City Council - workshop

It is 6 p.m. on Tuesday, August 25th, 2026, and I'm going to call this Lacey City Council work session to order. All council is present. I also want to acknowledge that we, the City of Lacey, are on the ancestral land of the tribal people of the Treaty of Medicine Creek, including the Nisqually Indian Tribe and the Squawks Indian Tribe. With that, can I get a motion to approve this evening's agenda?

Move to approve the agenda as published. Second.

It's been moved and seconded. Is there any discussion? Seeing none, all in favor of the motion, signify by saying aye. Aye. Is there anyone opposed? That motion passes unanimously. Next up on our agenda is public comment. We did receive two written public comments. That will be part of the record. And we have a couple people signed up already. The first person is Rhonda. Can you please approach the podium and tell us where you're from? And you'll have three minutes for public comment.

My name is Rhonda Rosenhoff. I'm from the Sturffy Foundation, and these are also two board members of the Sturffy Foundation, Megan Wells and Leslie Galt. And we applied for the, the Sturffy Foundation applied for the Human Services Grant, and I would just like to take a couple minutes and just reiterate why we applied and how we would use the funds if we were granted any of that. The Strophy Foundation's Therapeutic Court Stability and Recovery Support Program directly meets all three of the 2026 City of Lacey Human Services grant priority areas, behavioral health, affordable housing, preventing homelessness, and youth services. This program aligns directly with the City of Lacey's 2026 funding priorities. It supports behavioral health by helping participants remain engaged in recovery, treatment, and therapeutic court requirements. It supports affordable housing and homelessness prevention by addressing practical barriers that can destabilize participants including housing related needs, employment cost, childcare, transportation when needed, and other basic supports. It supports youth and families by helping parents and caregivers create safer, more stable home environments while they work through court connected recovery and family stability plans. The City of Lacey funds would allow Strophy to expand the number of requests it can fund for Lacey community members within the existing program. The foundation already has the relationships, referral process, and experience in place to respond when therapeutic court participants need practical support. Additional funding would simply allow the Strophy Foundation to say yes to more of those needs. And I've prepared, there's some data that actually shows the number of participants. These are drug court participants over the past 10 years that live in the city of Lacey that the Sterile Free Foundation has supported financially. And the funds would help these individuals into the future, not these same individuals because there's new individuals coming into the program. But this is drug court. There's also safe babies court, family recovery court, and mental health and veterans court. So should I just leave them here?

Just come and bring it up to me. Is there anything else? Well, thank you, and we look forward to actually it's our next agenda item, which is the grant program overview. So we're looking forward to hearing about that. Thank you. Next up is Julie. Can you please approach the podium? Tell us why you're here, and you have three minutes for public comment.

I'm going to lower this a little bit, because I couldn't hear a word she said. So I would like to be heard. My name is Julie Carrasco Peetz, and I've lived here in Lacey for over 45 years. I've never had a problem with Lacey. In fact, I've been a part of Lacey in one way or another. I am very much the city person that people come to when they need a lot of their cultural things that need to be done here in the Tri-Cities. I've also been in five of the agencies in the state of Washington, and I kind of climbed my way through until I finally became a consultant. I am here on a personal matter. I lost my husband, who was the executive director of a state office in Olympia. I lost him a year and a half ago. And since then, I've had to deal with what homeowners have to deal with all the time. The only problem is, is that I never did it. And I'm sitting here with my hands up saying, uncle. The idea that I would have to come here really isn't something I wanted to do, but I have had two water bills, one 700, the following, or the first month was 500 plus and the second month was 700 plus. And I came to the office today to say I needed somebody to look at the meter. I have no knowledge of how the water runs through people's homes, nothing. So I've been doing this kind of on my own and just hoping that the man is watching me upstairs and not getting too pissed at me. I am a community worker. I have been for 45 years, but right now I have two bills, one for 500 and one for 700, because the meter was not turned off after somebody noticed the outrageous bill that I had for a home on a corner. And I came in today to see if I could get somebody to look at it. And all I was told was, here's this little form. However, even if you fill it out, unless you turned off the water, which it was after the $700 bill, there's really nothing we can do. I looked for an irrigation specialist in this city and they are far and in between. I found one. He has now turned it off. I came in to see if there was something because somebody gave me the idea, a neighbor, saying, go to the city. They might be able to help you. Maybe bring down your bill a little bit. I came with discouragement because I was told that even though I would come to you and I would stand here, you probably would not be able to help me.

Thank you for your public comment. We actually will have someone reach out to you and see what our options are. This sits close to home for me. I have a water leak at my house right now, and it's been going on for months, and I can't find it, and I've been calling specialists. I finally got ahold of someone, and they said they can't get to me for another two or three weeks. And so everything past the meter, When you have a water leak, it is unfortunately the responsibility of the customer. But if you don't know where to start, it is really frustrating.

And if you don't have a clue even where to start.

I get that. So we'll have someone get ahold of you to tell you what the options are in the meantime. And this is something we've talked about in the past about promoting companies where you can actually buy a small monthly insurance that would cover all this for the homeowner. I brought that to this council 10 years ago because the National League of Cities offers a program. And we said, no, we don't want to get involved in the private sector with that and put our name on it. But this is a real issue. You can tell when you have something like this and it's going on and on and it's costing you $500, $700 a month and you don't know where to start, this is brutal. So I think it is worth a conversation about what we can do for our residents going forward. because you're not the first person to be in this circumstance. I'm currently in it right now.

Well, thank you, because it has been very, very frustrating. We'll have someone get ahold of you.

We have your information.

Okay, if you need my phone number, I can give you my number.

Can you put your phone number? Troy's going to go out. Okay, Troy's going to go out and we'll go out and talk to you.

Thank you so much.

Thank you. Is there anyone else wishing to address the council tonight? See, it does make sense to come and talk to your council. Is anyone else wishing to address the council this evening? Seeing none, let's go on to our next agenda item, which is our 2026 Human Services Grant Program.

Hi, Michelle. Hi.

Good evening, Mayor and Council. My name is Michelle Chavez, and I am the Human Services Coordinator for the City of Lacey. And I am happy to be here this evening to talk to you about this very, very popular Human Services grant program that we have here at the City. I just have a few slides to go over and talk a little bit about the staff report that was in your packet tonight. So I'll just go through a few things, and we'll get to talking about the program. So this is the third year of our $300,000 Human Services Grant Program allocation. We had 29 nonprofits apply this year, so quite a few. We had 13 new applicants, which is very exciting. 27 of those applications were for service programs, and two were for capital projects. The applicants presented both their programs and their projects to the Human Services Commission over a two-day period in July, July 1 and 2. Just a little history of how the program has, the demand has grown. In 2024, we had 15 applicants. In 2025, we had 20 applicants. And in 2026, we had 29 applicants. So it's, the word is getting out there and it's growing. We also did, I did a workshop via Zoom on June 9th, so I always do a workshop during the, when the grant is open, when the applications are open. They were open from June 3rd to June 26th, so just about a month where folks could apply. So if anyone has questions, they could come to the workshop or just call me and ask questions. And then after the workshop, we post a link to the recording, and then we also have all the Q&A, all the questions and answers published on our website, as well as the scoring rubric that was used for the that's used by the Human Services Commission. So as the process goes is the Human Services Commission reviews all the applications and gives them a score based on a rubric that's very similar year to year. The purpose of creating the program was to create kind of a transparent and predictable grant program that was open to everybody. And so this year the total ask was $858,712, which is similar to last year. The first year the ask was about 1.4 million, but that's because we did not have a cap on how much you could ask for. So some folks asked for the whole pot. Again, just a little summary. Just a little summary. We had the max for service programs $30,000, and the max award for capital was $50,000 again. And I did a comparison over the last few years, and the average award over the past few years was $26,087. So in your packet, you'll see a table, and it has three different options. These are the options that the Human Services Commission looked at with us. They were able to make a recommendation with one meeting this year. I picked option one, but I think both options are fabulous. The reason why I picked option one as a recommendation is because the awards were closer to what the average we've been giving out. So option one, the top scores was the 90, 80, 70 percentile. and then the remaining 39,000 would be split three ways. In this option, 14 nonprofits would be funded. Scores below 570 would not be funded. Four first-time applicants would be funded. Two applicants who previously applied and didn't get funded would get funded on the second attempt. And eight returning grantees would be funded. That was what the staff recommendation was. Option two was what the Human Services Commission chose, which is to spread the money a little further. So again, it's a little bit less at the top, and I'll go through these more in detail, but it's an 80, 70, 60% split. The remaining 72,000 is split five ways as opposed to three at the bottom of the scale. And you had in your packet, there was an attachment that it's hard to read unless you zoom in on the PDF. It's very small, but it had all the scores, and you could see where all the different agencies ranked and who applied, and then the new agencies were in blue, so you could see the agencies that are new this year. With option two, again, Commission really felt strongly to want to fund more agencies so that it was 16 nonprofits as opposed to 14 The cutoff was a little bit lower. So some agent additional agencies would be funded five first-time applicants would be funded Again, the two applicants would still get funding they applied in the past didn't get funded they would get funded this year and then nine returning grantees would be funded with option two and Option three is something else that hasn't been thought of. We always leave a something else category in case something new comes up. So option one, again, the staff recommendation, the top scores, it would be four agencies would receive $27,000. The next level would be 80%. Two agencies would receive $24,000. The next level, 70%. Five agencies would receive $21,000. And then at the bottom, $13,000 would be split or each agency would receive 13,000, and then the scores below 570 would not receive funding, and that would mean 15 agencies would not be funded. So you can see that's kind of a similar allocation that we've kind of awarded over the last couple years. Option two is the HSC, the Human Service Commission recommendation to the council, which is at the top, they receive a little bit less, so 24,000 at the top, four agencies would get that, the next level, 70% of the funding request will be funded. Two agencies would receive 21,000. The next level, scores above 580 would receive 60%. That would be five agencies would receive 18,000. And then at the bottom of the score cutoff, 14,400 would be spread across the five agencies at that level. And so scores below 560 would not receive funding, so that would be 13 agencies that wouldn't be funded as opposed to option one, which would be 15 agencies would be funded. So again, option one, 14 nonprofits funded, six newly funded, eight returning funded, more dollars at the top, so 27,000 versus 24,000, less dollars to the lower scores, 13,000 versus 14.4,000, and that was the staff recommendation. option 2, 16 nonprofits funded, 7 newly funded, 9 returning funded, less dollars at the top, so $24,000 as opposed to $27,000. More dollars to the lower scores, $14,400 as opposed to $13,000, and that was the Human Services Commission recommendation. Option 3 is another option that we haven't thought of. And then just to recap, in your packet, too, there was a timeline, so this just shows kind of how the Program your looks so we want to get it started in September if we could We're hoping that we could get some consensus tonight and be able to put it on consent at the September 1st agenda council meeting but if that is not possible, you know, we can we can look at a further date and This is similar program timeline to last year That concludes my presentation and I'll open up for questions I

Are there any questions? Are you looking for like a direction before this comes to council for approval next meeting or is this information only? What are you looking for?

Well, the idea is that if to see if the council agrees with the Human Services Commission's recommendation of option two, or you would like to do something else. If you come to consensus tonight, we would hopefully put on consent then, because if you say, okay, we agree option two is okay, then we could hopefully put on consent at the next agenda, next regular council meeting.

Does anyone have any discussion? So option one was kind of like a staff option. And then option two was the people who actually went through all the commission.

Yes, the commission.

We like number two. And just just so we can get a feel for what was the consensus like in the room at the time when they kind of came up with their their option to.

Was it a split vote or was it a vast majority? It was unanimous.

It was unanimous. I think they really liked the way we determined the scoring this year and with the percentages. I think that made it easier for them to make a decision. I think they were really pleased with how they felt very – they all kind of felt like this was – Line with each other they didn't there wasn't anything that jumped out at them as odd like the Folks that came to the top they were pleased to see and the folks that were kind of on the lower end They felt that was correct Of the organizations that are returning did you get a summary of their work from the previous year I Yes, so part of the application process asks in that application, have you gotten funding from the city before? What have you done in the past? And that's part of their application. That's part of the scoring rubric also, where the commissioners each look at every single application, read them, and score them. And then in addition to that, the applicants come in person and they present to the commission and they talk about their projects and programs. And that is very helpful because then the commissioners, the questions that they have, they can ask in person. Some people presented hybrid. There was a couple of folks on Zoom who presented, but it's super beneficial and it's recorded. So then if for some reason a commissioner can't attend, We ask them to go back and view all the presentations to make sure that they're getting the same information all the other commissioners are getting. Thank you.

Anyone else? Of the two that you said applied last year and reapplied this year and they're on the list right now, I'm not sure. Is there any way for them to be noted on here or do you know which ones they are?

That is a great question. I believe it's Thurston County Inclusion. and Strophe Foundation? Yeah, Thurston County Inclusion and Strophe Foundation.

OK, cool. Thank you.

Well, I'm disinclined to go against a unanimous recommendation from our Human Services Commission. So I'm happy supporting option two.

I'm happy with that option to you know when we put these groups together And we ask them to do the hard work and and take time out of their schedule and be here and so on and so on And look at all this and come up with a recommendation and they decide unanimously that this is the way they see these funds splitting in the with the greatest community benefit I Don't have to be in favor of that, but I am in favor of that I

I'm comfortable with one or two. I lean a little toward one. Because I like the idea of a little... It may not get to as many organizations, but it's a little more funding to the ones that it does go to. That's really my direction. But again, you have a unanimous vote of the commission, and I can support that as well.

Yeah. I mean, I agree. I actually prefer the staff recommendation. And I've been pretty... consistent with my philosophy on this. I feel like we need to pick, spreading it around to a bunch of organizations and spreading it across, it maybe makes you feel good, but I'm all about trying to help people that score the highest, that needs the most amount of help. And so, you know, I'd rather give more money to the top scorers than kind of spread it around. That's just my personal philosophy. However, we have a recommendation that's unanimous and they're the ones that sat through all this and looked at all the information and so I would be tough to go against the unanimous. recommendation as well even though I prefer option one. I will go with the HSC recommendation as well.

Is there any reason where did staff come from? What was the thought from staff why it differs between one and two?

I really like both of the options, but because the option one had the awards were closer to the average, what we've been giving out the last couple years, so it's closer to that 26,000, that was really the reason why I picked option one, but I like both options.

Is there any information about, or I guess from the applications, like the differences between like say receiving 27,000 for like the top award versus 24,000? Like do we see, will we get to know like what services they're not going to be able to fulfill because of the difference between what they're asking for and what they're receiving?

That's a great question. But one of the questions in the application, and that is score two, is what would happen if you didn't get the funding? Could you still do the program or project if you didn't receive those funds? And that weighs into the score, too. There is another thing that I didn't mention, too, is that option two included a caveat, which is that didn't come up in the past, that if for some reason an agency declined the grant, that we would split the leftover funds evenly across all the other grantees. So I think that's a good, the commission came up with a contingency. I think that's smart.

I think it's one way of looking at it. Like I said, I think I'm pretty on record of my preference would be to give more dollars up to the organizations that have the highest score that are really doing the the work that needs to be done in LACI. But you can see where the other side of it is like, well, maybe we should help more organizations. Maybe they don't have as much, but it's better than nothing. That's just not my personal philosophy. But I will, again, go with the HSC recommendation. Do you guys want this to come before us on the consent agenda where you want to take action as a regular agenda item?

I'm good either way. I mean, if we have, it looks like it's unanimous to support option two, so I don't see any reason it couldn't be considered.

We haven't heard from Council Member Turner yet. You're right, we have not heard from you.

So in the spirit of transparency, we go with option two. I do sit on the board of Interfaith Works.

I don't think that's a conflict of interest. Yeah. Do you have any other...

I'm in agreement with you. I like option one, but I'm happy to go with option two if the Human Services group, you know, sees it unanimously.

It's the same. I mean, it's option one, but option two...

But that's because the Human Services board unanimously said... So sometimes, I understand your philosophy, and the reason why is because you're saying, let's do what moves the needle, right? And that is what we're here for. And I've also understood that in some times, in some cases, If we give the right person the chance they can also move the needle and this is what happens sometimes when we When we say okay, we're gonna we're gonna go ahead and spread it out over a couple because we're only adding two new recipients From the option one right so dropping the score by ten points brought in two new people now two new people have an opportunity to move the needle, grow in a way that they wouldn't be able to otherwise had they not received some of these funding. So it kind of gives us an opportunity to help somebody grow. And I don't know if $3,000 less is going to make it so that the people in option one are unable to move the needle in a way that they would have been otherwise.

I see where you're coming from. WHEN WE HAVE A GOOD SCORING SYSTEM HERE, AND WE'RE SAYING, YOU KNOW, ANYTHING BELOW 60%, IN MY OPINION, AT LEAST MOVING THE NEEDLE COMPARED TO A 40%, AND SO THAT'S WHERE I'M, YOU KNOW, AGAIN, A JUST DIFFERENT PHILOSOPHY. I DO THINK THERE IS SOME CONSENSUS FROM THIS COUNCIL TO SORT OF REPORT BACK TO HSC ABOUT WHERE It sounds like the majority of us are going forward, which is, we're going with a recommendation, but if we're scoring people, then we should probably put more dollars to the top scores going forward, at least as this council sits right now. I think that's a good report back to HSC.

It looks like it's four of us that lean toward one, but we have the HSE unanimous recommendation.

And so if we could at least report back to them, we agree with you, but, you know, next year when you're looking at this, you know, maybe look at giving more dollars to the higher scoring recipients. Okay, we'll report back. Three. Four. There's four. Four. But, you know, I'll go either way.

It's not like... Yeah, it's not like...

It's not, you know, $3,000 here, and it's not like, you know... So that's why I tend to go with the HSC recommendation, although, like I said, going forward, philosophically speaking, I think that's where a majority of us probably would be at.

And I'm surprised that we get so many candidates... And I understand that these dollars are easier to spend than state dollars and federal dollars, and that's part of the reason why we get so many candidates, because you don't have to have a full-time employee to spend these. And I've asked Troy in the past, you know, Troy, what's the possibility that we could increase from $300,000 to a higher number? Because we just see so many people saying, you know, these are the kind of dollars that we can use to get ahead. Like, we don't have the kind of staff that we can spend for state and federal dollars. And I know that this, you know, when we first, well, I want to talk about when we first started putting these dollars out there because we were kind of a mixed bag on that. But I see now that, you know, we're kind of seeing the improvement and we're in the community. In addition to that, we're seeing how many people are coming out to access this money. And it's good to see. and I wish there was more of it, but I am inclined to go with the commission's recommendation after spending all this time, effort, and energy weeding through all these candidates and telling us what they feel is the best impact for the community.

I think that's a good conversation to bring up as we get a little bit closer to budget time about council priorities and is this the right number? Should we look at a different number and can we even make a different number work? But I tend to, I agree with you. The thing is, is there's never enough money, right? There's just, all these nonprofits are doing such vital work in our community. There's just never enough money, unfortunately. which is why I like to be smart with the dollars that we do have. And I tend to lead to, like, let's score them, let's give the highest scores the most money, and let's move the needle that way. But I think it's a conversation to have. It is.

It's getting worse where state and federal monies are drying up, and there's even more pressure on local.

Unfortunately, we're going to have another tough budget year, and it's not like we have, I mean... Not like we have a bunch of extra money that we can add to it. Although, I mean, obviously, no matter how much we put, there's always going to be a need for it. I mean, there were three times as much money asked for as we were able to give.

Yeah, that's tough. Well, yeah, that's a conversation for a bunch of time. Okay, sounds like consent agenda and report back on our discussion today.

Yes, we'll do. Thank you. Nicely done, Michelle.

Okay. So next up is our stormwater rate study. I think Royce is online, and Vince will get us started here.

Good evening, Mayor, Deputy Mayor, Council. So we're here tonight following up on the stormwater strategic plan that we were here a little while ago to specifically focus on the rate study, and we have the consultant, FCS, who did the rate study will be presenting on that. I'm here with Ryan Jewell.

I'm the stormwater. Ryan Jewell, stormwater engineering manager.

Roy Sheung, stormwater permit coordinator.

All right. Augie, do you want to take it away?

Good evening, Mayor and Council. I'm Tagi Auker, Senior Project Manager with FCS, and with me, Amanda Levine, Assistant Project Manager, and we're the consultants who work with your water resources team on this rate study. So tonight, we're presenting the results of the stormwater rate study, specifically the revenue requirement. which just tells us how much revenue the utility needs going forward. This is a briefing for you all tonight. We're not asking for a decision, just direction on the preferred path forward. So I'm going to share my screen here. Let me know if that's coming through OK. Looks good. All right. So tonight we'll cover four things, the methodology and key assumptions, the capital program and how we plan to fund that, and two revenue requirement scenarios with recommended rate adjustments. And then we'll look at how Lacey stormwater rates compared to nearby cities. Here's the general logic of what we put together in the rate study model. Generally fiscal policy sets the ground rules, so we look at reserve targets, debt coverage, capital funding approaches, whether it's cash versus debt versus grant funding. And those policies combined with your operating maintenance costs, capital costs and debt service all add up to your annual revenue requirement. And that annual revenue requirement turns into the rate. Rates are essentially therefore set to recover the cost of providing service. So this next section before we get into the numbers really covers the why the strategic plan that drives this rate study and the basic assumptions used in the analysis. Stormwater strategic plan sets the roadmap for the utilities programs and projects for the next nine years that's 2027 through 2035 and the rate study is really built around that funding plan. And two things are driving that plan, as noted in the staff report, aligning with the city's comprehensive plan and complying with the new 2024 through 2029 stormwater permit. In this analysis, we looked at two service levels required and recommended. Required essentially just keeps us compliant and can mean declining service over time. We'll be focusing on the recommended level of service tonight. That allows the city to keep pace with long-term goals and lets us do more preventative maintenance instead of reactive fixes. This is essentially the financial model in one slide. So we run a multi-year sufficiency analysis, which means we're checking each year whether or not revenue is keeping pace with costs. Three fiscal policies were incorporated into the analysis. We have an operating reserve. making sure you have two months of operating revenue in the bank. We also model a capital reserve having 2% of fixed assets, allowing you to have some money tucked away in case of a capital emergency, or in some cases, matching grant funds if you are successful at getting grants. And lastly, we also make sure that you're complying with the legal requirement for debt service coverage, which just means how much extra cushion you collect above what you owe on debt payments each year. So generally, in our forecast, the costs fall into two buckets. We have the operating costs, which are the recurring ones, salaries, supplies and materials, maintenance, professional services. They're a little bit more predictable based on the current adopted budget generally. And then we have your more periodic capital costs, replacing infrastructure, expanding facilities, and those can be funded by rates, debt, and or grants. So this chart just gives an idea of how generally operating costs can be more steady while capital costs can vary year to year, depending on how many capital projects were taken on and how large those capital projects are. I'll hand it over to Amanda to get into the technical results for the next few slides.

Great, thank you. Can you all hear me? Okay.

Yes.

Okay, perfect. So we're going to move on to our financial forecast key assumptions for the rate study. A few of these items were briefly touched on in the previous slides, but we do want to just focus in on the forecast basis, different reserve targets here, because they are going to drive the results. Of the overall revenue requirement for the stormwater utility. So, for our forecast basis, we're looking at that 2026 through 2035 timeline, and we're using the 2026 budget as our baseline for the analysis. What that means for the expense inflation that we see on the green box right below that is that each one of the line items in the 2026 budget is going to be escalated in 2027 by either a general cost inflation at 3% per year or a labor or benefits at 4 or 5% per year. The construction costs we're setting at 3%, which means the CIP is going to be escalated to the year of construction based on that 3% escalation factor. As we talked about in the previous slide, we do have some reserve targets for the utility and that's two months of revenues, which is about $1 million based on 2026 budgets. And then we're also keeping in 2% of the fixed assets for the capital target, which equates to about 1.5 million and grows as capital is completed for the utility. The customer growth within our analysis is about 1.25% per year. So this means that the rate revenue for the utility is growing before we even apply any kind of rate increase. So this is our base rate revenue that we're looking at throughout the forecast. And then finally, in those purple and blue boxes, we have our existing debt and capital plan. The existing debt for the stormwater utility is approximately $102,000 or $1,000 per year. And the final payments are going to occur in year 2033. For the capital plan, there are about 24 projects that we're looking at, an average of $3.8 million per year. And this is our plan through the year 2035, which is in line with our forecast basis. So on our next slide here...

I have a quick question there. The customer growth at 1.25% per year, what has the actual growth been, say, on average over the past five years? That seems like a very conservative number, and I understand why you do that. However, that changes the math dramatically when you're... not, when you're so conservative that you're having to make up with revenue on the other side. So what's the actual growth number really been over the past five years?

Yeah, so we were looking at population growth from I believe about 2020 to 2025 and it's different each year, but it was about 2.5% from 20 to 2021, then 6%, then 2.15, then 1.3. So kind of a little bit less than what we saw earlier in the forecast. So what we did is we actually just took the average of the last three years, which was 1.25. So that does include a year of 0.28%, which is bringing that average down a little bit from what we've seen kind of earlier in that five-year forecast. So that's where that number's coming from.

That seems awfully, awfully low in my opinion. I understand your math there, but the one year that you're looking at is a complete anomaly over the past 20 years. So again, It just changes the math dramatically if we're that far under, if that's the rate you're using.

I had the exact same question. When I saw the 1.25, I thought maybe that was a generic number and not specific to us because it doesn't seem like it would be specific to us. And then in addition to that, with our annexation study and plans, I'm wondering if that would move the needle too. But I didn't think, when I saw the 1.25, I thought maybe, You know, that was just kind of like an average number that you guys use. It didn't seem like it would be specific to us because of the growth that we see here on a regular basis.

If I can jump in real quick. Take the annexation, potential annexation area out of the equation. If you just look at our historic rate of growth over the last 20 years, yes, we've seen a lot of rapid growth, a lot of big population number increases in percentages. However, we all know that as we've grown, we've lost available land supply and those type of things. So our growth is going to change going forward. So I just want to put that caveat on it, because you're right. If you look at our historic average, it's true. The last five years, you have some anomalies. You had the COVID era, meaning most recently had the real small rate of growth. But our population trends is going to slow down. going forward just because the nature of being built out and infill development and slower growth. That being said, I don't think, and this is something that the consultant team or our water resource team can answer too, is it doesn't include annexation because we can't guarantee on that, but also that comes with additional services.

I just feel like I'm curious of what that how that changes the math if we got closer to a 2% year over year, which is probably closer, even on the conservative side, of what it's going to be, at least for the next five years. We're not built out yet. And we've seen the multifamily and other things that are about to come online. We're not there yet. I know it's coming, but we're not there yet.

And they have access to our pipeline, right, to see what's in it?

We do, and that pipeline has slowed down to what it was five years ago. Because we do have multifamily, and that creates several units, but you're Again, but that goes back to your household size, different multifamily versus single-family detached, and there's all this different variables. But I think you can look at these numbers as, look at the last three years as that transition point, and we need to monitor that going forward. Because you don't want to be ultra-conservative, but you also don't want to be over your skis if you're not able to realize that future population growth.

How do you see the nexus with future growth projections and the likely path of annexations that we're looking at?

Well, just for clarity, all the analysis here does not include anything for annexation. We have separately working on estimates for what that might look like for stormwater utility, but that's not included in the analysis here. Yeah, it's just not included.

I don't think you really can include annexation, the potential annexation. Because not only is that going to bring, yes, it's going to bring more people, but it's also going to bring a lot of expense. Let's not forget that the area that we're talking about possible annexation over these next several years probably is not up to the same standard on the stormwater facilities. So it's actually going to probably change these numbers, not in a good way, that annexation.

The only good thing there is we will have some reimbursements for some of that. Some. Well, yeah, that's a totally different, I'd say, I agree. Totally different conversation. You can't include the annotation in this. I'm saying straight, look at our population.

But that is an average of the last three years. I get there was that one anomaly year in there.

Very anomaly.

But we are also moving toward built out, and I don't know how much higher than that. I mean, maybe you could do 1.5. I don't think you can do 2.

Well, I'd be interested in seeing how it changes the map, but we'll let you continue. Sorry about that.

I have a question. Go ahead. Under the reserve targets, how often do we inventory our fixed assets?

Are you asking about the infrastructure and the ground, that type of inventory, or?

Any of the fixed assets. How often do we inventory those? How often? Yes, that's the question. It's analyzed each year. Is that 2% enough if, for example, you had two failures in one year?

Right. It's evaluated each year at the end of the year as part of our financial statement preparation. So we take the new construction that's been added, that gets added to inventory. So it's a growing number typically. We build more assets than we actually abandon. So, yeah, it's a growing number in terms of that 2%. That's just going to grow over time.

Okay.

Okay.

We'll let you continue. Sorry.

No, no problem. Good questions. All right. So we're going to take a closer look at those reserve targets that we looked at at the previous slide. So we have the combination of the two months of operating revenues at $1 million and then the capital target of the 2% fixed assets at $1.5. Just like Troy was saying, that will increase revenue um over time as more assets are added to the list as capital gets built but this is just what the target is for 2026 and this bar describes how the beginning cash balances are compared to that target so you can see the orange line there is where the 2.5 million target is set and we have over and above that target within the stormwater utility So everything above that orange line is going to be able to be used for capital projects. So when we show the rate schedule, that's going to be a combination of cash funded capital, but also using some fund balances as well to pay for projects. So, on the next slide. We're going to get into the revenue requirement itself, which we're looking at two different scenarios. Both of these are very similar. The only thing that we're changing between the two is if we utilize any capital grant funding or not. So in scenario one, we're ensuring that the utility can fund its existing needs, as well as how Tadege described earlier, that recommended level of service for operations. And we're also incorporating a select amount of capital grant funding, which we'll get into more detail to on the next slide. But just for comparison for scenario two, all else remains the same except for the aspect of no capital grant funding for scenario two. And that will become clear when we see the rate differences there as well. Right, so on our capital program slide, this is the planned expenses for the capital program through 2035. Uh, the scenario 1 that incorporates that grant funding. Is really illustrated here with the 2 different colors. So, the utility funded capital costs are in blue all the grant funded capital costs are in green and those are made up of those projects we see in that green box off to the side. Scenario 1 assumes 85% of those project costs listed below are funded with grants. That equates to about $5.1 million throughout the forecast. We have 2032 as the last year in which those grant funding projects end. However, as we go into scenario 2, you'll see that the rates have to be a little bit higher in order to cash fund those green pieces of the bar. So if we go to the next slide, we can take a look at the scenario 1 rate forecast. So just to orient ourselves to this graph a little bit better, we have all of our expenses in the columns. Each different color represents a different kind of existing expense or new expense for the utility. The light blue is the operating expenses from the stormwater utilities budget. We have our level of service additions for that recommended level of service in yellow. The really thin, small bar of pink purple, that's the existing debt service, which you can see ending before we get to the end of our forecast. And then finally, we have our green, which represents the cash that's going to be used to fund capital projects within the forecast. So that covers our expenses, but our revenues are represented by the black lines, the solid black line that we see kind of running horizontal just above that $6 million mark. That represents where rates are today. So this is where we would see As was mentioned before, if the math changes on that customer data piece, we'll see that that solid black line adjust a little bit depending on what rate we put in there for the customer growth. And then the dotted line is where we are once we apply those rate increases. So with 9.5% starting in 2027 and going through 2034, you can see the difference that that rate increase year over year makes and what the utility is able to fund. So the main points really to bring up here is that if you kept rates as they are today, that solid black line that's more horizontal is gonna start eating away into not only your rate funded capital needs, but also your existing debt and level of service additions by 2028. So that is kind of the driver, the need for those higher rate increases upfront. And then if we go to scenario two, with all else being the same, except for the fact that we now need to cover an additional $5.1 million of capital projects that are not being grant funded, the rates need to go up by 1.5% each year. So 11% increases all the way through 2034. And then like in scenario one, we can drop down to more kind of cost inflation rates starting in 2035. So those are the revenue requirement results for the two different scenarios. And on the next slide here, we'll start getting into what that actually means summary and rate wise, which I will pass it back to Taki.

Thank you. All right. Thank you, Amanda. So in summary, this is called the bottom line. We have two scenarios, same level of service. The difference is the level of grant funding. Scenario one, that's that nine and a half percent annual rate increase, assuming we land some capital grants. Scenario two assumes no grants. That's that 11% annual increase there. So by 2035, the last year in our forecast, the monthly single family bill under scenario one would be $32.58 versus $36.33 under scenario two. So that Yeah, roughly $4 monthly gap is the cost of grant funding not coming through. Here's that same general story, but on a year by year basis. So generally, scenario one increases by about $1.90 per year, and scenario two, about $2.30 per year. Both start with today's rate, it's about 15.46 for a month for a single family customer, and that gives you a sense of how those different scenarios impact that residential bill.

This is a change to base rate? Is that what the 1546 represents, base rate?

Correct.

How successful have we been in grant funding in the past?

What percentage have we gotten? That was my question as well.

I'm only aware of one grant-funded capital improvement project we've done since 2016. So this is a very aggressive strategy of pursuing grants and outpaces our past performance on grants. And then moving forward, last week staff actually spoke with the Department of Ecology, who administers a lot of the grants we'd be going for, and they are skeptical that design phase projects are gonna receive grant funding in fiscal year 2028. They've got several multi-million dollar inter-jurisdictional projects that are construction ready that are gonna be applying for funding and eating up the, what is it, $15 million annually?

That's roughly, it's been about 15 million annually for several years, available grant funding. And I just, I wanted to say, like, no other utility would be coming to you with a recommendation to rely on grant funding. It's really not there for other utilities. It's been there with stormwater from the state. It's Model Toxics Control Act funding primarily, the stormwater account. So, yeah, there is some risk, and we don't have a long history with the grant program, but wanted to put it out there.

And if we went with the option without the grants and we did get grants, we could always adjust the rate accordingly, right?

And are you really recommending a 10-year rate lock-in here? Is this the recommendation for the next 10 years? No, this is definitely something we could revisit as needed because that's what I'm wondering because I would feel very uncomfortable about passing a 10-year rate. And we put future councils.

We're laying out a 10-year horizon rate because there's a couple of factors that I think Vince can go into a little bit more detail about. One is the Department of Ecology permit requirements And at the time that this current permit period is over, there's going to be a new standards and we're going to have to be in place to meet. Also, in terms of planning our long-term capital programs, they take multiple years to plan and build, and so when you get to the end of the life cycle, how do we keep that momentum going without dropping our level of service? And again, these are based off of the briefing that you received a couple of weeks ago regarding the strategic plan and level of services. But Vince, you want to talk a little bit about the dynamics of permit requirements in that life cycle?

The permit requirements really, and so yeah, that's just a study period for the rate study. We'd love to get some guidance on that. But really, we do have a really good sense of what the regulatory landscape looks like for about the next six years, ideally, because there's that period of time where there's a ramp up between permit cycles, their five-year cycles. So we have a really good sense that these are going to be our operating costs. These are our identified capital costs for quite a bit of this through six to seven years already. So that would be, ideal to have that predictability so that we could have a more steady rate increase. If we go with something shorter, you know, something unanticipated comes up, we might need a steeper increase.

But, yeah, that's what we're... And that's one of the things, too. This is the study period, but also part of this is getting in front of council and briefing, having a conversation, see where council is on the overall recommendation. There's not a recommendation necessarily right now, but this is what you know again an even perspective over ten years does this bonding capacity play a role in in what we're seeing here and in any way

Bonded, right?

It's all cash. I know we're sitting on cash.

But this will also play in the part that provides ability for issuing revenue bonds and those type of things if you have a steady revenue source. But you also have to be careful about your bonding to make sure that you are covered by your bond debt.

I guess what I'm asking is that possibility, you know, propping up the length of time that we're even looking at for a full 10 years. I'm just wondering if... if we're looking at that kind of horizon because it allows us to bond better.

Right, more predictability for that bond. But any time we look at a rate area, we look at bonding for more than 20 years, we're going to make sure that we have enough revenue projections off the current rate level that we issue bonds under that would cover that. And then after that, if you increase or lower rates, it's going to be based on where we are in those bonding capacities. So bonding isn't necessarily related to this. It doesn't play a big role in what we're seeing. Okay. Mike?

As I recall, we did a couple years ago now, probably, what was it, a five-year water rate that we did? Yeah, 10 years is a long time. Also, I love looking at that, but then when you look at the end, you get to 2035, and you see this drastic reduction. Again, we know by then there'll be new stormwater regulations, and we're not gonna actually ever see that. I mean, you're gonna see another rate study that's probably gonna have 11 or 15 or who knows what going on forever. Unfortunately, there's no other way to keep up with the cost of the infrastructure, but I'd be a little hesitant. I mean, 10 years is a really long time to set a rate for. I mean, obviously, we can always look at it, but I'd be more comfortable with half of that.

I was going to say the same thing. Half of that would be nice because even when we do five years, we always tell ourselves, we're going to take another look in two years from now and see if we're still on target and see if we can save people more money or see if we collected too much. It just kind of falls through the crack and we don't really get that.

You do five years, and then if you do happen to get some grants, maybe you're able to adjust it down from there. Because, again, to count, I mean, to go with the nine and a half and anticipate grants that haven't been happening in the past, and that Department of Ecology pretty much said you're unlikely to get, doesn't seem like a good fiscally responsible move.

No, I agree. But I think, you know, I have a real hard time passing double digits rate increases, even when we're talking at this level, and especially doing that for a 10-year period when I don't agree with the 1.25% population growth at all. I would really like to see a little more information of what, when you change that population number to something I think more realistic over the next five years. After five years, you know, let's Let's talk about it. Let's see where we're at. I think within the next five years, we're going to be closer to our historic rate over the past 10 years, not the past three years, and see what that does. And I have a real hard time with double-digit increases here.

How difficult would it be to come back to us with an I mean, that's the only thing we're asking really to change, right, is that growth rate. What does 1.5, 1.75 look like? You know, I mean, I'd like to see a couple of scenarios because, I mean, I think two would be pushing it, but 1.25 does seem low.

It's, yeah, historically low. I mean, we just haven't been that community for the past, you know, since I've been on council. So... I think that changes the math quite a bit, but I would like to see it. And then, I know this is for discussion, but when are you looking for, is this going to be part of the budget?

Yeah, it'll be bringing back for final action by the time the end of the year rolls around. Okay.

Well, so we have some time. Yep. Let's look at that number and, you know, and like I said, I've even gone to the city manager and said, you know, I'm really hesitant right now about any major expansion in anything that we're doing when it comes to the cost of living in the city of Lacey. I mean, people are struggling in our community right now. The cost of living keeps going up and up and up. like, it is, like, where's the end? And, like, people just need a little bit of a break, and this is all extremely important, and I know a lot of it's by law, and we have to follow, you know, there's things that we have to do, but on the other hand, like, if 1.25 doesn't pass the smell test to me, and it probably has a big impact on this number. And so I'm just really hesitant about, especially in this next year, doing everything we can to keep our costs as low as possible. It's a very uncertain time, and people are struggling. And I feel like we need to step up to play as a local government and do everything we can to make sure we are doing everything we can to save our residents money right now, because people are hurting. And so let's look into this a little bit more. Let's look at what that does with, I think, a more realistic growth rate, and then we'll have a conversation again before we get to budget time.

I'm definitely in agreement. I'd like to have some time to dig into it some more.

Yeah. OK. Looks like you guys have one more slide.

Yeah, just one more here for you. And we'd be happy to run different growth scenarios for you. So we looked at what other single family customers throughout the area pay for monthly stormwater rates. And you can see they're currently $15.46 per month, sort of in the middle of the group. And whether it's the scenario one or scenario two or something in between, would still be well below Puyallup, Olympia, Shelton, and just below City of Tumwater there. It's just giving the idea of, even though these are cities of different sizes, different characteristics, different mixes of residential versus commercial, et cetera, a lot of caveat, but it gives you a sense of what others are paying in the broader region.

That's good to know.

Okay. Is there anything else you'd like to take a look at? So we'll take a look at the rate growth projection. We have been talking to our neighbors, Olympia and Tumwater in particular. We're all struggling with the same. How do we address affordability? How do we keep costs down? They're looking at similar range.

That's a pretty good reserve balance that we have. I bet you none of our neighbors have a reserve balance. anywhere close to what we have at the City of Lacey, which means we've been very conservative on our projections, and so when you do that, guess what, you build up reserves. That's great, because in some cases, you don't have to go out and issue debt, which makes it more expensive in the long end, but especially right now, I have a little more angst about maybe looking at the reserves and being a little more judicious about that and keeping rates a little bit lower in the near term, because I think there's going to be a lot of changes that are going to happen in this community in the next five years, and I have no idea what that's going to look like five years from now. We don't know, but I think there is going to probably be some big changes one way or the other. So it's just tough for me to go up. past that five year horizon as well and try to project out 10 years. I think that's really difficult for us to do here today.

The good news, though, is we do have the reserves. Yep, that's great. And like you said, probably more so than anyone else, and we've done it with lower rates.

Yeah.

So, I mean, that's a testament to the work that our utilities people have done. It's amazing.

It's good to have a long horizon snapshot, like the 10-year horizon. It doesn't mean you have to have a set rate for 10 years. You can do a five-year, three-year, and then a check-in, and then recast.

Yeah.

But, again, this gives you the long view of where we think it is today, and then we'll see where that goes, how close we are when we get to those midpoints. And we can come back and get those different growth numbers and kind of get some scenarios, high, medium, low, and then also how that affects the potential for rates and also. Sounds good. Everyone good?

I really appreciate the long horizon because it is showing a gap. Yeah. I don't think it's going to get easier. Okay.

Thank you. Thank you. Thank you so much. Thank you. Thank you. Our next agenda item, which is our budget amendment update.

Good evening, Mayor and Deputy Mayor and City Council. I'm Chelsea Knight, Deputy Finance Director. Tonight, we're going to discuss another budget amendment for 2026, and this is scheduled to be our final amendment of the year. Okay, so amendments occur for a number of reasons, including unanticipated activity, council actions, and external funding sources, just to name a few. This presentation is intended to provide a high-level summary and an opportunity for discussion. This is just for review only this evening. We're going to come back on September 1st for actual council action. And I'm going to focus on items over $50,000. However, there are smaller items are listed in the amendment, the Exhibit A, which is in your packets. Okay, so this slide's just a quick snapshot of the draft amendment as shown in your packet material. The total amount is $5.3 million with 57,000 of that being for joint animal services. As you can see here, the bulk of the amendments fall within two fund types, 2.5 million in the general fund and 1.6 million is associated with utility funds. A large portion of the needed amendment this time around is related to the citywide utility cost shortfall that Troy mentioned during our mid-year report a couple of weeks ago. Oh, that looks really small up there, sorry. So we're gonna focus on the current expense fund first. The first two items are really more housekeeping in nature rather than true monetary changes. Both are intended to better line up the costs with the department that's managing the program. So the first one's the annexation study. This is simply just moving budget dollars from the CED department into the city manager's office budget codes as they're the ones that are overseeing that project. There's no change in the value that was previously authorized and a total of $403,000 is being moved between the two departments. Similarly for the public art program, this is moving public art dollars both the reserve amount that we're holding as well as the 2026 budget allocation from the building improvement fund into the current expense fund. Again, there's no change in the actual dollar value and we're moving just under 499,000 between those two funds. Next is opioid settlement dollars. So this amendment is what we consider more of a true budget amendment where we're adding some funds. This would authorize the city to remit opioid dollars that have been collected through that one Washington MOU to Thurston County. This is in support of the regional opioid abatement efforts. And the total amount collected so far through the end of 2025 is just under 416,000. And so that's what we would intend to remit over to the county for the regional use. Next, we have a proposed amendment for the Veteran Services Hub to finalize the ADA improvements that have been happening over there. And the amendment request is about $74,000. And lastly on this slide is related to the Lacey Municipal Code, LMC. As you know, the CED team did incredible work on updating the city's planning, development review and planning language, as well as Title 16 zoning. And so as a result, we had to update the LMC, which was pretty pricey. So this amendment helps with making sure we have enough funds to cover that, as well as our additional costs throughout the rest of the year. Any questions on the current expense fund?

I keep asking this question. So for the opioid dollars that we transfer to the county, the county is the fiduciary for these dollars. And are they doing 20% or 10%? I couldn't remember, and I don't know why I can't remember. I know typically it's 20%, but I thought for some reason we agreed on 10%.

I'd have to go verify the agreement, but I think it was dropped down to 10% because of concerns raised. Okay. We're going to get the dollars on the street.

Okay, so next we're going to look at two amendments that actually cover multiple funds. The first one is that utility cost shortfall that I mentioned previously. The city experienced significantly higher utility costs than we anticipated for 2026, and so the total amendment request for all of those kind of added together is just over $1.7 million. The general fund, which is shown at the very top of the first chart, is inclusive of the current expense fund, the community building fund, RAC fund, and the city street fund. And that was a total of $722,000 when you add all of those together. The next highest was the water fund at $523,000, followed by the wastewater fund at $469,000. Also, for a multi-fund amendment, we have a public works operations facility. The improvement there, like the pre-design work that's being done, we need an amendment for us to finalize some work through 2026, and that cost is allocated between parks maintenance, street water, wastewater, and stormwater. The largest allocation is to water at $45,000, and the second largest is wastewater at just under $40,000.

So with this shortfall, does that also mean that we'll be building the same number into 27?

Say that again?

So we have a 1.7 shortfall for citywide. Will we also be building that into the 27 budget? Yes, exactly.

Yeah. Okay. Yep. We'll account for the shortfall for 26 to create our new baseline and then apply rate adjustments for into 2027. Yes.

Is that, that's a pretty big number for us for a shortfall. It is.

That's why we are all feeling our utility rates at home too because it's, you know, we brought this up and I think, you know, PSE is.

Yes, I've been having some conversations with a representative from Puget Sound Energy about coming in and having a conversation and a work session with the council to talk about the rate increases, the Ys, and what other programs they have to help potentially offset and especially help those households.

Where are you on that, though? Because I know there was some reluctance on their part.

There is, but I think we're setting up basically a pre-meeting just to talk about what that conversation will look like at the council level to get them comfortable with leadership. But I think that at the end of the day, we'll have a work session opportunity with Puget Sound Energy. I spoke with Christine Mapa today, and so we'll get this meeting set up so we can talk and explain to them what we're really looking for. And, you know, it's important. It's an important conversation because, just as the Mayor mentioned earlier, all these different actions around the state, at the state level, down to the local level, are increasing costs and, you know, it's increasing that household burden too. So, just to kind of explain the whole, how everything's connected.

And the residents feel it twice, right? Because they're getting it in their own personal bills that are going up, but they're also on the hook for all of this. Because, you know, everything, the money we spend comes from the public. So they're paying it on both ends. So I think it's only fair that PSE sit down in an open meeting and talk about it.

And cost to buying goods across the city of Lacey, from the restaurants, you name it. So, yeah, it's nice to... have an explanation of why we've seen such a dramatic, we haven't seen a bump like this.

Ever.

Ever in my, ever, ever.

I do know that there are several drivers that are outside of PSH code, but I think it would be helpful for them to come explain that and what those drivers are.

Yeah, that's all I'm asking, that they explain it.

Can you remind me of, again, are we still buying 100% green power, quote unquote?

Not directly. So we invested into the wind farm, and then I think there's a solar farm as well. So it ends up being a bit of a surcharge. Different from the surcharge we had before, we actually have ownership and we have a long-term contract with PSC. Short answer is yes, we are.

That was a great... Investing in that was smart for the city. It was a great investment, but... how that impacts rates and everything else. It'd be interesting to see how that works. Great, thank you.

Okay, so we're gonna move into a discussion about transportation dollars. There's three funds that we use transportation dollars within, and I'm actually gonna kind of bounce around on this slide a little bit. So we're actually gonna start in the top right side of the screen. So arterial street fund, we're actually really excited to announce that right away acquisitions are ahead of schedule for the college and 16th Avenue roundabout project. So that being the case, um, an amendment of $625,000 is being requested in order to maintain that pace throughout the rest of the calendar year. Um, this will just shift the dollars forward. It doesn't actually create new dollars for the project. We're just moving them ahead of schedule. Moving over to the left hand side of the screen with the street fund. The way that our operation works is parks maintenance has staff that also do work for utilities and the street fund and specifically right of way is something that is maintained by parks maintenance staff and we are fortunate enough enough to add a new staff member to that team this year. And so in doing so, the street fund has additional costs for the extra maintenance that they're able to complete. And then also on the flip side, the parks maintenance and the current expense fund also receive revenue from the street fund. So the amendment here for 163,555 is just reflecting that extra expense and then also the associated revenue. We also have a request for $63,000 amendment in electrical supplies and this is related to unanticipated costs of having to replace stolen wire and also damaged utility boxes and that's due to vandalism and theft and also just vehicle collision things that happen.

So what are we doing about vandalism and theft? Are we just assuming that this is something we're going to have to live with or what are we doing?

I'm sorry, can you repeat the question? How we approach vandalism, of course, can't be everywhere all the time, all at once. So we can do as much proactive enforcement as we can. Chief Armada can probably add some more details to when we do have damage done, we have to identify and replace it. But again, we have a vast system, and there's lots of little places where copper wire theft and those type of things can occur.

Is this the average amount of money we need to invest in vandalism and theft? I mean, what has it been in previous years? Is it $60,000?

That's a great question. I'm not sure. We could probably find out for you. This is just what we need in addition this year to what we've already spent. So it's above and beyond what our normal budget is. Okay. But I do know it's been pretty frequent for the wire.

So the cost listed here doesn't cover the cost of investigation or prosecution for the folks who are held accountable for doing that. We try to get restitution as part of that. Unfortunately, most people that steal copper are indigent, so there's no real restitution teeth that go into that. We also go after the locations that purchase copper to make sure they're not doing that. So we try to hit both ends of the equation. So it's an ongoing effort. I can tell you that they stopped doing catalytic converters and they went to copper because copper is worth more money now. So we're not the only jurisdiction seeing that. Not counted in this is vandalism to, say, restrooms. which is more graphical pens, things like that. We've been very aggressive on those, working with Parks Maintenance on that type of thing as well. We're getting good handle on people reporting the theft, so it's not something that just happens. Either the scripting graphics or the graffiti vandalism or the copper theft are both reported well by Public Works to us so we can get on the investigations quickly. And also the increased cameras have helped those investigations.

Yeah, I was going to say, as we also... have hot spots we'll put the cameras up also there's some parks that do have cameras so we can kind of do some follow-up and then as a parallel example you know we also have a maintenance budget in in streets related to um street light replacement for cars running the street lights because not all the time that we can get recovery from insurance companies those type of things because they're uninsured motors so these are things that this are happening and as Chelsea mentioned this particular year there was a spike and that we weren't accounting for in our normal uh

So is this a public works line item that's going up?

Correct. Thank you.

And do we know how much are we, what is the budget item on that usually? I'm sure you can look it up.

The adopted budget was just under $122,000 but not all of that is due to that the vandalism that's kind of electric supplies in general, but about 122,000. Okay. 50% more, huh?

It's been a tough year. Okay. Thank you. Wow. Yeah.

Okay. So the last item in the street fund column is really kind of twofold. It touches both the street fund and the transportation benefit district fund. And this item actually isn't in your packet material. If the council is interested in pursuing this initiative, we will add it in for the next meeting. But what this is is it's associated with the July 28th work session where we discussed sidewalk gap funding. And so what came away from that discussion was a potential for annual funding of $300,000. And, um, this amendment would basically start that in 2026, rather than waiting for 2027. And what it would look like is sidewalk maintenance, um, which was originally coded to the street fund would be coded to the transportation benefit district fund, which is what you see on the bottom right of your screen sidewalk maintenance, 300,000. And what that does is it frees up funding that would have normally been spent in the city street fund to be used for sidewalk gap funding. which is what you see on the bottom left-hand side of your screen. So if the council is interested, we can include that in the final budget amendment ordinance for 26. Yes.

So, you know, we had this conversation at a work session, and we talked about sidewalk gaps and the difference between, you know, building the Taj Mahal and just kind of filling in a gap, and we talked about development standards not only for ourselves but for developers. After that conversation I kind of went looking around to see you know And I remembered a couple spots where the developer you know developed did the full development And or did a gap That they needed to do in but like I'll give you an example on 15th You know where the new apartments are well in front of the new apartments. They did of course the full development with the planter boxes sidewalks all the things and But just shortly thereafter, they were also required to do sidewalk gap, which did not have full development. And this also happened on 37th, because it brought city manager's attention. And so we're not doing something different for ourselves than we're doing for developers. When it's a gap that just needs to be filled and just needs to be poured, developers have that option too. But with the exception of in front of their project, they are doing the full build out, but Adjacent to their project if the guidelines require they're just pouring a strip without doing the full development So we're not doing something different with ourselves and we are for them and that there's at least two examples that I can point to Where we did not require them to do the full development of the sidewalk and the planter boxes and the whole thing Because I thought about you when I was thinking about this night and I looked and wanted to make sure that we were being fair

I'd like to add a little bit more on how that happens and how that's approached. The Deputy Mayor brought that up and it reminded me and jogs some memories. There are times when you have a private development project that when they add to their full frontage permit, there is a gap to get from a key, especially if it's a family oriented development and they get it to school or to a bus stop and if there's a short distance where you can close that gap for a safe walking around, you can't require offsite right away dedication because that's a whole different thing. So you have to have the nexus to the development that there is a need that they're causing. And then we look at a modified standard to just get a safe passage from the end of their frontage improvements and sidewalk to the next where it picks up to get to that key thing. And so it does, as Deputy Mayor mentioned, it comes back to that conversation about the equity and we do provide that as an opportunity.

And we are going forward looking at doing a deeper dive in those standards, too.

Correct. As with the development guidelines update that will be coming up, they'll be looking at how we create a language around that exception so it's consistently applied going forward. Great. Not that it's not consistently applied, just make sure that it continues to be consistently applied.

Great. But on this topic, so on this $300,000 for this year, so this was already going to be budgeted in for next, starting with next year was the plan, right? So this would be an additional $300,000 that was not?

We'd start that process going forward so we'd have something to plan for if we identify gaps in any projects coming up in next year.

So this is a next year budget or is it this year?

Yeah, that's where I get something. Chris, weren't we already going to budget it for next year anyway? It is.

We're just including the budget amendment for this year, so we also have a base amount going into next year.

So January 1st, there will be $600,000 in this fund?

Well, as of actually on this budget amendment, Orange, we'll make the change and have that account. Now.

With 300.

Right.

And then once the budget passes at the end of this year, there'll be another 300.

Right.

So January 1st, we'll have six.

Yep.

Okay.

Rather than three. Yeah.

There'll be six, potentially six, the final budget approval, 600 in that account going into 2020. Okay. Comfortable with that?

Okay. Great. Thank you. We're going to look at some utility fund amendments. This one's specific to water. We have on the operations side an amendment being requested for 312,000, and this is for additional water meters. It's to make sure that our inventory is sufficient to get us through the rest of the year, both with our regular maintenance and in conjunction with our meter replacement project that we're working on.

How are we doing on that? Where are we at?

It's going quite well, actually. I can really talk about the results and impacts it's had on the utility billing staff. So I looked at data just from December through July. We're actually in billing week as we speak. So if we look back at December, we had about 1,600 manual reads. That meant someone had to actually go to a failed meter to read that. That actually grew in February to just over 2,000. So that's kind of our base, where we were. We also estimated about 800 accounts or reads. So we're talking 3,000-ish meters. In July, we completed 272 manual reads, so 10% of what we were, and we estimated 50 accounts, so a fraction of what we did before. So far in August, it's even better than that, but we don't want to go public with those numbers, but it's already... even easier in August. So really, the results speak for themselves. It's been extremely successful.

Look at all the man hours that we have saved. I can't believe 2,000 man hours a month are going out there to look at a stupid number on a water meter. I mean, there's so much better things that we could be doing. Thank you. Thank you. That's wonderful.

All right, on the capital side, there's around $80,000 worth of amendments that we're requesting to just close out projects. So $65,000 for the Terry Cargill Reservoir and $15,000 for the Marvin Road water relocation. Next is the stormwater fund. This also is not in your packet for tonight, but will be added for the next meeting. This one actually affects two funds, but the bulk of the impact is to the stormwater fund, which is why it's listed here. And an excavator was approved in the 2026 budget. And so that doesn't change with this amendment, but the excavator was intended to be split between water and stormwater and the whole budget went into the water fund. So this is cleaning up that so that the budget is in both water and stormwater. And then also the excavator was a little bit more costly than what the budget anticipated. And so it's also adding roughly 20, $2,000 to both the water and stormwater fund as appropriate based on the funding allocation. So that's what this fund is doing, but moving essentially water budget into stormwater is the really big impact. Okay, the last item we want to highlight is in the equipment rental fund. An out-of-cycle vehicle replacement was required for police unit 568 due to a collision. Fortunately, insurance recoveries offset the majority of this cost, and so the amendment reflects both the revenue and the expense side of this. The amendment amount requested is just under $67,000. Okay. So this slide is a second snapshot of the overall amendment. However, it's different from the first one because it incorporates those two items that I spoke about verbally, but are not in your physical packets. Um, those will be added for the next meeting. Um, please note that the joint animal services amendment has been approved by their board. At least that's my understanding. Um, however, it's supposed to be a part of our ordinance as well, which is why you see that there under the fiduciary fund category. And so recommendations and next steps, we just hope you can use this information presented tonight in the packet material to consider the ordinance, which we intend to bring back before council on the 1st for final adoption. With that, thank you for your time and consideration, and I can take any other questions if there are any.

Any questions?

They were all great questions.

I just want to circle back on the question that Deputy Mayor had regarding the... opioid abatement council administrative fees. I did confirm that it is 10% for the county's administration of that program. And then also just to go back and reiterate the efforts that the finance team and the water utility and the operations department have done on the meter replacement program. If you recall, council came to you in November of last year talking about an idea that, doing a budget amendment to look at instead of doing our previous program of just as we could slowly replace meters as we can, and we're losing ground, that we would just do a project. And at that time, the idea or the initial idea was looking at hiring a contractor to do that work to reduce staff time. But the public work staff and the finance staff started looking at it and say, well, I think we can make it a little bit more efficient, a little better for us if we manage that project with internal management and so council approved that approach and the teams went out and as you can see the results and we're looking at this as a two-year program and we're very ahead of schedule and a lot of it has to do with the coordination of the shop and the operations folks of being able to you know know where the crews are going out to replace meters in advance of making sure those meter boxes are clear so it's easier to move so getting equipment out there to clear and brush and clean them up And then also hiring additional staffing for data entry on the billing side, we're able to make sure those meters are calibrated and transmitting. So I think it's a great team effort amongst most departments to solve a problem. And again, we're ahead of schedule and we're getting some more efficiencies and reducing some of the customer complaints in the sense of estimated reads or failing reads and communication. So I want to just commend the group for doing that.

Yeah, I'm really excited and happy to hear that. Obviously, it looks like we're going to be through most of these replacements by the end of this year. Is there a plan on what we're going to do since we thought it was going to be two plus years?

Well, of the failing... Systems and means of course we have some they're still fam at least we're ahead. We're placing faster than they're failing now And then ultimately the ones are still Performing we still aren't scheduled to replace those so there's some work to do But at least we're getting the problematic ones resolved faster if I remember right In order to manage this product project ourselves.

We needed to bring on one and a half Full-time employees we brought in

Two meter techs and another person to enter data into the utility building section and then also some equipment, trucks and everything.

And is it possible that those people will have jobs when this is done?

Potentially. I mean, these are on a limited-term project, but also they're getting skills and ability, and as transition occurs, they're going to be better suited for long-term employment. But also, as we get closer to this program, we're going to reevaluate and see if there's still need for those employees. But again, we'd have to go back to that budget year and reevaluate if we can extend that limited term.

Okay. Okay.

All great news. Is there any other questions? Okay, thank you. Now we're on to council reports. Are there any council reports?

I don't have a report, but I did want to bring up one thing. I'd like to see if we can work it into a work session sometime in the near future, this year hopefully, to have a discussion on... some of the energy scoring stuff that we had talked about. I know it's on the work plan for the future, but the realtors have come up with an alternate plan that they, and I've met with them, I don't know who else has, I know they're reaching out to all the council members, that they'd like us to discuss some further. And I think it's worth discussion. I think it's something that we should at least be taking a look at. It's kind of a voluntary plus program that they've come up with that I think could have some merit. I think it's worth a conversation.

I know that we said we weren't going to sort of put this off until 2027, but I do think that they've also reached out to me and I was talking to them, so are you sort of just preaching what status quo? Do we really need an update on what we're already sort of doing? But they want to talk a little bit more about the whole program and what they're seeing and what it means. And I don't have a problem with getting an update of what they're seeing on the ground and at least be able to hear from them what they're seeing on that side of things.

Well, as you mentioned, The topic of the home energy score program and consideration by council is right now scheduled to be considered on the 2027 work plan. Right. And so this is, I know there's been a lot of talk around the home energy score program. I think the Thurston County Realty Association is looking at other options and they just want to introduce that as a placeholder. And if council is agreeable to this, we could schedule a work session where it's an informational briefing, just context, but we wouldn't, as a staff, start working on what program or home energy score until 2027 when we have the staff capacity and schedule to work on it.

I think that a lot of people are, I'm getting a lot of questions about it, so I think it's probably good information just to put out what's happening, what's going on, and more information is always better, in my opinion, so I don't have a problem with that.

I'd like to hear what they have to say. I get the emails too, and I get the questions about it, and I know that we don't have the infrastructure for it, regardless of what jurisdiction has already passed it. But if they have an idea, I want to know what it is.

The TCMC met last night. I haven't finished putting together a report, but there was a lot of discussion about the home energy score implementation program and how they're actually looking to move forward, and I was going to be putting that together and just brought it up because we're talking about it now.

Good, good, good. So yeah, I think I'm okay with information only. The other thing that I want to talk about that's been brought up is the fire district is going ahead and putting out a bond issue that's going to be on the general. I'm also getting questions about that from the public. They're starting to see that. It'd be nice to invite the fire district to explain what they're doing and give the facts about what that is so that the public can hear it from the city of Blasey.

And it's a major issue on the November ballot. I think it's a good informational.

When you start getting questions from people, it's good to be able to give them answers. So if we could schedule that as well.

Yeah, and Chief Schmidt did, last time we spoke, was talking about the potential about having another informational briefing, so that fits right in with that. Great. Anyone else?

I have inner city transit, but it can wait until next week if you want. Not a lot of big stuff.

Okay. Well, with that, we've reached the end of our agenda. Tomorrow I'm going to be on KJY to do a radio interview. I've done a couple of these with KJY. They have a, I think every Friday or something, they look at local issues and what's going on in the community. And so they have invited the mayors to go around and talk about what's happening in their communities. And they've asked me to come back to talk about what's going on in the city of Lacey. So I will be doing that interview tomorrow.

What time? What time?

The interview will happen tomorrow at 11, but I don't think it will air until Friday. So with that, we have reached the end of our agenda. Without objection, I'll call this work session adjourned. And as always, keep it classy, Lacey.