure and apply and use it for their development So if there's a development on a street, it brings infrastructure all the way across its development or across its frontage and ends it so that the next development comes in and does the same thing, they extend it so that that third development along the way can just pick it up and take it across their frontage. So in theory, it's a good way for each development to basically extend their part so that the city grows in an orderly fashion. Where that works best are in large greenfield developments where infrastructure already meets city standards and where projects are large enough to absorb the infrastructure costs. Where that concept becomes challenging is on the smaller scale infill projects because the costs are higher relative to the project size. And then the infrastructure upgrades may be disproportionate to the impacts just because of the number of units and because there may be additional infrastructure upgrades beyond just that two and three, just because of the age or capacity of that infrastructure. I'm going to now turn it over to Renee to talk about how the permitting.

Thanks. This information was provided in much more detail in the memo, so I'm just going to just kind of highlight what we're trying to point out with this slide. It's infrastructure requirements by development type with your standard subdivision on the left which has the most comprehensive requirements. And this could be infill, but it's more likely going to be greenfield or somewhere where they're bringing complete infrastructure to the site. Extending streets now to the property throughout the subdivision, right-of-way dedication for those streets, full street furniture for utility extensions, underground and overhead utilities. If they're in the area. So where this presentation is primarily focuses in the middle and the box on the right, which is middle housing land divisions and middle housing. So middle housing is anything duplex, triplex, quadplex, cottage development, townhouse. Currently, those are reviewed just through building permit review. There's no formal land use application. Um, and so the infrastructure requirements for those are not nearly as significant as a standard subdivision. There might be street furniture improvements. If the lot. And up the street in front of the law is entirely unimproved rather than requiring right away dedication. If it's the lots on the street that's undersized for its classification. don't require the dedication for just building permit type um just middle housing development itself but we we do make them adhere to a special setback so we reserve that area in front of the property should city want to come in and acquire the right-of-way to enhance the street corridor and widen the corridor so there are special setbacks that are applied sidewalk might be required if it meets a certain criteria then in the middle we have middle housing land division and That line is getting more blurred between the middle housing land division and middle housing. In fact, they're actually merging more as state law continues to change and limits what cities can require from middle housing land division. So you'll see the requirement for improvements is pretty similar to just the housing itself, which really gets to the heart of what Sarah mentioned and what we highlight in the memo is we've historically triggered infrastructure requirements based on the application type. Is this a land division or are you just going through building permit? But really, should we instead be focusing more on the number of units regardless if they're on their own lot or they're all clustered on one lot and it's a rental property management situation? Then the next slide is, again, we've covered a lot of this already in our presentation, but with recent state policy changes expanding intensity number of units that could be on a lot where we typically plan for or only assumed there might be one unit and maybe an adu also with the state's continued requirements that we can only adopt clear and objective standards and procedures for housing projects is limiting our ability to be creative and flexible in these situations so the intent is good that everybody knows what to expect They're an objective, it should be numerical and understood by anybody who reads it. But when we're applying these in unique or difficult to develop sites, we don't have that ability to use discretion or apply subjective standards. So that's again why we're asking council for some direction where we do have those mechanisms. We do have applications that applicants can apply for variances or waivers. We're wanting this check-in with council to see if we're on the right track when we're allowing relief to those standards on a case-by-case basis.

Okay. I'm going to talk a little bit about what we're experiencing from from a staff perspective because of this. So the applicants, obviously it's going to be cost and delays, the impacts of the construction. There's what's proportionality concerns and then it gets back to the per unit. If you're able to spread costs over multiple units, it's more proportionate than if you're trying to focus those costs on a relatively small number. Inconsistent outcomes because Infill development, we're trying to make so many exceptions. It's difficult when we come into like a pre-op situation to be able to advise based on this greenfield code, we're trying to apply to an infill development. And again, the unclear requirements we've talked about because each site is so unique. From the staff's perspective, we're seeing these complex involving rules. Every legislative session, we're getting new types of permitting requirements that we're putting into our local processes. Every project is unique. As Renee just said, we have limited flexibility because of the clear and objective standards. We would like to be able to be more nimble and make case-by-case decisions, but that's a little bit challenging because of the legal framework that we're operating under. It's a time-intensive process. Trying to put in full development four or five units or three or four units on a smaller lot is much more difficult than putting four units on four lots in a traditional subdivision where there's plenty of room to put all of the utilities in the stormwater, et cetera. So there's a lot more time per unit spent on trying to solve all of the issues that arise. Threshold uncertainties, Renee just talked about. For a regular subdivision, we know what that is, but when it comes into middle housing, the same number of units, we have different thresholds for what gets triggered. And then balancing competing priorities, and that's should we prioritize the housing or should we prioritize the infrastructure? We want to do both, but sometimes they're self-defeating. And this leads to some core tensions. This is the near-term development versus the long-term system needs that I just talked about, the flexibility and predictability for clear and objective standards. And then the project impacts versus the system performance. And where they show up, and these five bullet points are going to show up later on during the discussion section, but where they show up is in primarily in right of way dedication with insufficient rights of way throughout the city sidewalks whether or not to require sidewalks or to replace existing sidewalks because they don't meet current standards frontage improvements that's the two and through that i talked about a little bit utility extensions and upgrades again the two and through um and then the site constraints um they're everything in bend is not flat we do have rock we do have other constraints within the existing environment that affect infill development. So that does affect where we get into a waiver or a variance and how we apply those criteria. I'm going to turn it over to Ben to talk about where we see these in some specific examples. As Sarah said, we're going to try to stay at a high level with these and not dive in too deep because there's a lot of details that we'll spend a lot of time on. We're trying to keep this at a policy level. Go ahead, Ben.

Yeah, thank you. I think really the most important thing on this slide is just understanding that you can have the same scale of development, a triplex, duplex, quadplex, or in this case, a cottage cluster. and your requirements for what you need to do just depend on what someone did 60 years ago 40 years ago when the standards were different and we thought about infrastructure and long-term maintenance in different ways so if you don't have water main in front of your site you have the two and three requirement you have to extend that water main same thing with sewer a lot of the example projects we have are next to gravel roads and that trigger sometimes, depending on the scale of the development, would trigger paving, curbs. As soon as you're concentrating stormwater by putting in hard surfaces instead of having gravel, you can have erosion concerns. And so then you're talking stormwater infrastructure, which can also vary depending on what part of town you're in. If you're in Aubrey Butte, you're on a lava cone. There's not really anywhere for that that water to go. If you're in other parts of Bend, it might be easier to get the water into the ground and you can have smaller stormwater infrastructure. So depending on where you want to put your quadplex in town and exactly what's going on next door, the price tag for that development could vary drastically. So we can move on to the next slide. So we have four projects here. They actually have fairly similar requirements across them for sort of different reasons. 8th and Quimby and 5th and Franklin both are missing substantial sections of paved roadway in front of them. So those would need to be paved, curbs, sidewalks installed. 8th and Quimby actually has sidewalk on part of the development, which doesn't meet our current road cross section. All of them have some sort of utility extension and then Quick point about costs on these. When we get infrastructure permits, part of our warranting process and closeout is that we get cost information from the contractor in order to scale the warranty and the bonds that we might receive from a development. Great way for us to check unit costs over time. So we have a spreadsheet where we track this information. I tried to pick a consistent number that was more or less in the median of our costs for particular types of construction and then did some very rough cost estimating so these are order of magnitude like very rough planning cost estimates they could be off by a little bit the idea is to give you a sense of scale across all of the 10 or so developments in the memo and then the three here Yeah, we need to skip over these and come back to them potentially later if you have questions.

Can I ask a question about it?

When it says modified uncertain under 5th and Franklin, can you explain when they're modifying what that really means, how it works, how does it play out for you?

So I was not around for the 5th and Franklin permitting process, but my understanding is the original idea was that it was going to be a 60 developer to want to continue with that project and they turned it into a safe state area so when we say modified they they decided that they wanted to do something productive with the land in the short term while they figured out whether or not they want to proceed with six unit development or something else that might scale them proportionately to the cost of the infrastructure is that something that you see often that they say okay well then we're going to do X because we can't afford this um

perhaps they might take a different route. And I think Colin mentioned this, when we do get pre-op requests and meet with applicants, sometimes we'll get a few different concepts for us to provide feedback on because the applicant's looking for the best route to go. And then oftentimes the feedback we provide in the pre-op book might point them in one direction or the other. Sometimes they might downscale it just to try to minimize the infrastructure improvements that are required.

Okay, thank you. Steve?

Can you go back to that slide? That with the money slide right there? On any one of these, in your professional judgment, I'm asking those of you here, if there's one thing that you could have, because you say limited flexibility, my hands are tied, if there's one thing that you could have done to relieve these developers of the requirement? What do you think would have made it go in each one of these, if you would?

Does this get in what we're going to talk about as far as like short term options?

It could potentially with short term, we're going to discuss sidewalk fee in lieu, right of way dedication. So, I mean, we could get into lesser transportation standards. If we skip forward to 8th and Quimby, Try not to get too far into the weeds on this, but if you look at the left image, in red there's a sewer main and a manhole and then you can see off of that manhole i mean everything about this is very out of standard but off of that manhole we have two four inch sewer services going to the last houses on the block okay typically we would have that sewer main extended through the frontage and we would have a lateral perpendicular to those houses to serve them we end up with these diagonal lines it creates larger utility conflicts and when you have things like water and sewer crossing them, you want to minimize the amount of time that joints and those lines are near each other because it creates a potential cross-contamination issue. In this situation, there are sewer lines on the alley to the north of Quimby. There's a sewer line on the next street to the south of Quimby that would serve all of the developments in that area. uh the fourplex here going to be an eighth likely we could consider something like reusing the existing diagonal lateral putting several houses on it instead of requiring the sewer main extension but this is a very vacant lot next to this that wasn't owned by that property owner we would probably recommend a to and through extension so that we wouldn't be putting the entire cost of a longer sewer extension through someone else's frontage and then the property's frontage on the other owner in this situation There's not really anything else that could develop. Even if one of these existing houses decided to demo and put a quadplex, triplex, whatever on that property, they would be able to get sewer from somewhere else. You end up in a situation where a four-inch line is a little bit smaller than we like to see for combined development. But if it was something that made the difference to the applicant in the situation, we would consider it.

But you weren't able to do that because the current code doesn't allow it? Because this one is moving forward, right? So what actually happened?

So for example here, and I'm not sure what the purpose of this permit is, but for illustrative purposes only, this is a very good example of where the two and three requirements we all stop and start scratching our heads and going, how do we equitably apply these here to this one case where it's got factors like the other properties us or by potentially other means. But if those didn't exist, what would we do here?

Right, if there weren't those diagonals, we wouldn't have that.

That did happen here. So I guess what I'm trying to understand is I thought I thought it said, isn't there some flexibility to allow that? So allow this to happen a waiver.

Something like that short, because we do not have did not proceed. Sorry.

I'm reading the long. Sorry. Sorry.

My bad discretionary. Process. that we have are variances and waivers to public improvement standards, which are land use decisions. They have costs associated with them for planning and engineering fees and minimum time requirements for notification purposes. So some of the- And some risks, they can be appealed. Yeah, and because they can be appealed by a neighbor. Whereas like some of the examples that Brene gave for the middle, being approved just through building permits so if we're able to approve something through a building permit but we have to then do a land use decision so they don't have to do to and through

extends the permanent cost so uncertainty okay and i don't i just want to make sure it was hard for you to see those those green lines are the diagonals yeah yeah and that's given giving me the heebie-jeebies that's bad yeah that's not how you should do it so diagonal but that is what's there and so what do we do with it that can be safe um

that's that's the tension that we're talking about here okay since we're on the two and through i'm sorry well i okay i just want to check in that from what's coming that are we going to go each of those five each of the five okay because we'll get there so one of them is the two and three that we're going to talk about right okay and just to follow up on this one i mean it was a pre-application meeting it's staff are generally reticent to start promising that we're going to make a certain decision on a waiver or deviation we would want a little bit more of a developed set of plans from the applicant to start moving along through those discretionary types of decisions so in in this case we were able to talk about 8th street which is an arterial it should be a hundred foot wide right of way it has a substandard sidewalk on it and when i say substandard i mean it should be a multi-use pathway eight or ten feet wide right now i think it's four or five feet, essentially around our minimum for any street to remain existing. Even our local street standards have a six foot wide sidewalk. The right-of-way width doesn't meet the current standard. I talked to our Transportation Mobility Department about how 8th Street works, and we did say we would likely support a waiver to leave 8th Street at its current right-of-way width. But I think all of the infrastructure requirements that we discussed with the applicant made them at least nervous enough about the potential for their development to work.

Okay. Can I ask a different variation of that question?

Sure, just want to I just want to staff has prepared. We are going to go through each of these categories. So just make sure we're lining up with that.

But. So, just very quickly, I wanted to say, thank you for this memo because, um, very well been very Rene Brooks, Sarah Hudson and Colin Stevens. I noticed that's an alphabetical order. I don't know who the main author was. But really great job, very informative and well-written. So thank you for that. My question is on page 10 that says infrastructure requirement categories presenting the most difficulty. And the thing that to me was most striking about the case studies is huge variability in terms of estimated infrastructure costs. It doesn't seem like it's correlated to which projects actually move forward. I was trying to get a sense of like, well, kind of the why, which of these categories is the bigger barrier? And I think the answer is going to be, we can't say because it completely depends on the contact. Almost all of them had sidewalk issues, but a couple of really big ones might be make or break if it's something like sewage infrastructure. So can we put a sense of which of these categories represents the biggest dollar amounts? Could we rank them? So we say, we really need to focus on right of way, or which of these, in terms of magnitude, how do we relate them to each other?

I mean, full road paving is a big one. It's a little hard to answer that because I think some of it depends on, I guess, like how relatively deficient we think that thing is. Like expanding a five foot to a six foot sidewalk maybe feels worse than a four foot to a 10 foot sidewalk. Or if we have an older sewer main and there's a risk of that failing, that maybe seems like a more reasonable infrastructure investment. But to more directly answer your question, full road paving, water main extensions, sewer main extensions.

Those are expensive.

Underground work is generally going to be more expensive.

Underground is hard and pavement is expensive.

And it's variable, too, because the rock hardness changes defensively. think of that being sort of unfair as sometimes you're just going to end up hammering or I mean you can't blast an infill development as well because there are houses next to it you can damage someone's existing home right and hammering can take a really long time I had a job a few years ago where a contractor spent I think two months hammering out a drywall rock gallery so that's really big equipment with someone in it the entire time and you're excavating Yeah, that's very context. No, that's good. Good.

Okay. Neighbors love that, too.

Oh, yeah, absolutely.

Yeah. That's unique. That is sort of a unique thing with Bend. Yeah. And a lot of folks that come here from the valley, we talk about why are you so obsessed about water and sewer construction being so expensive? Well, it's because of our geology.

It's so different here from a lot of other places.

So some of these, you know, when the state talks about policy and infrastructure requirements, it's a little bit of a different ballgame here in Bend. That's why folks just don't, because they don't see it. They're not opening up the hood to see what's underneath the surface.

And just another infield versus greenfield kind of comparison. I've heard from some developers that at the greenfield scale, you can run essentially a rock crushing operation. So you can clear the site, you can blast, which is cheaper, and then you can run all of that rock for a rock crushing machine and then build your roads with it. Instead of what you do in the valley where you excavate and then you contract to the quarry, you bring in rock to the site. You just do all of that work on a site. And if you have a big enough space. Essentially is the same as the cost of bringing in rock from a quarry. If you're hammering to remove rock from a trench, it's just the infill becomes much more expensive.

Yeah. So back to the council discussion, and here are the five categories that appeared on an earlier slide on the left-hand side. It doesn't say the to and through, but one of them, the frontage improvements, we can just try to consider. Basically, to and through. So this lists those things that I talked about earlier, and then we have some administrative approaches to addressing those. And then the further to the right that you get, the more sort of far out there it is as far as policy or future. So things that we are considering and or working on is from an administrative perspective, it is what's called a do not widen list. And it's to expand that. Right now we have a list within the development code or roads that we do not want to widen, even though they may show on our transportation system plan, it's a collector or an interior street. We recognize that because of the built environment, we do not want to widen them. And so when a development comes in, we do not require them to go through some form of waiver to not have to dedicate and prove that right away. An example is like 14th Street through the older part of town between Whitebeamport and Galveston. 60 foot right away, it's supposed to be 80. We're never going to have it any foot right away through there, so we put it on the list. There are other roads in town that should be on that list. And so we're actively working on that. And that's something we're working on. The sidewalk discussion. This is something that We would like some input on it, but we're also somewhat working on it. And the biggest, I guess the two biggest things that we grapple with are where there is no sidewalk and there's the infill development that comes in and we say, well, the code says that you're supposed to put a sidewalk in. So you need to build a sidewalk, even though there's no sidewalk on either side. So it really never gets used. Or there's an existing sidewalk there, but it's four feet wide and it was built in 1973. and it should be pulled out because it's either failing, a couple panels are failing, or it doesn't meet our six foot minimum standard right now. What should we do? Should we leave it or should we replace that with a more modern sidewalk? Stormwater disposal options, we'll talk about that on our next slides, but this is the drainage intensity that we've heard about. We, for many years, have had this stormwater sort of regulation that you keep stormwater on your property. That's how you treat it. But with infill development, our lots are getting a lot smaller. So we're looking for other options to do that because there's not enough room on these lots. And that would be to be able to share or to mix the public and the private stormwater and dispose of it within the public rent supply. We also, if you move it a little bit to the right, this is where we're going to need some direction. So for waivers and deviations, this is where somebody would perhaps not do a waiver to widen the right-of-way or to install a sidewalk. I think if we can get more direction from council, we can put those into the development code, into our criteria. so that we are not guessing whether or not we're making the right decision when we're asked to make a waiver or a deviation or variance. As we move further to the right under policy, This is where we're going to need some help on refining those infrastructure thresholds, and this is the intensity of the use. As Renee pointed out earlier, it was a lot easier from a permitting perspective before the House Bill 2001 when we knew that a four-lot subdivision would have four single-family dwellings on it now. now we we're not entirely certain if we're going to get you know four single family duplexes or triplexes on there so it's it we're not 100 certain about what that intensity is but the the other thing is somebody could build that same intensity through a middle housing and not trigger any of those and so what it would require a code amendment but we'd like to be able to remove the application type as the trigger and focus more on the intensity of that development and make that consistent across the board. So it's not that somebody comes out of a pre-op and says, well, I'm not going to do a land division anymore. I'm just going to do middle housing and middle housing because the land division was going to trigger all of these improvements, even though I'm getting the same number of units. A limited discretionary path for qualifying info projects. This one is an interesting concept where, because of the clear and objective standards that we have to deal with and those examples that Ben showed you are examples of how complex and different and unique each one of these infill developments can be. However, the standards that we apply, even if we adopt new standards to anticipate infill development rather than greenfield, still have to be clear and objective. And it's virtually impossible to anticipate all of the variations that that could be so that we could create a clear and objective path that everything would fit into so this concept would be to have a voluntary process where a developer could say hey i recognize that this doesn't fit into the clearing objective box rather than putting you know a variety of variances and and waivers all together and stacking them let's just go into a full-on discretionary process for this where we work with city staff with our design team we just into a land use decision, but we could do it, I mean, with agreement with the developer, relatively simpler than trying to do it with stacking variances and layers together. So I think that would be a procedural path that staff would recommend that we investigate. Legislative advocacy. Is there counselors here? We just had our with them in anticipation of the 2027 session. I don't have any great ideas to throw under the table right now.

That should be in the funding side.

Okay, maybe on the funding side, but honestly, that . And other things like prevailing wage, work to use public funds with private, there's some partnerships that there's a lot of discussion that we can have over the course of the next six months if we want for that.

Or a question on the limited discretionary path. That's allowed under current law. We don't need any influence.

I think the key word was voluntary. Yeah, yeah, yeah.

I understand. We need to amend the code to create that option before somebody is allowed to choose it. And I will say that if we were to go down that route, that suggests a lot of staff time a lot of collaboration i mean there are going to be fees associated with that that we'd have to figure out and but yeah that's a path we could create and there'd be some definitions of what it takes to qualify for that path projects of certain types yeah right we'd have to figure out intensities of use or down we're going to make discretionary the default we're not allowed to do that anymore that's the law yeah

And then going under the funding category, the Fee and Luluf program, we actually have a Fee and Luluf sidewalk program in Woodbury Village. It has been in place for over five years now, where it was recognized that there's a lot of larger properties to do land divisions and it doesn't make much sense to put a sidewalk that doesn't really lead to anything out there. So they pay a proportionate whatever calculated cost of roughly what it would cost them to install a sidewalk that goes into a dedicated fund to put sidewalks or pedestrian facilities in Wood River Village. The funds did help build a sidewalk that goes from the park that's in Woodward Village up to McClellan along the hill there. So there's already some actual physical infrastructure that was put in the ground. So we are collecting it there. So the idea here would be to expand that to a more of a citywide program, but that's a project. But I think it would be very helpful for info development.

I want to give a little anecdote because I was thinking of Wood River Village a couple years ago because triplexes, things were being built in that neighborhood without the infrastructure with it, getting complaints. Look at all these new homes coming into my neighborhood with cars, with people walking, but we don't have a sidewalk and now we have more traffic. that's one of those trade-offs, right? Then you have the housing come first and we come back for the sidewalk, but for the neighbors already in the neighborhood, maybe they wanted the sidewalk first, right? So that's what we have to think about as far as when does the infrastructure come in, right? And it was just interesting because I remember them coming into council, I watched that meeting in that neighborhood, a bunch of them saying, hey, we don't want to have to have this be a requirement and we like how our neighborhood is, but then several years later, the impact of that kind of showed up, which was interesting, so.

And then the last underfunding is deploying the city funds. And this is fairly wide open. And this would just be to help with the extension of infrastructure. You know, there's a variety of different ways. General fund utility rates. I mean, we've got the septic to sewer. Could there be something to replicate that for other areas where there's like a revolving fund? Sort of wide open for the discussions on that one. And then we'll go to the next slide. And so these are council guidance we're looking for to help inform us on our decisions. So here's some problem statements. I'll just go through them and then kind of open it up for discussion. So something to think about is should we require new dwellings, all new dwellings, to contribute to the multi-modal network? um you know you know either at their frontage or an in lieu of programs should each unit be required to help participate in in the infrastructure um should we be prioritizing the right-of-way dedication now for these uh substandard width streets um even though we may not be building a road for a while or or are we okay with just requiring the adequate setback so the city can come in and buy that property in the future the trade-off is It gets to remain on the property for the time being, through the city project and building it because we'd have to buy that.

Still imposes the same limit on the property size that can be developed, right? So it doesn't benefit the housing units in any way or therefore the redevelopment potential of that piece of property.

It lowers the cost, the upfront costs, having to go through the right of way process with the city and the dedication process.

So what is that? So that's the part I don't understand. What is that cost that there's an actual cash outlay for the right of way?

It's more of the improvement of that right of way. Okay, it I think I think the struggle is more on whether or not we should require that frontage improvement that to improve okay or or. Either picking it up or requiring a setback probably doesn't impact the development quite as much as requiring the. Expensive.

Yeah. So the cash outlay at the time of redevelopment is not really impacted by the choice between those 2 approaches. It's a different thing later where they could capture some value back from the city. The future owner could.

Right. Okay. I'm, I'm wondering a question, just thinking about how we went through Franklin with a lot of neighbor discussions and trees that were in the wrong place. If we get a dedication, do we think that makes it more or less likely that property where we're going to end up with a tree or a little garden box, or if it's dedicated to us, maybe that's easier or maybe that doesn't matter. if it's city right away it's easier in the future to maybe say hey don't plant that tree there that's not the right spot okay the more things that get installed there it's private property the more it's just you have to take care of it later well we changed design on Franklin we tried to accommodate right because we wanted to be neighborly but um that is there's a cost to that so okay okay I'll just go through something we can come

in field development or are we okay with like a decision tree where if it's built within a certain amount of time or if it's a certain width that it's allowed to remain even though it doesn't meet today's standards? The next bullet is requiring a full frontage improvements for large developments, even if adjacent properties are not fully developed or matching existing conditions. This is a little bit more of a to and through. And this does talk about larger developments, but I would like to counsel weigh in on just generally about two and through with infill development. The exploring the development intensity threshold, we talked about that tying the intensity rather than the application type to the improvements. And then allowing exceptions to two and through extensions where the adjacent infill potential is very limited. So if it's completely built out, do we like that one? Are we fine with it? But if there was a big vacant property, then it's just like that. Maybe that's where we go.

So some of that stuff could be built into a discretionary pathway, right? Some of those things could be solved that way rather than separate policy.

Yeah. Okay. So we have some next steps on another slide that I'll save till the end. So I'm ready. Okay.

I thought it might. These are really good questions. I thought it might be good to go to that one that had kind of everything on a on a page and just to talk about that decision tools for waivers and this idea of this voluntary discretionary path first, understanding some of these other questions about what that would be, we can talk about later, but how do people feel about that as sort of a threshold question of allowing this sort of off ramp for these type of infill, small scale. And I want to really emphasize small scale infill because to me, anything inside our UGB, we are filling in, we are doing infill, but I recognize that it's totally different if you're on 8th and Quimby than you are if you're in the Southeast area where there's nothing built yet. So I want to be clear there. But how are people feeling about that discretionary option that staff might explore defining how that would work and giving people an option to do that?

We'd have to come back and define that in code, right? So we'd get...

There's a lot more, and this is initiating a project.

Yeah, right. Because that was required to make this work. I generally support that. I think the key part is going to be the definition of what qualifies for that option.

Right. same okay as a concept yes okay yeah i have a question on the first bullet there but but i'm i'm i support that sure yeah that's a little bit more sort of tactical but okay so it sounds like that is something and to me to my knowledge of being here for the last five years and hearing people who ping me about their projects and hey can you talk to the staff which isn't really my job but there's a lot of conversations going on um there's sort of an informal like Path of trying to work with staff and sometimes getting a waiver and sometimes getting this, but I think a formalized path would be much better in a recognition that these are the types of housing that we want to support. And I did, you know, this presentation is amazing. The memo is really great. we're having this conversation because we're very pro housing council and city, and we want to build housing, even though we're identifying all these barriers and there's things going on in state law, we want to build housing. And so one of the downsides of discretion and the reason why the state has sought to take away discretion from cities is discretion has been used to block housing or to make it hard to build housing. So it's just something to think about when defining this is how to make sure we infuse that value into it, right? instead of the value that we want to help housing be built, right? We're not going to use these tools to suddenly start saying we're imposing extra things that are going to make it hard to build housing. But it sounds like we can start looking at how to achieve that. Okay. You can stay here for a minute, or we can go back to those other questions, but other things that are coming up for people just hearing this anything you want to start talking about.

Yeah. Well, so on the expanding that do not widen list, I think the hardest. Thing there for me is envisioning, you know, what do we want the city to look like in 1020 years? And so the answer kind of depends on well, what are we anticipating the future of that corridor looking like if it's. You know, a 5 lane, 45 mile an hour Boulevard. Like, I don't think anybody wants to see that. Well, some people actually did. Oh, yeah, but if it was, you know, like, I spend a little bit of time looking at, like, what are the smallest cities that have streetcar systems? Like, sometime in our future, I think that would be really cool to contemplate. But if we're not planning ahead to actually provide the right away for that, it's never even going to be an option. So. I think I'm a yes to expanding the do not widen list with maybe the asterisk being, I would like to see a transit master plan or a bicycle master plan that says, actually, for these designated routes, we are going to set aside some right of way. But for everything else, yeah, let's not... require widening, let's not acquire additional right-of-way. But that's another step that's part of the TFP and a future conversation.

Yeah, I can speak to that. Yeah, Lee. I mean, we've been working on a list for the past do not meet their transportation system plan designation but essentially it's bumpy so there are plenty of streets in river west like this on brought up 14th there are a bunch of named streets in between 14th and the river newport galveston that are like 50 feet wide or alleys that are a little bit substandard but there are a bunch of garages in the way and it's rigor, right-of-way dedication. We had to go through a waiver process. And that costs people $4,000 to do something that we already know we don't want to do. But because we don't have it written down, it wouldn't be equitable for us to pick and choose who gets to do it. So we want to lay that list out early on. 8th Street is another. That's never going to get wider. area and the corridor essentially functions as, I mean, maybe from a bike and pedestrian perspective, we're not quite where we want to be, but it's unrealistic to assume that we're going to get to the place that's our ideal in that specific street corridor So it's really just about codifying where we know we're probably not going to get to the right place. And you're going to have a chance to talk about that in the upcoming transportation system plan. That's when we would be talking about do not widen. It's just sort of a preview that that's where we're going.

I think that is part of accepting more of existing conditions, basically. The theme comes up in multiple places, probably especially with the sidewalk and stuff. You know, I mean, on that core, 8th Street is an example. That's why we're trying to get people to think about biking on the- On a different corridor. Yeah, 6th Street. Yeah, on 6th Street. So, you know, we have to accept some of these limits because we can't, we just don't have the resources and it's practically doesn't make sense. And the conflict that would generate is enormous. So I think that philosophy has got to inform the thinking.

Yeah. Maybe Colin, can you go back to that list of questions there? All right, anything else coming up for folks

Well, the intensity versus the type things seems really important to me, that we focus on the intensity of that.

That's one of the threshold ones, I think, as well.

Yeah, so can we go back to that first bullet? Because that's kind of the intensity, right, there in the refining the infrastructure thresholds, what you're talking about? So I guess the question I had on this is, you talk about, well, let's remove the definitions and just look at the intensity, which makes a lot of sense to me, to approach it in that manner. I'm just wondering, those destinations are middle housing. Those are there for a reason. They were developed. I'm wondering what the downside of removing that kind of criteria from this is. Can you think of any other unintended consequences of removing that?

yeah anyone else on the panel jump in if you feel like there's more to add but i think there's a little bit of a tension between our maintenance funds and development you know if we're not getting uh old water main improved or utilities placed in the right part of the street or um to and through we're either putting costs on future developers or putting costs on to our water services maintenance fund streets maintenance fund or in some cases you know if we're talking about things like whether or not there's a sidewalk it's um you know comfort walking around a neighborhood do we want kids to be able to walk on the side of the street or do we want them in the road um do we want excessive like ada pathways versus like, are we thinking about specifically kind of housing, not at all costs, but with a reduced investment in the sort of like ideal version of the city, or are we willing to absorb the costs of getting where we want to in different ways? So there's there's a little bit of a like we might get sort of a less good finished product for citizens to use, or we might be not getting an investment in public infrastructure that would reduce the sort of burden of our maintenance funds.

Yeah, I get that. I'm sorry. I just feel like the intensity really meets that need though to me because that's the designed use of that that that where we grow we will need x y or z to to meet the need of the intensity i i i just want to understand and so i'm very much behind that that kind of concept i'm just wondering if we remove designations tied to a particular intensity is there any any blowback for that i just before i just walk away from those destinations that are destroyed

Lisa Chavez, yeah I think. Lisa Chavez, Even with the limitations on notice and who can appeal Randy says okay it's related to housing like, as I said, really. Lisa Chavez, The lines are getting pretty close to each other as it is already between middle housing land divisions in the middle housing itself and, in fact, a code package of amendments that Pauline is working on right now that you'll see pretty soon. um just explicitly removes right-of-way dedication as a requirement for a middle housing land division we have the option in state law and we're just proposing to remove that as a requirement because in many cases the middle housing is already on the ground we get pre-apps for triflex and oneplexes that have been there for 20-30 years and they want to come in and do a middle housing land division they just want to

divide the law.

Basically put lines on paper so they can be sold off separately. And historically, in the development code for the last two years, it's triggered a lot of infrastructure improvements. And so both through state legislators and our council priorities, we're just trying to remove some of those barriers if the house is already there. The impacts are on the ground already. So to answer your question, I can't right now think of a An immediate downside to doing that, to focusing more on unit count and not whether they're on their own lot or all on one. There's like water and sewer implications for that, which we're also wrestling with in terms of how many laterals they're supposed to have.

You wouldn't capture that through an intensity use, the water and sewer?

billing implications and what what's easier to um like in the long term for folks so it generally makes sense to have individual water services with meters going to separate units so that people are you know paying for the equivalent amount of water yourself sure on on the sewer side we care about it a little less so um the 27th in Wichita is I think the example that in be looking at new water services to each of those units and then probably keeping the shared super service.

I think one of the things we've kind of always talked about earlier where people come out of it the pre-app and said, well, I'm not doing that because this application triggers improvements. I'm going to do something similar because it doesn't. We're letting the improvements drive the application in order to remove that. For example, if somebody came in and they wanted to divide a property into three, which is the partition that would require a lot of infrastructure, but they could come in and do a triplex, which is the same three units, and then come in later with just a building permit, and then come in later and do a middle housing land division, and not have to do improvements that that partition would trigger. So we just want to sync up.

Just lining it up.

Yeah. Intensity to improvement and not play this game. I would have a patient type of my filing form. Yeah. It's defendable to me to go that way.

Yeah. In terms of the to and through stuff, the thing I worry a little bit about, are we just transferring some of the costs to future development, especially in the context. If there's one where basically everything's developed and it's just a lot, that's different because you're not going to have to worry about that. But in an area where, There might be future. And I just I don't know the answer to the question because the who pays and when they pay, you know, especially if it's the site serving. I've been trying to think about it as site serving infrastructure versus kind of system or community serving infrastructure. And it seems like. I mean, water and sewer, I guess, are both, but they seem more site specific to me when I think about public health and safety. And, you know, you want to have good quality water that shows up and is reliable and that we can bill correctly and all that stuff. And the same thing on the sewer side when it leaves the building. So, you know, I don't want to just transfer the costs here. Um, and I've even been thinking like, well, maybe the site serving stuff is the stuff that we, you know, maybe there's still discretionary paths. So in the circumstances, we make some changes, but that's what we're focusing more on. And the system serving stuff, we're really backing off the requirements. Right. Because we're never going to build the sidewalk Network for example without a public investment of some kind in my opinion it's just never going to happen sidewalk is the easiest one to conceive of yes right so the water stuff that's hard but that framing of site serving and kind of core infrastructure water sewer and roads and access are important to some extent right for sure but um So what the answer is to that question, but I don't want to just push the costs off to five years when another infill development happens and then have to pay more because we did something today. So if you can answer.

So that's some of the in lieu, right? Like if you do a sidewalk in lieu, then I kind of paid a little piece of your mind. So when they come in, they don't have to pay for the whole sidewalk. Maybe it's some of that idea, but I think that is the trade-off here. You are pushing a cost onto either a future developer, the city, or maybe some of both. Right, right.

It's also the city.

So I would be interested in yours.

I love the idea of the fee-in-lieu programs, and I would like to see them expanded, not just for sidewalks, but also for things like, you know, we have a couple, I don't even know what to call them, cycle tracks or cycle paths. I want to know if we can expand them and use them in other areas too, because a lot of times we hear about developers will hit these triggers and then shy away from it. And there's this like, well, I don't want to be the first one to trigger that. So we're addressing this in some areas, like in the Southeast area. But can we expand the fee-in-lieu program to other kinds of infrastructure too, so that the city has a little more coordinating ability to plan centrally for things that have these sort of network level effects that would avoid or at least mitigate some of these trigger mechanisms that developers then shy away from. So I like the in-lieu programs. I feel like that makes sense. I'm sorry. Go ahead.

I was just going to say, I also like that idea of like a septic sewer, but doing it for other things too. I mean, having that sort of revolving loan, I think that's a great idea that maybe we could use as well.

Yeah, I think the other thing about where we start to collect those funds from, what's really nice about the septic sewer one is there are some like water quality revolving loans that we can sometimes inject into that. But if there are other ways we can start to slowly build up some of the funding to do some of that. I mean, people write to us about their gravel roads. And what's interesting is they're maybe not thinking about, OK, if my gravel roads improve, that's nice for me when I come into my neighborhood. But also that's all this extra stormwater because it's not it's now not a permeable surface. Right. And so like there's all these different trade offs, but maybe we're slowly improving those with some sort of fund. Right. Instead of having to do it. OK, I just want to just on the threshold question around Not looking at application type, looking at intensity and feeling like there's consensus on that and stuff, check that out. Looking at more options for fee in lieu, are we feeling okay?

The question on that is it sounds like we're still cost shifting to later people by doing that because we're charging probably a percentage of what the actual improvement would be. Is that true?

How do you set the fee? Yeah, that's what I'm saying. Any of them. If you were to do one for a water main or some other frontage, how would you look at setting the fee?

Like a latecomers agreement or like a reimbursement district.

That's a little bit of a different discussion. I'll come back to that. Right now, I'll just talk about the Wood River Village one. There's basically a formula for how much sidewalk you would have had to build and then on a square-footed basis of that that's translated into a fee, and they pay that when they pick up the building permit. And it's based roughly on the cost to build it. Roughly. Yeah, roughly. I mean, you could do that for other utilities as well, or you could set it at 50% or 75%. It's kind of a policy thing if you know that there's going to be some matching funding coming from another source.

Right. And I think that would be sort of the policy decision. Okay, we're going to take 50% of the hit. You're going to pay. Yep. And either your neighbors or us are going to pay the rest of it, right? Or we do the 100%.

And I just want to acknowledge that those would be present dollars, and it would get built later when it costs more. So we just have to acknowledge that as well.

Absolutely. Megan, what were you saying about some... Well, I just wanted to ask.

I mean, those are some things that we do, like in larger greenfields.

Yes. So what... Councilor Norris was talking about is a concept where a developer puts in a piece of infrastructure that would potentially serve the neighbor. And then we have an agreement. There's actually a portion of our municipal code that allows them to install a reimbursement district that's in place for a certain amount of time. And if that neighbor develops and taps into that, then they pay their share back to the original developer who put that in. So those are options.

don't see them used a lot yeah okay okay all right um so back to the questions and maybe maybe we could take a look at next steps okay guys go ahead i mean i do think that um

It seems like we should be narrowing also what we're talking about. Like we should be talking about the improvements immediately, what it would cost to sidewalk immediately adjacent. And I mean, we read some examples, at least in one piece of input about having to pay the sidewalk across the street or the ADA ramp across the street. It seems like those costs are maybe also generate, placing a larger burden on some of these developments. So we're talking about in lieu of fee, I think we should be thinking about that. Um, where you touch the prop, where the property touches, you know, where the sidewalk would touch the property. And if it's on the corner, it's maybe a little bit different calculation than if it's just on the street. Right? Yeah, but not having to do some of that extra stuff. Those those systems are really getting into these these broader, like, system level community level shared resources. And again, I think Future councils are going to have to figure out how to pay how we're going to pay for that and actually make some substantial investments besides small piecemeal stuff that we can do through at least a sidewalk program. It doesn't buy us that much improvement. Yeah.

Okay. Okay. So we've touched on a few of these. I think we've all sort of said it makes sense when you are the dead end that you're two and through should probably be able to be a little different. If you're eighth and quimby and there's nobody else, take that weirdo diagonal if it works, right? So there's some support there. So maybe let's take a look at next steps and see if we're all looking okay here.

and we've talked about a lot of these so um refining the do not widen list um you're going to be seeing a middle housing land uh division code package next month in the planning division um the uh drainage and density discussion will be is is moving through staff right now

So just to ask a question about that, let's just try to get creative on some other ways to allow some of that stormwater disposal that might reduce some costs.

Yeah, allowing public disposal of stormwater generated on a private site.

Instead of having to build your own swale or whatever.

Yeah. And just we're evaluating different options for that, how that would happen in infill developments versus greenfield, starting an internal discussion about that. And that's actually eventually going to feed into a rewrite of the Central Oregon Stormwater Manual, which we're in the process of taking off. So a lot of stormwater discussion coming up, I think, before we present any of those options or where we're at with council. We want to get a little bit further along the pathway. Okay.

Working with Carrie and her team on the developer toolkit through the housing grant. We're also looking for, we're going to be discussing policy and funding approaches that can be addressed, I mean, this biennium, and we'll be doing goal setting for the next biennium. I think some of these are going to, I mean, just practically need to be pushed off of that. there will be the transportation standards and talked about moving forward, the drainage density, the home committee recommendations, and then again, the pro-housing grant. Those are all relatively soon.

I don't think we specifically called out the home committee and of course the state have all been talking about the sort of infrastructure revolving loans and other ways to just help pay for the infrastructure. Maybe on one side is the regulation and the other side is just funding the stuff to get it done. So yeah, Mike.

In some of the email exchanges I had with a few people in the last day and a half or so, one of the suggestions or ideas was, really identifying what are some specific infrastructure investments in certain parts of town that if they were made would reduce the obstacles and the financial challenges you have to unlock. And that's not really showing up here on this list. I'd like to see that show up on this list because I think it can inform conversations about how resources get used in the future or what resource needs might be, how we might spend some of that money if we were able to spend it as a city and do some of that work. via any funds that might come from the state. It just seems like an important piece of data to have to inform the ongoing conversation.

Is that the kind of stuff we'd throw on the CIP then or something?

Well, I feel like that might show up in sort of the pedestrian master plan or the bike master plan that says, hey, we've identified these quarters and then we're going, okay, let's pick a few of these that also line up with infill development, right? Like maybe it's these gravel roads that are near a bikeway or something like that.

Bain, I mean, what about like the inventory of vacant lots where there is adequate infrastructure there or there does seem like there could be a lot of opportunity. Or these are already kind of in low cost.

That's kind of the flip side.

I'd also like to point out too, I think we have opportunities with when we have our urban renewal districts humming, right, and we have resources. That's really what, that's a tool for urban renewal. Sure. the street yeah this thing we can you know sort of catalyze not only placemaking but also remove some requirements for development with use of those funds but I mean our urban renewal districts are I mean certainly the Central District um the other the other ones aren't so much places where there's as much opportunity for it yeah but also to point out the site-specific program does could reinvest the value that you are creating with this project back into that project that can be used to help pay STCs and infrastructure requirements in place so we have some of these mechanisms in place yeah I think we're looking for you know to expand that toolbox with some policy work and some funding work beyond just use of road renewal as a source.

I think what you just said, Mike, it sort of fits in that second big bullet of like that policy and funding of looking at how to unlock other places that it makes sense for us to just address it and unlock it versus- Funding investment might be water.

They might be sewer, right? It could be, it may not be a huge project, but it might be eight or 10 blocks and it might be something- I would say our Southeast Interceptor is a great example of that.

That was a $70 million investment. It was very big, but that is really what helped to address some of the sector, the sewer, but also helped to expand and allow for some infill that we wouldn't have allowed otherwise. So I would argue a lot of our CIP is pointed in that direction, but we need to be more explicit.

Well, it's fair to say that our GeoBond projects are also reducing costs for our developers all around the city, and we're paying for that.

15 problems they didn't help pay for in the past.

Well, that puts a bow on the whole conversation because the reason that we have a GEO bond and a TEF and all these other things is to address infrastructure deficiencies because we haven't kept up for various reasons, be they decisions in the past, be they inflation or whatever. important to think about if we are reducing these requirements what that means for the future but i think if i think what i'm also hearing in this discussion is about is about the small scale infill that we really want to get going that is the target here so just keeping that in mind of like we're not deregulating the whole city right we we still need development to build infrastructure but these are the ones that would be really good for us to build for housing reasons for climate reasons right this is what we want to be doing so i mean i think it aligns is there a tiny tiff pathway that is specifically built that's what it is but maybe not what is it like 20 units jonathan four yeah you can do it with four units so yeah because of the administrative it's hard with administrative burden but it is possible but that's something to think about is there a way to tailor something similar for small okay sarah anything we didn't answer that you need from us i'm always looking to to you all i think

I think we've got the guidance that we need to move forward. I mean, maybe a general sense of priority of, you know.

Yeah, I think there seemed like there were some somewhat simple things like looking at the intensity and so the application type, starting to create that discretionary pathway, those feels like those can sort of move forward. I think the fee in lieu is like maybe more complicated, right? I don't know, what are the things we're prioritizing?

But certainly for sidewalks, that's going to be part of the Tsp discussion coming up. So I think it's going to be because that's like 5 years out before it's finished. It would be a portion of it. It would be part of the overall process, because I think one of the things we want to talk about is like, I think you can create a safe route to school or places where maybe Fee and Lou would go.

The program, we have a framework already, and we just need to expand it. So that's not that hard. I think in terms of where we get the final funds, that's going to be hard. Oh, no, no. I understand.

But in terms of removing this obstacle, let's get that done. I think it's very common.

Yeah, I think those frontage, how we can reduce those frontage seems like a priority, right?

And for sure, we're good with all the administrative things that you're suggesting, right?

Yeah, I think we are.

Yeah. I mean, I'd call it a widened list.

All right. With that, let's stop this discussion. Thank you very much.

This was really, really good. Background information was really, really good. Thank you. Thank you.

More discussions to come.

All right. So we're going to transition now to the utility stuff that we do build, but we're just talking about all the cool systems that we do need to keep our water and sewer going.

we are a little bit behind and really to practice this before uh staff present so and we're gonna in the future do a better job of distinguishing distinguishing between work sessions and study sessions so what you just had was a work session because it is asking for some direction you're kind of co-creating with you this is more of an information session this is grounding information nothing that we're needing to come out of tonight with some big decision just general kind of like are we in the right

are you kind of tracking with us you'll you'll see some general questions at the end so I think we can cover this and make up the time that we've lost a little bit sure just really for sure absolutely all right good evening Council or afternoon right Oster director of the engineering department Brittany Barker principal engineer Jason sir principal engineer Dan Quick budget financial planning manager and I'm the designated slide clicker so this will mostly be the three of them presenting but to preface this I was I was here in May we were talking about transportation CIP focusing on the jail on and the Transportation Capital Fund. We've ran out of time, so this is our revisit on the utility side. And it's a great segue into what you were just talking about, because I think you were all hitting on it. The housing goal is wonderful, and all that increases demand on the system, whether it be an outback with our distribution, with our collections, or over at the WRF. So what you're seeing here is a reflection of some of these council goals that are having consequences on our utility system. So agenda for today is real quick, it'll look familiar, just kind of the big biennium update process, an overall calendar timeline, and then we'll hit on the water, stormwater and water rec funds. And then Dan will do a high level introduction into utility rates. And we'll just confirm a few council related priorities as we roll into starting these higher level utility rate discussions. So once again, this is really, you know, we do this every year. It's an annual update to our five-year capital improvement program. So we added fiscal year 31. That actually has been officially adopted now. And so it is one of the attachments in the council packet, as well as some technical memorandums from both Jason's team and Brittany's team. And so reference those if you would like, and really just making sure we're still in alignment with council goals and with all the other influences we have on our system. So where we are today, you know, we, in May of 2026, we were talking about transportation and geo bond. In June, we actually did do the Mid-Vianney and budget adjustments that was last week. And so here we are today towards the end of June. Jason will speak on this a little bit more, but we are anticipating the collection system master plan wrf facility plan as well as the public facility plan which are separate and distinct things all coming back before you for adoption later this year but because of the needs out there we are leaning ahead we are getting into these already some of that which council has already approved so we're getting a good jump start on that and then Towards the end of this year, in December and into January, we'll start the formal biennial budget process again, and included in that will be a more robust utility rate discussion. So with that, I will hand it over to Brittany.

Great. Thank you, everybody. um as a reminder i know you've heard me talk about these many times but we have um many guiding documents but the three on the screen here the 2021 integrated water master plan the 2024 in conduit hydro feasibility study and the recently adopted 2026 outback facility plan are all the guiding documents that are generating our five-year cip list and some of those key items are resiliency capacity with condition requirements, that's growth, and then maintenance, a repair and replacement program, and I'm going to touch on some funding opportunities. I just wanted to give you an update on some of these larger scale projects that are triggering a lot of the discussion from the Water Fund. Our Outback facility improvements, we have exciting news. Our NEPA process was completed last week, so we are moving forward with our Townside Act process. You'll be seeing more of that in the coming months. We recently awarded the owner's rep contract for that. They're developing an RFP, the request for proposal for design and a construction contract. So you'll be seeing those shortly. That's for the pre-treatment and in-conduit hydro work. So later this year, you'll see that. Brick funding, the application is due next Wednesday to the state. we are working on that and I know previously we talked about if we're not successful with BRIC we'll look at WIFIA we did evaluate that due to the city's excellent credit rating our interest rate is about the same as WIFIA if we were to go through with general revenue bonds so WIFIA does require excessive amounts of reporting and an additional initiation fee so We're still exploring lots of options there. As far as Franklin water line improvements go, last month they started night work that was for water line specific improvements. So that's going, which is exciting. We also have Aubrey inconduit hydro power design. We are at about 90% right now anticipating final design this fall. And then our construction package will come to council winter time of this year. So we're getting much closer there, which is exciting. And then we have the River Well One, we're calling it the Renewal Design Contract. That River Well One building that's adjacent to the amphitheater has settled and the casing, the outside pipe that goes down uh to suck that water out is failing so we are working on a design contract to work through that um to get that operational right now it's being used for emergency use and uh intermittent use so all of these things are coming up you'll see a design contract award i think in august for that river well one

Brittany, didn't we almost get the brick last year or two years ago?

We applied in fiscal year 23. We were not successful. And then we put together an application for fiscal year 24. And the week before they were due, they terminated the program. But at the end of March, they reinstated the program. So we had to modify our application to the latest requirements because they did change some of the criteria.

but we're working with the same consultant that helped us with that last application and we're feeling very promising so yes i rode my bike on franklin today and there was the huge hole as you're going east yeah just after the interpass and it looked like some really old pipe i thought maybe we'd have a piece of it here tonight to show off we want to see it

So yeah, it's a good reminder. There's that 1030s, 1950s bike that we're stealing in the day. Well, a souvenir. Yeah.

Not to wear much. Thank you.

All right. And then getting into the stormwater fund, again, our guiding documents. We had a 2014 stormwater master plan that we updated at the beginning of this year. That's our guiding document. Indicated both in the 2014 and the current one that we had improvements on Franklin Underpass as well as South Aubrey Butte that we had to address. So the Franklin stormwater improvements are anticipated to start in September. And South Aubrey Butte has an interesting story I want to share with you, as many of you might be interested living in that area. But we've been developing that project for a while. It was part of the Newport project design. Newport was one of the seven areas that we had to improve in the South Aubrey Butte area. We were working on developing the design. and we had included some new infrastructure as part of the Aubrey Butte water line. We used a synergy opportunity to put in some dry wells, and those were not performing as well as we thought that they should. We went and we did a little bit more testing, infiltration testing, not coming out well either. So then we started connecting with a geologist and doing some exploratory work up there. We did some coring. I'll just explain this a little bit.

Oh my gosh.

It's your inner geologist. Whatever this is, it's cool. It's very fascinating. So we did two core samples along Saginaw down to 100 foot depth to try to understand if there's any sort of fractured layers in there that we could get some good infiltration. that segment is basalt there's little gas pockets there from the lava we essentially that was um at 100 foot depth we did not get any infiltrating layers in that 100 feet all of that Yeah, we have a dozen or so drywalls that are up on the Butte. We have maybe four or five of them that work really well and everything else doesn't perform very well. We did some geophysics survey, which is drilling 18 inches down, putting these probes in. and there's 10 of them or so on a run, and they do an evaluation of what's underneath so they could see the layers up to 100 feet, and we were using these core samples to kind of correlate between actual and what they were seeing with the colored layers. We were hoping we would be able to put in some stormwater injection wells. Those are the deep underground injection controls in this area. However, as part of all of this geotechnical work or geology, and looking up record maps. down to at least 200 feet if not more is solid rock up on the butte and the edge of the butte is right along newport so the volcanic rock of the butte is very very old two two and a half to 25 million years old and then you've got um the next youngest is the bend pumice layer which we all are hoping to get into when we're um doing our storm water work and then you have the tumulo tough and shevlin park tough which you may or may not get some infiltration there. So the challenge that we have on this project is we were hoping we could go deeper and get into those well infiltrating layers. Our design had proposed 56 dry wells all throughout the Butte. And after we did more investigation, it's telling us that that's not really going to help. get that water off the butte and down into the system. So we're kind of switching gears with this new information. We're closing our current contract because it was a contract from Newport. So that's been a long time. And we're going to go out for a new design contract to kind of explore some creative solutions, likely all surface improvements, and maybe some land acquisition to get some detention basin spacing.

Which can tie into what you were talking about of a public space where private stormwater could interact together.

Got it. Send it there.

Yep.

Okay.

Yeah.

And Ben Berry did a great segue into the Butte. He was talking about how it's solid rock and that's what we have discovered in this process. So, yeah, it's unfortunate because it's taking us longer to complete this design, but we feel like we did a lot of investigation here and what we would have proposed would not have been effective. And I think that would have been uh poor investment so we're excited that we went forward with this um exploration we'll have a little bit more to do to pinpoint our improvement areas and then as far as funding goes we are pursuing the clean water state revolving funding for south aubrey butte we do have two million dollars of principal forgiveness that we are allocated for this project um which is exciting it's going to change to half a million dollars annually per city in the future so this is our last big chunk that we'll get and yeah.

All right, we'll transition over to the water reclamation fund now. So Jason.

Ryan didn't let me bring any cool props in from your servers.

So yeah, Ryan mentioned that we're actively working on both the master plan for the collection system as well as a facility plan for the WRF. So that's the master plan out there. In combination of those two master plans, we also are delivering the Sanitary Sewer System Public Facility Plan, the SSS PFP, if you're tracking. So that PFP is really the comprehensive plan level document associated with a master plan. That is actually driving the critical path for adoption of all of these three plans if we want that to happen at concert, which is estimated, as Ryan said earlier, in the fall of this year. Both of those master plan efforts started in 2024, and so we are deep into the effort there. We are starting to consider landing these efforts. We are starting to get to the financial planning associated with the delivery of the solutions that we are identifying. And so through that master plan process, we are looking at the 20-year planning horizon with year zero being next fiscal year or the beginning of it as we talk from projects from zero to five years year zero is the start of the next fiscal year as ryan said we are taking action on some projects namely the large digester four project that i'll talk about in a second that's the one you guys adopted these uh findings for a little bit exemption a couple weeks ago So those are coming in. We are doing what we can to take action rather than wait until adoption of these master plans before a project is initiated. On the collection side, the main two aspects that we look at are capacity and condition. What the master plan is also showing us is our continued need for programs such as the repair and replacement. That's maintaining our existing system, making sure it's in order as well as the septic to sewer program which was mentioned several times in the last agenda item here but overall on the collection system what we're finding is in that first near term zero to five is there are not many capital large scale medium scale or even small scale capital improvement needs that we have identified what we do have is a southwest sewer phase three which is extension through the romaine village which is a pump station neighborhood and out to a septic area so then those neighbors would have an opportunity to apply to the septic sewer committee for potential selection Five to 10 years, we're looking at several other projects. Once again, these are kind of in that small to medium scale of what a capital improvement project would be. Decommissioning of the Highland Pump Station, which is near the north interceptor up there off of Hunnell. And then some Shevin Park, Shevin Pump Station improvements on the west side of town, just to name a few. But then in the year 10 to 20 is when we do see the need for capacity expansion within the collection system. The main one here is the East Interceptor. So that's a large scale project that we would be building off of the North Interceptor that was recently completed or somewhat recently. So coming down most likely a Hamby Road alignment to then serve the east side of town. And then that does allow the state to alleviate the core or the central interceptor from the flow that that does currently receive or even decommission the phase one extension or stubby of the southeast interceptor. So that would be what? Yeah, not yet. 10 to 20 years. um and then also on the south end of town really um around where the thumb is located um so really looking at some sewer infrastructure not or down peril or probably where the large scale improvements are going to be happening on the collection side

So the digester and the clarifier at the facility, they're not on here?

This is the collections. Great question. So this is all meant to be the collections. Got it. And then this is where you brace yourself. So, this is the side of things as you mentioned. So, digester 4 shows up in that 0 to 5 year time period backing up half a step here. The key elements here that we want to look at are the capacity, the condition, but also the regulatory. So that is what governs what we have to treat the sewage to. We did just recently receive a new 10 year permit the water pollution control facility permit, which is what. Issues us, and that says what you have to do. So that was a huge effort that the team did accomplish to get that new permit, which gives us the limits to then know what improvements we need to instill so that we can actually stay in here. So we also gain that 10 year permit allows us a runway to make some improvements. they typically do a five-year permit but we have a kid for 10 so we can do this effort once we achieved it and also there is r r repair replacement at the treatment plant on things wear out and do need to be replaced this is where the opposite of the collection side is it gets heavy up front and then it does TAB, Mark McIntyre, lead out as we get into that 10 to 20 years, so the initial investment here is zero to five years I just before hallways those are that's the project that you guys approved this whole story that little bit extensions for a couple weeks ago so we're working through that. TAB, Mark McIntyre, Working on a owner's rep contract to get that project going and then we'll go through that you are in the class factor. The Secondary Clarifier 4 is a project that we will be adding in the fourth year, fifth year of the five-year CIP, but the bulk of that spending will happen then into that five- to ten-year timeframe. So those are the two different really flow streams, the solids and then the liquids. So the drastic improvements, Digester 4 is prioritized first. Then we get into the 5 to 10 year, we're talking about adding another primary clarifier and another iteration basin. And then in 10 to 20 years, it's really another digester. So there are other improvements necessary, but those are just a snapshot.

And those steps, especially the first zero to five years, are they reflected in the current rates or no? Is that part of the rate?

Not in the current rate structure, and we'll get into that, or in the current CIP, but financially it's not supported yet.

Yeah, okay. So as we are initiating that project, the funding package for where the dollar's coming from, it's estimated it's in the $115, $120 million delivered this project for just Digester 4 and hauled waste. So we have had meetings with DEQ to see whether the Clean Water State Renewable Fund can support it. There are limitations there. So exploring other opportunities such as WIFIA, that's where we're getting to. So that's kind of where...

yeah we'll take the conversation but we are looking for revenue or financial funding opportunities to support that okay uh so just to summarize that real quick uh you know the big takeaway and council O'Reilly you just hit on it we put a lot of effort into these master planning efforts these facility planning efforts want to call out Jason and his team. They got DEQ to flex and to bend. Getting a 10 year permit is huge to really clear the runway for us. So kudos to him and his team for a couple of years worth of effort to do that. And then stepping back, the Townside Act process, we're on year three of that. We started that and we're like, oh, it could take a year, maybe two. And of course, we're in year three now. So again, just kudos to Brittany and her team. Both of those were huge efforts, and we're seeing some light at the end of the tunnel. So the big takeaway, though, is, as you noted, we have some big demands on the utility system. And our current rate structure and the way we've done this historically doesn't necessarily support the needs that we're showing out there in the system. So this is where we have to go through this iterative process of what rates is is the community comfortable supporting how do you balance that with all the other rate demands you know whether it's from the fire from the school district from parks district it's it's a big equation with lots of variables there so dan's going to just kind of kick us off here and just give us a high level overview of all the inputs and all the constraints and really the iterative process that we go through in setting rates

This is the least exciting. But I wanted to kind of set the stage for how we go about setting rates. There are a few processes that we go through with varying levels of frequency at which we do them. And they're broken down here in these different levels. First off, we have revenue requirement. This is what we do every year. This is essentially where we're taking, we're looking at the system. What are the financial needs of the system? How much revenue do we need to collect to be able to support operations, maintenance, and capital infrastructure to keep things moving? So that's what we do every year. That's part of our modeling process, which we'll get into in a couple of slides. Another process that we do is called our cost of service study. This typically aligns with our master planning efforts. This is where we do a deeper dive into customer classes. We're looking at the average usage characteristics of the different customers, talking residential, non-residential, multi-unit, industrial, and looking at, are they paying their proportional share of their impact on the system? Then lastly, we have the broader and more macro rate design. where we are looking at kind of those base charges versus volume charges and making some of those bigger changes to the structure. And so those are kind of the three different processes that we do. If you go to the next slide, it's not as simple as just taking, this is how much it costs to operate our system. the set revenue is equal to that. There are a lot of other policy objectives that we have to try to keep in mind as we're going through this. I have a few of them captured here. affordability, conservation, proportionality, public acceptance, rate stability, and revenue stability. Just as examples, as we're working through modeling, we don't want customers to be shocked by, oh, golly, I have a 15% increase in my bill next year. We're also trying to balance things between base and volume charges for conservation and incentivization, that sort of thing. So a lot of different policies, as Brian mentioned, these are pieces to a bigger equation. And we'll go into what it looks like for the actual bottling. So this is the nuts and bolts of what we're doing on a daily, weekly, monthly basis with working with engineering and with the water services to make sure that we're building financially sustainable plan. So each of the three water services has a 30 year financial model that we've worked on with our consultants. But we help manage it with input from the other departments. But this is at a very high level, kind of a graphical summarization of what the process entails. The first section are the inputs that we put into the model. This is just a sampling, but at a high level, growth assumptions. This is looking at how many customers are we adding each year? How much water are they using? We're using historical data. We're working with CDD to get kind of some of their projections on what developments are coming in, how many units are we expecting to add to the system. And this is one of the biggest drivers, as you might imagine, to our revenue. In previous years where we had significant population growth, that was really driving our revenues quite high. We've seen population growth stagnate in the last couple of years. And so even with rate revenue increases, we're not seeing the same proportional increase in our revenues. So as much as we raise rates, we're not seeing the same leverage, we'll say.

ask a question about that as someone who's in the part of town that's on avion just a reminder to folks that we're talking about people that pay city of bendwater right and we don't get any revenue from avion so if we're in southeast or some of these places that have been starting to expand their population growth is happening but we're not seeing the revenue right which is an important distinction i think you know

Yeah, so absolutely. So that's one of our major drivers. Next up, we have expenses. This is probably the area that we have most control over compared to customer growth or demand. From an expense standpoint, this is our operating maintenance. our personnel that operate the system, chemicals, electricity, the cost of water beaters, all the equipment that goes into it. And then obviously we have the capital plan, which are big capital investments, big chunks of dollars being spent out of the funds. And then lastly, we have kind of the economics of the situation. We have inflation, construction cost inflation, CPI. These are a lot of the inflation indexes we use to help inform our assumptions. But another big one is kind of what's going on in the bond market, because a big part of our capital funding strategy is determining pay as you go versus debt funding. And so what our interest rates are in the bond market will heavily impact what we can afford as we move forward. So we take all those inputs and we have to make sure that what's coming out of the model fits within the constraints that we've set for ourselves or that various other parties have set for us. For instance, debt coverage ratio, we have set in our fiscal policy basically this evaluation or measure of how well we can pay for our debt. comfortable with our revenues coming in, paying for our debt service. And this is also required in our debt coverage, sorry, debt covenants. When we issue bonds, the agreements that we sign have debt coverage ratios required. Another requirement is in our fiscal policies, we have reserves. And I have a couple of the reserves here in kind of that lighter blue. We have an operating reserve. That's a three-month requirement, three months of operating expenses. rate stabilization. This is a million and a half in water and a million in sewer. And this reserve is intended to kind of offset economic shocks. If there were any sort of recession or something, this could help alleviate any sudden spikes in rates. Capital reserve, this is for unexpected maintenance projects that might be needed and this is about five million dollars in each of the in the water and the sewer funds we also have a debt service reserve that a lot of our debt holders require that we have a certain amount of money held aside to pay debt just as a as a backup so those are some of the constraints that we have that keep us within certain bounds in our modeling. So once we have all these different inputs, we then have these bottom four boxes are the levers that we can pull. So this is our iterative process where we're trying to balance the model and accomplish all those objectives that we talked about earlier. So the four things, debt funding, again deciding whether we can pay for things with cash, or whether we need to leverage debt, raising rates, operating expenses. We can decrease expenses. We can delay projects, programs, that sort of thing. And then obviously in the CIP, we can look at project scope and timing. We often work with engineers. Is this a project that we can stretch out an extra year to kind of flatten any spikes? And so at a very high level, that's how the modeling works. We work with our consultant to do some QA, QC each year, and they help a little bit with the balancing as well, just to make sure there's nothing unexpected. But ultimately out of all of this, we come to our proposed rates. Next one. And this is a really cool line graph that I think tells an interesting story. This is our adopted rates for each of the funds over the last 10 years. I know it's a lot of very similar colored lines, and I apologize. But just to set some context here, so we have three separate models for the different funds and we adopt the revenue increases separately, but we do manage them kind of in aggregate to accomplish those policy objectives. So you'll see as you kind of go back in time and move forward, there's shifting in kind of what our priority is as a city and what we've needed to invest in. As you see, if you go back to FY17, there was a bigger investment in the sewer fund, which is that red line. And you see water is lower at 2%. That was at a time when the Southeast Interceptor was going in. There was a lot of expansion going on, some renovation or maintenance of different projects. Then you see COVID happening in FY20. We adopted rates a month and a half, two months after everything shut down. And so affordability had come kind of to the forefront of what was being prioritized. And then you see us climbing back up and kind of stabilizing at that 3%, and then slowly climbing up as we've been feeling the impacts of construction inflation and just general inflation to our expenses. So all of that said, We didn't include future years. Councilor, you asked about kind of future years and whether these master plans are incorporated here. So much is going to change between now and fall as we get those master plans, those facility plans. There's just a lot of unknowns in terms of what is prescribed in those plans and what can we realistically accomplish and we want to include in our financial models that all being said you see the steady climb there's an upward pressure on rates with these additional projects that we were hearing about these additional plans we do anticipate continued upward pressure on rates we just didn't want to put any numbers out there to kind of anchor ourselves anywhere when we just don't know quite where those plans are going to land But that is kind of the long and short of rate modeling. Happy to answer any questions.

Yeah. And inflation adjusted. Yeah, go for it. Sorry. Are those inflation adjusted or nominal?

So this is just the percent that we increase. In fact, we're in inflation. I would say we're there. slightly above inflation the last couple of years, but maybe slightly below. We've had years of 8%, 9% inflation in 2022. Our rates didn't keep up.

Our target, the direction that we've been receiving for the last several years has been trying to keep to roughly a 3% because that had been kind of the prevailing CPI for a number of years. And so it was intended to keep pace with inflation. But to Eric's point, there have been a number of years of about pacing inflation where we tried to keep things lower and more affordable.

And I'll just highlight the takeaway from this. You can see, you know, that the circle line, the stormwater line, you know, an 8% isn't as scary as it looks because that's an 8% of a very small bill. And then the water fund's a really good example. It dropped to zero in COVID. And then we adopted the master plan. So we've generally been kind of following what the master plan pointed us towards. So you see water in the triangle continuing to climb and increase. And if water generally stays at that level, Brittany can build everything she's been talking about. What's gonna be difficult is the square, the sewer side, because you can see that rate is dropping down in the last couple of years. It's been 2% or less than 2%. That continued rate will not fund what Jason's proposing that we need to do in the master plan. Obviously, not looking for any guidance or direction now, but just showing that's where we sit today.

Are you required to limit when you're designing the rate? are you required to only include what's like in the master plan in terms of projected projects? Because it's the capital costs that are going to really drive that rate.

Well, so a master plan is going to show basically this is what the system needs over the next 20 years. Then we pull that apart and we say, well, this particular improvement is actually being driven by 100 new homes. So we can actually make that a cost to the developer. Maybe that's a land use requirement. Maybe we capture it in the SDCs. And then so we really trim that down. But then when you talk about an east interceptor or a digester, that's a fixed cost, right? That's something that we need to consider within the rate structure.

But you are limited to what's in the WPF. the public facility plan in terms of what you can actually, which projects you can include in the base for the rate. Like, we have to fund these projects. How are we going to do it? Here's the ones we're doing in SDCs and this is what we're left with in the overall rate. That's the scope of what you can consider in terms of rate calculation.

Well, the WPCF is more about the quality and the treatment of the actual waste that comes into the system it doesn't really well the master plan i guess the master plan the master plan yeah will outline you know this this is the need in the system based on housing goals based on density goals based on anticipated growth because i guess my point is just you know if we have a five million dollar reserve

That's great. And we know we've a 120 million dollar project coming. We could have been building up with a different rate structure. We might have been building a larger reserve and not have to have the same impact now on rates. So I'm trying to understand what you can legally consider in calculating the rates. Is there any limits on that or not?

Not that it would be like, yeah, I mean, there's, there's some municipalities that literally just look at the master plan and say, okay, you need 500Million over 20 years. We're going to set a rate structure to support that. Yeah. And we don't do that here because we do factor in these, these objectives, which we'll get back to here in just a 2nd. And that's part of the question to you as council tonight is. What other information can we as staff, whether it be from finance, engineering, or water services, what can we bring to the table to help you kind of understand the demands and needs of the system? And then really the values that Dan highlighted here, and I'll flip back a couple slides. Are these still appropriate? Is there anything that you as a council would like to, I mean, and we don't have to do it here and now. We could prioritize these, we could add stuff, we could take away stuff. and really we've got a long runway here we don't have to really you know hammer this down and nail it down today but we are going to need to have a pretty intense rate discussion getting into this fall and over the winter and so before we start modeling a lot of this we want to make sure we're starting from the right spot

Well, what I think you just said is really important to continue to state in these discussions around that we try to look at what growth could pay for versus what isn't citywide, you know, water quality necessary infrastructure, right? I think that's good to continue to show people that we're being careful about what we're asking repairs to support versus what, you know, new growth can help support.

Yeah, because there's a world in which you could say, I want to fund 90% of this through SDCs. Right, and then your fees are going to be super high. The flip side is you can say, oh, I'm going to limit the SDCs, keep those low, encourage development, but then you're putting a lot of that cost on the back of the rate.

I was like, I'm thinking to like legislatively, you know, any sort of legislative funding or federal funding that's like coming. Yeah.

I think having this good list of projects and saying, being able to say, these are the ones we've, we've tried to fund other ways. And these are the ones that are on our backs that we're trying to keep cost low for rate payers is helpful.

It's a good example of like the rates we have today and water can build what we need at a little bit. So there's relief there if we get some federal or state support on this.

Okay, so Council, we're not giving direction tonight, but if there's anything else you want to say around your values around the rates and the water system and our projects that are coming up now is the time.

Just to clarify whether affordability and proportionality include the idea of someone who uses a lot of water for landscaping because they really like big green lawns versus someone who lives in an apartment and has a much lower impact on water. Do those concepts capture that hey, you have the ability to pay, you're using a lot of water, you're going to have a significantly higher bill than someone who says, because we hear a lot about people who I think are surprised by the baseline monthly charge seems very high. So I'm using very little water and then I'm using a lot more water, but my bill doesn't change that much.

oh good evening you were waiting back there just in case good evening mayor and members of the city council i'm Jillian Ochner i work in water services as a water policy analyst i arrived at the city at in january of 2014 when we were kicking off a major rate structure reform process for both sewer and water simultaneously for those people who were at the table and watched this happen it was a big lift and i just want to be clear so you have two parts of your rates right you have the rate increases that happen and then you have the rate structure that's how you collect the revenue that's required to serve all the needs that you heard about today Proportionality is specific to how you recover your cost in a way that is proportional to how people are imposing costs on the system. You heard that earlier. And that intention is tied to we cost allocate every piece of our assets in our system. based on how it serves our community and some of those things are equally shared by everyone and some of those things like the amount of water we use and how people peak as you reference with irrigation in the summertime is allocated specifically on how much they use and that's why we have a volume charge in our water so for somebody living in multi-family who is directly paying their bill which i don't i'm looking at dana we have nobody in multi-family right now who's directly paying their utility bill that i know of in a big multi-family unit so that they don't experience a peaking charge the way a single family residential a unit does if if uh you are a single family that is that piece of if you use less water your bill will come down and that's tied to that affordability and that's why back in 2014 the city council made the decision to actually increase the proportion of the bill that was recovered from that volume charge it used to be um proportionally the volume charge was slightly higher than the um the the excuse me the base charge was slightly higher than the volume charge and they flip-flop that so we recover a larger proportion of the revenue in our volume charge and that allows some autonomy over people's bills based on how much water they use does that answer the question it does I didn't know about that history either well what's interesting is I think we still hear from people that we have a pretty high franchise fee and I would be interested I know this work is coming and maybe someone can remind me the timeline on sort of

of ratcheting up. If you start to go over this many gallons in a private single residence, now it's more, right? Like a tiering, right? Of once you are starting to really, really use water for your lawn or your irrigation or whatever, then you're going to pay a little more. And I think one of the things that for people who are lower income, and would like to keep, conserve and lower the bill, they don't see that much impact when it's because they're in maybe a smaller home or something and they just really can't impact their bill that much. So I know that discussion is coming. Maybe you can just remind us when we were thinking about that restructuring.

And while she's up here, she's up here, you've presented with the Human Rights and Equity Commission twice now, and you've had these conversations. I don't know if there's anything you wanted to share about that.

Okay. Thank you for queuing on that as well. Yeah. So two things. One is in your goal setting for 25-27 biennium, you basically prioritize in your rate objectives conservation by calling on the city staff to start looking at a conservation based rate structure. So that says, how do we look at different options such as what they call an inclining block rate or a tiered rate structure to begin to send a louder price signal for those who use higher levels of water. There are ways that you can structure that such that the lowest tier could be even lower than what people are paying today and your highest tier can be, you know, it depends on how you break it down and how you tie it to the amount of change you want to see in your system. Just as a note, City of Redmond is looking at this right now. They're hoping to review that by the end of August and make a decision on whether or not to adopt an inclining block rate system, a rate structure. And as for the Human Rights and Equity Commission, so part of the work we've been doing in preparation for that water rate structure discussion is looking at affordability. because we want to be able to send a loud price signal at the same time as caring for the most vulnerable members of our community, looking at how we serve them today through our low-income assistance program. And so we were a pilot for the AIM tool, and looking at how we could use that tool to evaluate how that program is currently functioning today. Are we missing parts of the community that may be eligible for that program and are for whatever reason not using the program? And so Dana Chenoweth and I are continuing to work through that process and evaluate that program. And we asked ATRIC to help us make sure we were asking the right questions. And part of that is determining what should we be measuring? What's the desired outcome? Is it just purely increasing the participation in that program? And what does that mean? And we measure it now in terms of things like shutoffs, rate of shutoffs, and the participation rates and the distribution of that. We're looking at it across the city and how we're reaching people.

Great. Thank you. All right. We're a little over time, but anyone else want to add anything for staff before we wrap up?

Want to emphasize the importance of conservation in terms of this thing about and that, you know, completing that project and having a good set of options for a rate structure that really gets there. I I think there's a good chance if some of the current trends persist that we might actually start to see some declines in production from even some of the springs that we're facing that we get our water from if we see the trend that's currently present persist over time. And getting ready for that and having a fee structure that can really incentivize conservation, I think, is one of the bigger tools that we know we have. around achieving conservation goals. So it's just really important we have good options on that conservation structure.

Dan or whoever, regarding the growth projections, what is your underlying assumption? Is that PSU population growth? Is that what that is? The only reason I ask is because you say it's driven by the growth plan. Our growth plan is old. right now and we're not going to have a new one for five years right so so what are we doing in the interim right now so we use psu in conjunction with kind of historical rates about owner two for homes so psu comes out every year right so we we calibrate that every year tomorrow and regarding homes that's more stale but we are using numbers for that

Well, the loan is connected to the PSU. So the PSU, they're all kind of connected. So the PSU is sort of the base.

And last, rate stabilization. Is anything that our country has done internationally caused us to hit that recently?

We haven't leveraged the rate stabilization reserve in any time that I can. I haven't ever seen a touch to this one.

Interesting. Okay. Thank you very much. I appreciate your time. Thanks for the information. We are going to adjourn.