City Council - Regular Meeting

Good morning. Good afternoon. Good evening. I'd like to call the order of the City Council meeting of 05/19/2026 before asking the clerk to call a roll for tonight's regular meeting I'd like to note that councilmember Pascal will be joining us late for our study session He expects to arrive around six p. M. City clerk

Councilmember Tim Chisholm Councilmember Arnold

here

Councilmember Prem

here

Councilmember Falcone

here

Deputy Mayor Black

Here.

Mayor Curtis?

Here. Our study session tonight is on two items. We will hear an overview of the Kirkland utility rates first. Second, we will have our briefing on the Cascade Water Alliance of the cascade on the cascade supply plan. We expect to reconvene our regular meeting at 07:30. Deputy City Manager.

Thank you, Madam Mayor. Good evening, Deputy Mayor and Council members. This is somewhat unprecedented. It's for the public's purposes. We believe this is the first council meeting that city manager Kurt Triplett has missed in his fifteen years. He's in Greece on vacation. And so tonight, I actually have the distinction of being acting city manager but also doing the first presentation for the study session. And so my apologies in advance. It's a little bit of a lecture. There are actually a fair number of slides, but I will move through it quickly because some of that was really for you to be able to take a look at in advance.

And there are just some policy issues, particularly in the middle of the presentation, that we wanted to highlight because it will be coming back to you as we bring rates back. I also wanted to introduce Jenny Gauss, who is our Surface Water Strategic Advisor, but she's also helping shepherd the rate study while Carly Jorger is on maternity leave. And she's doing a great job keeping everybody aligned. And so you'll be seeing more of Jenny as we bring these rate items further. So to basically start, why we're doing this now is to basically provide you a framework in advance of a number of rate decisions that are forthcoming.

And we'll be bringing that to you over several months also while we're starting to roll out the budget process. So we just wanted to have everybody to have a foundation. And you don't talk about rates in detail every year the way you talk about other topics. So we just wanted to give everybody a good starting point. So I'm going to do a little background. I'm going to talk about the key pieces of the rate study, which are rate revenue requirements and the cost of service. And then we'll just give a high overview of the rate study schedule, which you'll start seeing in the coming months. So the basics regarding utilities is that most municipal utilities are enterprise funds. And what that means is they're intended to stand alone. They're not intended to be tax supported.

And in fact, they are taxed like separate utilities. They generate a tax to the general fund. Funds have to be used for the benefit of the rate payers. And you can't use utility funds for non utility purposes. However, they can reimburse the share of central services, so HR and finance and the city attorney.

And again, they also generate revenue to the general fund because we tax them like we tax other utilities. So with that as a basic context, we just wanted to run through really quickly a few facts about our utilities. We have four utilities that are operated by the city: water, sewer, surface water, and solid waste. And I'll talk just a little bit about each one. But it's important to know their annual budgets combined are $90,000,000 and so they are a very large piece of the budget.

And it's something that doesn't always get the kind of attention that the tax side does. So we, for water, Cascade Water Alliance, who you'll hear from later in the study session, that makes up about 38% of those costs. And the city does all the distribution and delivery of that water. But the important thing here is that our water utility only serves the southern part of the city. It's about 55% to 60% of the city, roughly South Of 124th Street and East Of 98th Avenue.

And the other customers are served primarily by North Shore Utility District, but there are also a number of other providers on the edges. And so I have a map in a moment that will just provide some clarity.

Deputy Mayor?

Is it okay if

we ask quick questions in the middle of the discussion?

Tracy, is it okay?

Sure. It's just I I have people betting on whether I can cover this in forty five minutes. But no, please, by all means.

It's such a unique opportunity because I have the deputy city manager who's actually a finance guru making this presentation. When we report general fund budget for the city of Kirkland, you said $90,000,000 for utility fund. Is that $90,000,000 is included in our general fund reporting when we report?

It is not. It's it's separate. An it's an entirely separate entity. That's what these enterprise funds are intended to be. So, that's added in.

Not only is the fund separate, but when we report out. Yes. Okay. Thank you.

They're a separate category.

Thank you.

So

for sewer, you can see the budget's about 20,000,000 little over $20,000,000 King County provides wastewater treatment. That's just under 60 percent of the sewer budget. We provide collection services, meaning it's coming from all the homes and infrastructure to get it into the transmission and treatment system. It serves some fewer customers than we serve in water, but similar area, but it's only a portion of residents. The rest are served by North Shore with smaller proportions from other districts or on septic tanks, which we still have in areas of the city.

And so just to give you a little visual context, this is a map that kind of shows the city's water service area, North Shore's water service area. And it gets really confusing because there are North Shore water customers that are city sewer customers and vice versa. There are some that are Woodinville water customers but city sewer customers. But I think the important thing is we serve just really the southern 60% of the city. In contrast, we serve solid waste or garbage to the whole city.

The solid waste services that are provided by contract by Waste Management are about twothree of the cost. We pay disposal costs directly to King County, so for the landfill, a little over 20%. So most of what the city does is public education, billing, and customer service as it relates to solid waste. But you, as the city council, do set the rates. In some cities, waste management sets the rates by contract.

So that's one thing that distinguishes Kirkland. And so just about 23,000, 24,000 customers, and everyone in the city is required to have garbage service. And last but not least is the surface water or storm water utility. Sometimes those terms are used interchangeably. The services are all provided by the city except for billing.

Surface water rates are actually billed on your King County tax bill as a separate line item provided throughout the city. And it's basically more parcel based, and so it's assessed on the parcel. Single family pays one rate, and then based on the amount of paved area, nonresidential pays a share of those rates. And so this deals with water that's essentially falling on the ground and has to run off, both dealing with it from a water quality standpoint, but also to help prevent flooding as it trains. And so those are the four utilities that the city operates.

Just to kind of give you a sense that the average monthly bill for a single family residence, a typical residence, is just about $235 before utility taxes. Our utility taxes vary by utility, which is a long story that I won't tell you today, but lawsuits were involved at one time, not against us. But this is a number that has gotten to be much more substantial in recent years. And what you'll see as projections are that it's going to get even larger. But this just gives you a sense of what an average single family customer would pay.

And these are all preliminary draft, not adopted rates at this point. But we provide the context of how much of the cost comes from other agencies just to give you a sense of one of the drivers of the rates. You'll hear shortly about Cascade Water Alliance's capital plans related to supply. King County's current I guess I won't say fully recommended it's not adopted yet wastewater rates, which you'll talk about later this evening, have very substantial increases projected for the next six years and beyond. But also, our solid waste disposal costs are going up.

And our waste management contract increases by the consumer price index. So lots of big elements of this we don't control directly, but they drive our rates because they're big contributors. So managing utility finances. There are some interesting things which are kind of true of the overall government, but when you think about them as stand alone businesses, they're intended to be businesses that operate perpetually. We don't have the option of going out of the water or sewer business, except in very extenuating circumstances.

So what that really means is revenues need to cover expenses. You need to have strategies to maintain financial sustainability because we'll talk about in a lot more detail the capital. These are very capital intensive businesses, so things need to be replaced. They can be very expensive. And so you need to plan for that, the infrastructure over the long run, but also for variability in revenues.

And so right now, we have a whole series of policies, financial policies that have been in place for many years, that are part of the rates. But the important thing is they're set by you, the city council. And so as we look at rate increases, we also will probably bring forward some levers that might help us manage rate increases. And so the next part of the presentation really focuses on some of those key fiscal policies and then how they fit in the rate study. So a rate study has three key pieces, and the first phase is how much we need to generate from rates in total to support the utilities.

And that's really the part you're going to be seeing this year. And then you have the cost of service analysis is about who pays based on their demands. So how much different does commercial pay than residential, than other types, government type clients perhaps? And then rate design is how do individual customers pay? And so we're not going to talk about those last two in much detail, but my sense is you'll be getting another one of these at some point where we'll talk about that in detail.

But I will introduce it a little at the end. So one of the things that goes into these rate revenue requirements is the operating budget, which might seem a little more obvious. But there's a rate funded part of capital financing. There's fiscal policies about reserves in particular. All of those come together to come up with the total amount of revenue we need.

Then there's the non rate revenue piece, which can be all sorts of things. There are charges and fees that are in the utilities. There's interest earnings. There's some large balances at times in the utilities that earn their own interest. So you subtract those out, you compare it to your current revenue from rates, and that's your rate increase overall.

So what I will focus on is those policy pieces a little bit in the next several slides. So, again, the math is fairly straightforward, but there's lots and lots of detail that goes into it. And what we'll bring to you is the key drivers of what's creating the overall rate increase. So we'll get all of the funding needs together, figure out what needs to come from rates, and then we'll bring forward some recommended increases that these fiscal policies also are influencing. And we'll identify for you the drivers, the wholesale costs and the other things that are driving potential rate increases.

So the first set of policies we want to talk about just a little bit is the first two are operating reserves. And because utilities have revenues that come in in a different pattern than the expenses For example, water costs tend to be not as seasonal as water revenues because there's irrigation revenues that occur in the summer. You keep a certain amount of money aside for making sure cash flow works. So when revenues are lower but expenses are higher, you have enough to meet those expenses. You can see they vary by utility.

Surface water is so large because we only get revenues twice a year, the majority of revenues twice a year through the King County property tax payments, though that's a good example of something we may reevaluate and bring forward as we look at rate increases. The operating contingency is basically for exactly what it's saying, a contingency against adverse actions or activities that occur, things that we can't anticipate. For example, if you have drought restrictions, you may be relying on a lot of revenue from the summer, but you may not have it because there are watering restrictions in place. Or you may have an unexpected expense occur, which we actually had fairly recently in one of the utilities. And this is intended to help hedge against that so you don't need an emergency rate increase.

And lastly, we have a capital contingency, which is basically just a hedge toward unexpected failures or costs that end up being higher than we anticipated because a lot of the facilities are underground, so you only know once you get in there sometimes what the absolute needs might be. So this is the part that I hope isn't too tedious, but it's a little bit of a thought process that I think might be helpful as we move forward. Capital funding in general really needs to rely on the engineering work. You have the system plans that look at long term capital needs, and those needs are both for capacity, so does the system need to get bigger, but also for repair and replacement. And I'll talk about that a little bit more in a couple of slides.

And so we set aside some funds toward repair and replacement, basically a minimal amount, but how they get spent is based on how the system is aging and failing. So reserves kind of grow and shrink depending on what the needs are. We do collect capital facilities charges from new growth, but those are primarily for capacity. And anything that those can't help pay for is basically paid for in rates. Those are one time charges, and again, I'll talk a little bit more detail as we move forward.

What I'm initially is that the best way to determine what your replacement needs are is a technical evaluation, which is part of the planning process. Aging and failing infrastructure is part of our water system planning. And that will tell us what we think might happen in the next twenty years. But you never really know because, again, a lot of this infrastructure is not something you see. So the CIP is done.

It's updated every two years, but it's done in six year increments to help us plan actual funding. So those are all different things that we do to try to anticipate capital funding, and I'll just kind of go into a little more detail on them. So these are really broad concept kind of graphics. They have nothing to do with our real costs. But to basically say that one of the reasons this is important, planning for the long term capital needs, is utility infrastructure sometimes has very long lives, fifty or one hundred year lives, but sometimes it will fail in year 10.

And sometimes, like the Roman aqueducts, they're still delivering water today. And so thinking about the utility when it was built, when the city was small and there was a lot of undeveloped land, a lot of money was going into system expansion. Some of that was done by developers directly. And then sometimes there would need to be upgrades, but you weren't necessarily doing lots of repair and replacement because the lines were still good. And then as it ages, you end up doing a little bit less capacity and a little bit more replacement.

And as a utility gets very mature, you end up focusing a lot on replacement when you're built out. But you still have capacity that you're expanding because we're getting denser, so you still have some growth. But over time, because it's a very long lived asset, we're just really entering a high level of replacement because a lot of our assets are now approaching a seventy five or one hundred year life. So there's a really basic measure in our financial statements of consuming assets, and that's depreciation. It just takes a life.

It says this is going to last seventy five years, and then every year says you're losing that value. So to keep your utility whole, you basically should fund at least that much on paper. But it has nothing to do with what actually happens on the ground. But in concept, everybody's using that utility sum every year, that asset sum every year. And so there are some flaws with depreciation as a starting point, but it's kind of better than nothing.

It doesn't take into account inflation. It doesn't take into account that a lot of these were put in either by developers or when there was just open land. There wasn't a lot of other infrastructure. And it doesn't recognize new regulations. And so many years ago I think the first time was 1998. We think the last update might have been 2008. An evaluation was done that basically used an insurance industry concept, which is survivor curves are basically saying it's almost like an actuarial thing. Some pipes will fail at the beginning. Some pipes will last much longer. But there's kind of a curve on which they'll fail.

And so basically, it's a little bit better than the accounting measure of consumption because it says that you're not going to be able to replace them exactly the way they were done. So to get what we did at that time was this is an illustration actually from the 2000 I believe the 2008 study. This is the way the assets in the water main inventory would be expected to fail if you basically said they're all going to fail seventy five years from the decade they were installed. You couldn't possibly replace them this way because you'd dig up the whole city. But the curve says you have real increases in your future because some are going to fail early, some are going to last much longer, but you're going to have that peak in the middle.

And so you need to be putting money away recognizing you're consuming assets. See, I told you you would be like, is she done yet? But you'll hear these things, and hopefully they'll make a little more sense when we talk about the numbers. And I won't do it like this again. When we did those studies, we basically said, at a minimum, we should put in some multiples of that depreciation expense because we know it's going to be a lot more expensive.

And so at the time the analysis that was done, it was 1.25x for water, a little bit more for sewer. And because we didn't have really good information at the point in time for surface water, we're saying we should aside at least appreciation because we know that they're being consumed at some rate. But because this is all like one hundred year analysis, a million assumptions and everything, we also said, you know, we don't know how it's actually going to work, so we're going to assume we'll fund 75% with cash flow, but we'll leave 25% to be funded with debt potentially, because debt's not a bad thing in a utility like this. So that's kind of how we determine a minimum investment from rates. And then we have capital facilities charges that come in from new growth.

One time payments when something is either increased in the capacity it needs, size. So if the meter size goes up when something's redeveloped, or there's new units developed. And so this is one time, so it ebbs and flows based on the development pattern. But it's something that we can use to invest in, particularly system capacity. In addition, we collect similar charges for CASCADE that regional capital facilities charges that are for Cascade expansion infrastructure.

And then King County assesses a separate capacity charge that is often done as a rate surcharge for a similar purpose. So that doesn't pass through our books. The cascade one does. But you have to kind of think about what you're investing those funds on, because if you don't invest it on the capacity you need but you allow the development, you're going have a problem at some point. So the role of debt, I'm just going to hit on for a moment because it does help deal with the uncertainties.

These utilities generally support their own debt. They're not drawing the tax debt. They usually use revenue bonds or low cost loans. We get public works trust fund loans and so forth. But they're also used to support long term needs because they spread costs over time, which is actually in some ways more equitable because these are very long lived assets.

An example is we have a big water tank that we're about to replace. We will likely issue debt because you'd only do that once every, I don't know, fifty years. And so you want everyone who's benefiting from it to pay a share, plus it means your rates don't have to spike. But you want to make sure you can deliver the projects before you borrow because they are an obligation of the utility from rates. Well, that wasn't so bad.

So you take all of those, and you come up with a total dollar amount that you need. And then the next phase, which will actually start probably late this year, maybe early twenty twenty seven, is based on a lot of the planning data that's in your system plans, particularly for water and sewer. And you basically take the amount you need and say, what drives the cost? So in water, as you all know now, fire flow capacity is a big driver that's driven differently by different types of customers. Residential and commercial have much different requirements.

Basin peak flow, different types of residential customers have higher peaks. A single family home that has a yard is going to water in the summer, and that's actually expensive because it's the time of year where water is not as plentiful, as you'll hear. So for each utility, water as an example, you figure out what the costs are related to those categories, you figure out what the demands are each customer puts on those costs, and it's an amount of money that each group should pay. More than you ever wanted to know about rates. And so once you get that amount, then you say, what's a reasonable way to charge it to customers?

We have fixed charges and volume charges. Some of the volume charges vary by how much you use. And all of that is various there's technical elements and policy elements. For example, our solid waste rates, our garbage rates, have a very strong conservation ethic in them. There's an overlay of conservation on there as opposed to just straight what drives the costs.

And so the good news is this is a topic for another day. So this is my last slide on this one. And Phase II, again, is coming, but what you'll be seeing in the next few months are the results of the revenue requirements and a revenue forecasting exercise that we're doing. So what does it all mean? Utilities have some similarities to all the other services, but they have some differences.

And so the revenue collected has to really fund everything, and you have to think very, very long term about what that looks like. So sometimes you'll see really large reserves in a utility, but usually that's good planning for really large needs at some future date. But it can be pretty confusing to people. And I think a lot of people historically maybe didn't pay attention to the details of the utility rates, but we put up that monthly bill because it's getting to be more and more of a conversation on affordability. And all those projections make that conversation feel more urgent.

So this is where we are from a rate study standpoint. We did a competitive process to select a consultant. They are working actively now. We've seen some draft work. They have some models where we can do scenario analysis.

And we'll be bringing information back I'll show you a schedule in a moment over time for adoption by the end of this year. Then we'll start up Phase II as those plans, the water plan and the sewer plan, become available because those are key to how you do that cost of service, how you do the allocation. And so those will start probably late into 2026, and depending on when the plans are done, we may be bringing results in 'twenty seven for 'twenty eight, 'twenty nine rates. And last but not least, keep looking at my watch, these are kind of our current tentative dates. We think we're going to be bringing preliminary rates to you at the study session in August.

We'll have proposed rates in September, and hopefully the adoption will occur in October. There are some statutory timelines where to have rates effective when you want them to be, you have to, particularly in solid waste, adopt them by a certain date. One thing I will say is because of all of the complexities of what's happening with our wholesale partners, what's happening with our system plans and what's happening with the rates is we may make some adjustments, but we wanted to just kind of give you a sense of what we're thinking in terms of when you'll see more on this. And I think that's my last slide. So there is time for questions, and I'm happy to go back to any of it, but I think we are just a little bit worried that we want to make sure our Cascade partners have their full forty five minutes.

You did it in a half hour.

You. Was focused.

Did you practice?

Not exactly, but I've done this presentation Oh, many thank you.

Yes.

And so I tried to put my emphasis in the important parts.

Thank you. City Clerk, did you note when Councilmember Pascal joined us? Thank you. Council Member Falcone has the first question.

Thank you, Madam Mayor. Well, thank you, Deputy City Manager Dunlop. I in my opinion, that presentation was a lot more interesting than you thought it was gonna be for us. So I actually really enjoyed it. You can learn from it. So thank you for that. My question is probably not going to be surprising to those of us who are in the room when we have talked about any of these utilities, particularly water and sewer before, is that I understand, obviously, these are the utilities that are under our control. And so my question is about the ones that are not and how we track that. You mentioned thank you for having the map of the different water sewer service areas. That was really helpful.

But those in the North Shore Utility District and the Woodinville and the others that you mentioned, even though we don't have decision making power in those, it still impacts our residents and our businesses and our community, right? And so obviously the bigger picture here is concern over utility rates and rising utility rates and kind of tracking and making wise choices about budgeting and future infrastructure improvements in addition to being considerate of and understanding people's personal finances and business finances. So anyway, with all that said, I'd be interested in at least having an understanding of what is happening in those other utility district areas that serve other areas of Kirkland. Just want to make sure that they are having an equally thoughtful process during this and that if there's anything that we need to advocate for on behalf of the Kirkland community that we're able to do that. And I don't know the I mean we can talk offline, you know, what would be the best way to do that, whether that's a staff briefing summary of that or whether we invite North Shore Utility District to come for a special presentation or something of that nature.

But I do feel a sense of responsibility just to make sure that there's some parity with how what services are provided to Kirkland residents. I don't know that all Kirkland residents know kind of the complexity of the different utility service providers throughout various parts of our city. So that would be really helpful. I really appreciate all of this and we're doing a really good job and I'm happy with the work that we're doing and what sounds like we're going to continue to be doing to be really thoughtful and to make sure that we're planning well and we're striking that right balance. But I would love a check-in on ensuring that we have that same expectation for all the different utilities that serve the city of Kirkland.

Great. Just a couple of quick thoughts of ways that we do get involved in that. We do have franchise agreements with NorthShore and Woodinville, which define roles and responsibilities, and there's revenue pieces to those as well, that are one element. They also are required to do the similar types of system planning that we are by state agencies and so forth. And I know we have a fair amount of communication with them when we're doing comprehensive plan changes because we're making changes in zoning and requirements.

But I do know that there's regular meetings that Public Works has. And so I think we can maybe brainstorm the best way to bring you kind of an overview because they are different. They have a different elected body that set rates and make decisions, but we'll think about the best way to kind of give you an overview.

Thank you. I think that'll be helpful not only for counsel, obviously for the public to hear that and become knowledgeable on that. So thank you. I really appreciate that.

Deputy Mayor?

Thank you, Madam Mayor. And thank you, Deputy City Manager, for your presentation because like Councilmember Falcon, I actually found it fascinating. Springing off of what Councilmember Falcon was saying a little bit just about transparency with the public. I like if you go back to the previous slide, I liked, you know, we're gonna be having this conversation that we started today. We're gonna be having versions of it three more times before rates are actually adopted.

And that's an opportunity for our rate payers and who are residents and businesses and constituents, to provide input. I actually really appreciate this one zero one type of discussion because I hope that anyone I I hope we're hearing from the public as we have these public conversations around, looking at rates and ultimately rate adoption. I hope we hear from the public. I hope they also go back and watch this discussion so they can understand, frankly, this is complex. You know, I this is not my first time through it, but but every time I I I go through it, I learn I I I my memory's refreshed.

It's just about the complexity of of our funding utilities and the way that they're funded and the number of them that we have. I just I think it's really important that we're having this conversation. And then what I'll say is another big takeaway I have is that there's, like you said, there's a couple of policy there are in here are some policy decisions that are made. One is fiscal policy. Do you want to have a sound fiscal policy that's more conservative, maybe a little bit less sound, less conservative?

I mean, those are decisions that are made that are driving these rates. And then there's also independent policy decisions that we've made as a region when it comes to, for example, wastewater discharge into our lakes and streams. We've made decisions about how important clean water is to us, and those are driving some of these utility rates. So, one of the things we learned from the from Kirkland, prompted utility rate summit is just how many of these large capital expenditures, not just our utilities, but the region's utilities, how much of that's driven by policy? And policies that matter, like clean energy and clean water and clean air.

And those are really difficult prioritization decisions that have to be made by a collective group of electeds from hundreds of different agencies. So there's no limit to the amount of challenges here. But I'm glad that we're having this conversation. I'm glad we're having it openly in what will probably be at least four meetings, and I do hope folks that provide us input. I hope people do, and I hope that they take the opportunity to hear this original presentation. Thank you.

Thank you. Anyone else? So I'm just going to follow-up. Mean, obviously, the concern is about affordability for our ratepayers and the future impact. And as when we go into these further conversations, I would like to look at our Kirkland Cares program and what we're providing for people to support utility payments now and somehow figure out as the rates increase how the need will increase and I'm sure that's going to impact our budget conversations too as we move forward. Councilor Tim Chuzen.

I would second the mayor's interest in the Kirkland Caris program. I don't know how that works just pragmatically kind of where the money comes from and how that works and if it well, I just have questions about that financially and how that works without raising other people's rates or if it's lowering it for some, raising it from, or that money's coming from elsewhere within the budget.

Yeah, we'll bring back a report on how that's going because it's a fairly new program. It's been in place for a while, but you know, who it serves, how it's funded.

And I'd be interested how broad the program is, how many people are participating and things like that. It's not a program that I am familiar with.

Okay.

We'll do that.

I was supposed to study it, I don't know. But there's a podcast? Woah. Well

alright.

There you go. Alright. Anyone else? All right. Thank you, Deputy City Manager.

Great. Thank you. And thank you, Jay. I think we're going to take a minute to

To transition. Yeah, to transition. So we are now going to move on to the Cascade Water Alliance presentation, the Cascade Supply Plan briefing number one, and it looks like we might need some extra chairs Thank You, Jenny Brian there's a sticky on your We're not going to tell you what it says It's the tall guy Welcome everyone Deputy City Manager you want to introduce us.

Yes. Thank you Madam Mayor With us tonight to give us Cascade Supply Plan Briefing one, we have Molina Thone, the CEO Interim CEO Program Executive Brian Bartle and Water Efficiency Director James Umspacher. Thank you. I apologize. And we have other Cascade staff and city staff in the room who are available to answer questions as well. And so with that, I'll turn it over to the Cascade team.

Deputy Mayor and Council members. Thank you so much for inviting us here tonight to share with you some information about a couple of Cascade's programs. Brian will be our headliner talking about the Cascade Supply Program, which is the biggest CIP project in the short history of Cascade. Go to the next slide. We have a short program for you tonight.

Forward? Okay, there we go. Awesome.

I'll do a very quick overview of Cascade and then James will give a short presentation on Cascade's conservation programs. And then our headliner, Brian, will delve into the Cascade Supply Program. One thing I do want to mention is that Tracy talked a lot about rates. We will not be talking about rates tonight, but I heard her say that this is Presentation one. So I think we will be back.

And given that we are 38% of your water budget, we really do appreciate the opportunity to share with you some information about Cascades, a couple of Cascades programs. But we will be back and to talk more about rates and the impact that the Cascade Supply Program will have on rates and your rate payers. Cascade is a very young organization. The city of Kirkland, along with, at that time, seven other cities and special water districts form cascades, really to have a voice and a vote in terms of its water future. We provide service to 400,000 residents and 380,000 employees.

Our primary mission is to provide clean, safe, reliable drinking water to our member agencies in a cost effective and environmentally responsible manner today and in the future. We currently get all of our purchased water from Seattle Public Utilities. But as Brian will explain in a few minutes, starting in about 2040, we'll be shifting away from relying on Seattle Public Utilities and more towards Tacoma for our drinking water supply. The other thing to note on this slide is you'll see the little lake taps towards the bottom. We purchased lake taps in 2009 as a future source of drinking water.

But with the new contracts that we have with Tacoma, we likely will not need to utilize lake taps until probably the 2060s. So with that, I'm going to turn it over to James.

Thank you. Can you hear

me? Okay.

So I'm going to provide an overview of the current water supply conditions, talk about how Cascade is responding to the drought and also talk a little bit about Cascade's water efficiency programs. So first,

if you want to

hit that, I have four graphs I'm going to go over to explain current water supply conditions. Just to give you some context, all of these graphs are based on the water year, which goes from October to the September. The there's going to be a solid or a bold orange line on each of the graphs, and that represents water year 2026, our current water year. There's going to be a dotted gray line that represents water year 2025 or the last water year. And then there's also a solid blue line that represents the long term average.

So this one this graph shows cumulative precipitation. So as you can see, we actually had a lot of precipitation this year. Unfortunately, it all fell as rain. So we had extremely low snowpack. This graph shows snowpack as a snow water equivalent.

What that means is it basically represents if all of the snow melted, how many inches of water would be remaining. We actually had the third lowest snowpack on recorded history this year. So the reason snowpack is so important is because as the weather warms in the summertime and people start to use more water, we rely on the snow to melt and refill the mountain reservoirs. So next one. This shows combined reservoir storage.

And because of the low snowpack this year, SPU made some operational changes. First, they received a waiver from the state to increase the water level at Chester Morse Lake in the Cedar River Reservoir by an additional two feet so they can capture more water. And the second change they made was that they raised the reservoir levels earlier than usual and are maintaining the level as high as possible for as long as possible. And the final graph shows the average seven day water consumption. So water use about doubles in the summertime.

And as you can see from the graph, as we've had strings of warm, sunny weather, people have already started to consume more water. So all of these measurements on the graphs help drive the outlook, for water supply this summer. Seattle Public Utilities has told us it's too early for determine right now if they're going to need to activate their water shortage contingency plan, and ask for voluntary water curtailment this year. But on April 8, the state, Department of Ecology did declare a statewide drought emergency. They did have a caveat that areas served by Seattle, Tacoma and Everett, water utilities plan for drought conditions early in the winter, and they don't anticipate any impacts to their customers.

But this is the fourth year in a row that at least a portion of the state has gone into drought emergency. So there is a clear trend towards lower snowpack. So how is Cascade responding to the drought? So I want to start by saying there is a delicate balance between revenue and conservation. Earlier conservation messages are more effective in reducing water consumption.

However, too strong of a message can lead to potential retail revenue loss. Since almost all the snowpack has already melted, we are keeping a close eye on reservoir levels as well as water consumption and making sure we're aligned with all of the Cascade members as well as Seattle Public Utilities and our messaging. We are increasing messaging around the drought and snowpack on both our website and on social media. We're just being really cautious in the language we use to make sure people don't end up being confused if we do end up having to go into voluntary curtailment later in the year. And then finally, we'll be waiting for the fall rains.

They are anticipating a strong El Nino year, which could potentially delay those fall rains from coming back. And we really rely on those to then refill the reservoir that time of year. And finally, want to talk about Cascade's water efficiency program. So the focus of the program is getting people to conserve water through behavior changes as well as upgrading their fixtures, appliances and tools that will allow us to continue to make the most of the existing water drinking water sources. Program components include school programs.

We partner with Nature Vision to provide 500 in class programs each year. Those are mostly elementary and middle school programs. We also partner with sustainability ambassadors for problem based learning for water systems. Those are mostly high school and some middle school students and teachers. And it's really focused on those who want a more in-depth study of water conservation.

We provide free water saving tools and fixtures as well as rebates on water efficient dishwashers and washing machines. Cascade attends at least one community event in each of our member service areas to explain why water conservation is so important and provide tools and tips for people to do that. And we will be at the Kirkland City Hall for all of it this September. We also have a strong presence on social media. We have We Need Water accounts on both Facebook and Instagram, where we share water saving tips, talk about the importance of saving water and talk to people about our programs in a bit.

As I mentioned earlier, water consumption about doubles in the summertime due to outdoor water use. So we do have a number of program components that are really focused on outdoor water use. So we have weekly Cascade Gardener programs as well as a monthly Cascade Gardener newsletter. We partner with TULF Alliance on a soil and water stewardship training program as well as community projects to help them use And so get of of get their, to gardening questions answered. We partner with King County Housing Authority to provide training to landscapers and building managers on water efficient landscaping practices.

And we provide free irrigation assessments to businesses, multifamily properties and government agencies with our member service area. And finally, we have a Lawn Be Gone grass removal rebate program, where we offer rebates to people for removing their grass lawns, which use a lot of water and replace them with native or drought tolerant plants. That's all I have. Before I hand it over to Brian to talk about the Cascade Supply program, does anybody have any questions?

Was going to have you pause before we move on. Any questions for James? I just had a quick question. Thank

you so much for this presentation. Super fascinating. How does the volunteer curtailment work? If that's implemented, like what would the outreach look like and what's the impact, I guess?

Yeah, so we'll do a significant amount of outreach. There will be press releases. So it'll be combined between us and Seattle Public Utilities and all of Cascades members. And we will let people know that we are asking them to voluntarily use less water.

I will just add that we do take our cues from SPU. So it's up to them to determine whether they need to go into voluntary curtailment. And before they go to voluntary curtailment, go into their advisory stage. And then from there, it's voluntary curtailment. And when they make that shift, they let us know.

We immediately start working with our member agencies. They give us all the messaging so that we're all in alignment to all of our member agencies. We're all in alignment with SPU along with their other wholesale customers. So we're working very closely with them to get a heads up if they are beginning to move down that path. But once they do, we sort of fall into step with them.

And what happens what is it called after voluntary containment?

Then it would be mandatory. Mandatory. Okay.

And then it's emergency.

Oh. Oh. We have four levels. Mhmm. Okay. Dep are we done? Yeah. Okay. Deputy mayor?

Thank you, madam mayor. DEFCON one, DEFCON two, DEFCON. Yeah. Council member Prem Ant asked one of the questions I had, which is great. Good question and great great to understand how that process works.

People watching at home are gonna have that question. Another question they might have that I thought I would ask you, James, is you talked about, variant policies this year for filling reservoirs earlier and filling them more. There's going to be a bunch of folks, maybe including council members who are like, hey, you got a reservoir, fill it early and fill it full. So can you talk about what the trade offs there's obviously some policy trade offs associated with that. Can you talk about what that is?

Yeah. So typically, they don't do that because they want to make sure they have what's called a flood pocket so that they're not so that they can take rain if there's a big storm event and they don't end up flooding areas further down. But it's helpful that they did receive from ecology or from the state dam safety office the ability to raise the reservoir higher than they normally do. So that gave them an extra wiggle room.

Okay. So it's actually interesting. I thought it might have to do with fish passage or something like that, but it actually has more to do with dam safety.

Yeah. And there are a number of considerations because they do have to worry about having enough water for fish in addition to people. But the main reason they keep that flood pocket is Okay. Yeah. Prevent flooding areas downstream. Well,

thank you. Appreciate it.

Councilor Mayor Falcombe?

Thank you, madam mayor. Well, thank you for this presentation. I just wanted to share that my second grader recently did a field trip to Everest Park with that I know Cascade was a partner in that field trip. And it was a rainy day, but the kids learned a lot and had a lot of fun. It was great having that kind of hands on experience of a field trip learn some of the fun educational things. To any folks listening who are PTA or school leaders that they're looking for a field trip, it was a really good partnership. I'm happy that the kids learned some good things and had a good time. Thank you for that.

I appreciate that feedback. Thank you.

What else? My question is and this may be a staff question. These programs that you do are amazing and as attested by councilor Falkohn. My question is what is the participation in lawn be Gone? What are we seeing in Kirkland? How many people are participating? Do we have those numbers?

So for Long Be Gone, it's a recent program that we recently launched, and we've only received a couple applications. We're still trying to get the word out and let people know about it. We made several adjustments to the program to kind of widen the net of people who would be eligible. And then we'll also be potentially considering increasing the rebate to see if that helps. We're not there yet, but it's just getting started.

Yeah, I would just be interested, and this is for staff, what we're seeing in Kirkland, who's taking how many people we have taking advantage of these programs.

Yeah, and I can share. So I do send quarterly quarterly reports to staff that has numbers in there.

All

right. Thank you, James. Brian?

All right. What did you call me, the headliner? I don't know I've been a headliner. I feel so important now. Yeah, no kidding. So we are going to talk for a while here about the Cascade Supply program and a little bit about the vision and what the program entails. It a big deal. And so I will try to go through this quickly and get to questions at the end, but I don't want to go too fast and skip something. So the program does have a long history with Cascade. It's kind of why Cascade was founded, to develop lake taps and bring water to our members.

But in the last two years, it's really taken off. And this started with the board taking a regional vision that there was water in the region, and it was not time yet to develop Lake Taps, but instead to find a partner. And as our contract with Seattle declines, we are now going to bring Tacoma online as a new partner. So we have two wholesale agreements with Tacoma. One is a permanent supply of 15,000,000 gallons a day, and one is a market price agreement that's a temporary supply of 17,500,000 gallons a day from 2041 to 2,062.

So those two combined 32,500,000 gallons. We will still even as our from Seattle right now, we are about 33,000,000 gallons. That will start declining in 2039. And we decline at about 1,000,000 to 2,000,000 gallons a year. So by 2040 to 2041 in that timeframe, we would not have enough water for our members.

And so we will ramp Tacoma up appropriately in that time frame. We also oh, I should mention, with Seattle, as it declines, we do keep 5,000,000 gallons a day in perpetuity from them. So throughout 2025, we hired our staff for the program internally, I'll say our initial staff for the program. There are four of us, myself as the program executive. We hired a design director, a planning director and a program controls lead.

We have a new position that we just posted that will be a communications and outreach position that will be joining our program hopefully shortly. Also this last year in 2025, we went through our consultant selection for program management assistance on this. So Stantec was hired for that. They will be with us through the duration of the program providing program management, planning support, construction management. They are not the designers.

They are not the contractor that will build it. They are there to support us and be staff augmentation for us to deliver a program like this. To put numbers on that, their org chart in their proposal was about 110 people to support this program. We estimated that for us to ramp up full time staff, it'd be in the 40 to 60 people that we would need to hire for this program. So it is more cost effective for us to outsource that to consultants and bring the program forward that way.

So I am going to move on to this, which is our first map, our first here's what the program is. And this is a very early graphic that doesn't show you a route of what we're doing yet. This explains the zones of what the program entails. So Phase one is the green. That's what we're calling the transmission phase.

And so that is what we are focused on right now, which is taking water from Tacoma, which is that yellow line between the green and the purple, and bringing it north to the yellow, the phase two zone on this map. So that is about twenty, twenty five miles that we need to build a pipeline. We need to, in addition to the pipeline, build a storage tank. Tracy mentioned that you all were taking on building your own tank in town. We will be doing something similar to that.

We have on the third bullet there is the re coronation Station. So water when it travels needs to well, water to be safe for drinking has to be coronated. Water that travels that far, the chlorine will decay to a level that is not safe for drinking, so we have to re chlorinate it once it gets up into our member area. The last two bullets up there, SCADA operation, storage, maintenance. Everything that you all have to operate your city water system to operate your transportation system, etcetera.

We don't have those facilities at this time. So those are buildings for us to be able to operate and maintain the facilities that we would be building. Phase two of the program starts about 2030 and is the yellow that you see on the map. That is the distribution phase. So in your city system, you have distribution pipes.

So when we talk about transmission and distribution, we are not taking over distribution of the city system. We are talking about transmission being transmitting the water from Tacoma up to our service zone and then distribution being our distribution to the members. We're not taking over any of Kirkland systems or any of that distribution system. In that Phase two, we likely will need additional storage facilities. We likely will need pumping facilities.

The Bellevue Issaquah pipeline, it's that little orangey, I'll call it Y shaped line on there. Likely we might need to upsize or replace that depending on where the transmission system comes and connects into Phase two. And we call it right now the BKR, the Belvieu Kirkland Redmond pipeline, but what it looks like in the future is unknown at this time. But it is to take the pipe that we bring from and through the green zone up through the yellow zone to come to all of the members. Phase three is the purple phase at the bottom of the map starting in roughly 2040.

This is our water supply development phase. So this is to get us ready to be off of Tacoma and Seattle and to be on to our Lake Taps system. So that would include building a water treatment plant or facility at Lake Taps and a transmission line to get that up to that Phase one pipeline and then other appurtenances that go along with the system. So that is forty years' worth of work in one graphic. I'm sure there'll be questions on that, but we'll move on for now.

Don't we pause?

You want to pause now?

Yes, thank you. Councilor Mayor Arnold?

Thank you. For the Phase two distribution piece, this exists today with Cascade bringing water in at some point. Some of what you described there sounds duplicative it may be duplicative for me. Is it upgrades? Is there a way to do an inter tie with Cascade versus new infrastructure? What's the state of planning for this?

Let's start with the blue lines on this map that you can see in the middle of the green zone and then up north going through Redmond and Kirkland. Those are the SPU, the Seattle Public Utilities lines. The one on the north is the Tolt pipeline. The one on the south is the Cedar pipeline. The pipelines running north and south through Bellevue and Kirkland are what they call the TESL and the SESL, the Tolt East Side Supply Line, the Cedar East Side Supply Line.

Every one of our member agencies right now takes water from Seattle through the Tolt, the TESL or the SESL. What we are building is a replacement of those systems. So the Cecil line is on the order of 100 years old. The Talt line is newer, but I can't remember the dates off the top of my head. So we will be effectively replacing that with Cascade lines. So right now, Seattle owns, operates. They provide all of the treatment. They provide all the transmission. They provide all the distribution. Cascade will be taking over those facilities and over those obligations to our members.

So is it duplicative? In some ways, yes. In some ways, it's also adding resiliency and redundancy to a system that has reached the end of its useful life, as you heard in the beginning of the presentation. It's also standing on our own and having our own system and backbone. It also provides if the big earthquake I shouldn't say if, when the big earthquake comes, you, as Kirkland, would have an older Seattle pipeline with your existing taps on it that could be used in an emergency.

You would have the new Cascade pipeline that's bringing Tacoma water, and eventually, you would have that same pipeline bringing Lake Taps. Now you've gone from one source of water, Seattle, to three sources of water. So it's a lot of redundancy and resiliency in building out this system. Yes. So

the declining block with the Seattle Public Utilities, we wouldn't have anything like that with, like, Tacoma, right? Like, is there a declining block with no, there is not.

So our contract with Seattle is a block contract, so we refer to that as the block or the declining block. Whether we use one gallon or the 33,000,000 gallons from Seattle, we pay for the full 33,000,000 gallons. Our contracts with Tacoma are usage So as we ramp up, we will pay less because we'll only be buying maybe 2,000,000 gallons of water from them or 3,000,000 gallons of water. So there is no block that can decline. It's really just the two phases of we have a permanent supply of the 15,000,000 gallons and then we have the temporary from 2,040 to 2,062 that's the 17.5.

Thank

you, Madam Mayor. Thank you for this presentation. Fascinating, all of you. Brian, a couple of questions for you. One, just springing off of Councilmember Prem's question. Does would Tacoma have does Tacoma have any right to terminate that contract for water, that per million gallon rate contract for water?

You're testing my memory of our contract terms. I believe I'll have to double check, we can get back to you. I'm sure there are off ramps in our contracts for both of us with associated penalties, I imagine. I cannot remember at this point But in what I will say is that the reason we have a two different contracts, one permanent and one temporary, is that Tacoma was comfortable committing to the 50,000,000 gallons for the permanent supply. They, as all of us are, it's hard to imagine what supply will look like twenty five, thirty, thirty five years for now.

So they were willing to commit to another to a temporary supply, for a specific period of time. But what we've talked during negotiations, there's always been discussion about if the supply is there, that there might be room for an extension for that temporary supply.

Okay. And then I'm going to ask a couple of questions that I think maybe some of our residents who are watching, listening, or watching later might have. What is so we know that the the water we get from Seattle PUD is Toll River well, at least Kirkland, Toll River water. Famous for being incredibly pristine, I guess, for lack of a better term. Maybe you wouldn't describe it that way, but sort of famously high quality drinking water. What is Tacoma's water supply?

It's a Green River watershed,

Okay. It

is basically almost the same as the Cedar River watershed that serves the southern end of it.

Is there a principal reservoir?

I don't think there's a principal reservoir on it. I'd have to get back to you on that one.

Okay. And then are there comparisons other people may be wondering, are there comparisons between the quality of Tacoma water and Seattle water? Do you have a general sense of

We actually just completed the first ever study comparing Tolt, Cedar, and Green River watersheds all in one document. It was actually just presented at a recent AWWA conference. I got to co present on that. So yes, we did that.

Yes, please.

It is out of the and I might get the exact numbers wrong, but I believe it was around 20 different parameters or constituents that we checked. I believe 16 were better in the Green River, three were equal and one or two were questionable whether it was going to be an issue or not. And those one or two dealt with one particular constituent in the water that is not above any maximum contaminant levels, but is something that Tacoma is aware is in their water and that they want to remove it further. So by the time we get around to this, so remember we will not have water flowing into our zones until 2040, 2041. In the next fifteen years they plan to do improvements on that.

I can't speak for them and make them do that, but that's their intent.

A lot of positive indicators in that. Okay. One more question, and this is sort of a what can member agencies like Kirkland do to help? One thing I see in that trend green transmission area is a lot of agencies, led jurisdictions that are not cascade water jurisdictions. And they may have opinions about transmission lines going through.

What can cascade water lines member agencies do? We know things take a long time. Well, two things. One, we know that one of the biggest drivers of cost increases is sort of citing transmission lines and things of that nature. You get pushback from agencies, you get pushback from residents, you get pushback from businesses, etcetera.

And that's why I'm highlighting that we've got a lot of agencies and jurisdictions in there that don't have the same interests that the Cascade Water Alliance members have. So we know that drives cost. We also know things take a long ideas like reducing some of these regulatory barriers you know, take time to sort of socialize them and then make sure the right people understand how important they are and then turn them into actually policy that, you know, becomes a mandate for some of those agencies and jurisdictions. And I love some of the elected leaders in those agencies and jurisdictions. I know them, but I don't really want them standing in the way of what is otherwise a huge, you know, community benefit.

So what help can we provide, if any? Are you thinking about that? Or

We are thinking about that. So one of the I'll call it a policy that we are writing right now, we're calling the partnership policy, where we are drafting and we'll be presenting that to the board. You'll see on my calendar in a couple of slides when we come forward to our Board. It's a policy around how we partner with those other agencies. So they are not members of our jurisdiction, as you pointed out.

We can't ask them to be members. We can provide emergency enter ties, which helps their redundancy and resiliency. And we can also do partnerships. So if you're looking at when we start looking at routing through these areas, right now we're looking at, I'm going just say, mile wide swaths of trying to figure out what's the route to get through this green area. As we narrow that down, we can go into those communities and say, hey, we're kind of looking at this route.

And if they come back and say, gosh, we have wanted a bike trail over here for one hundred years. And that provides a clear path for us. We become a partner to them. If we say, hey, we're coming down 4th Street, and they say, you know what, 6th Street hasn't been paved in twenty five years and it's really pothole, we can go down 6th Street instead. One of the things that I didn't mention on this slide that I will mention now, we are a large pipe.

Most of Kirkland's pipes, and I don't want to speak out of turn here, but I think are in the eight to 16 range, eight to 12 inches pipe range maybe. We're talking about 54 to 60 inches pipes here. So we're talking about five foot pipes. They take a whole traffic lane to install. They take a second traffic lane so that we can run trucks next to it and haul soils and do stuff. We're going to be very disruptive. How That's we find not

going be popular.

No, it is not going to be popular. But how we find those partnerships and pathways through here, I know there are some King County trails through this area that they've looked at paving. Maybe that's a partnership opportunity. So when you ask how can Kirkland help, as we start to develop this route and develop our program, we will be going to our Board and saying, okay, it's time for us to go engage with this community to reach out here. Who do you know? How can you help us open some doors? How do we find the best path through their community, through their jurisdiction?

Is there anything even bigger than that? The state saying, listen, when it comes to essential public utilities like this, there's no standing. I'm not trying to bulldoze my fellow colleagues in other cities, but I'm just saying we do a lot of this where we stand in the way and just drive up costs. And I'm just wondering if there's even bigger ideas that we're thinking about that the state, maybe Olympia, says, listen, when it comes to these, these are essential utilities.

I'm not aware of that type of action going on right now, but it's not a bad idea to start those conversations. The biggest thing that elected officials, in my opinion can be doing is making sure that at the national level, the WIFIA program continues and gets funding.

You'll hear more WIFIA?

WIFIA, W I F I A, Water Infrastructure FIIA, whatever that is. I will remember that at some point. It is a federal program that provides low interest loans to large programs like this at a 50% level. It can make the difference, not going to steal from our rate presentation, it can make the difference of a point or two on rates. It is one of the greatest programs that we can have for a program like this to continue. It's a huge thing. And every year it comes up for how much money should be in there. So talking to our elected officials and spreading that word is hugely important.

Well, I'm glad I asked. I'm glad you brought that up because that's a conversation we can have with our fellow elected leaders at the federal level. So thank you.

Okay. I need to do a time check. I love that everyone's so engaged, but we just stopped Brian from doing his presentation. Can we hold questions for a minute? Okay. Go ahead. May have gotten heady

day and night about this. Whatever you guys all want to talk about. I will try to go through these ones quickly so that we can answer

anything I do

have a lineup here, so

I could just say this is our schedule and move on. No. This is a pretty high level schedule. Three different colors, purple, blue and green. Purple is our planning, our PES contract I mentioned earlier with Stantec, that is our program and engineering support contract.

Blue is our design contracting and green is our construction contracting. We're at the very beginning of this program, so we are heavily into the planning right now. And there is a ton of work to do there. In a few years, maybe twenty twenty nine ish, we'd look at starting design and then construction starting out there in the 02/2033 range. The other thing I will point out on this slide is the Phase two and Phase three at the bottom.

Those are very, very high level preliminary schedules. But the point of showing this is Phase two doesn't start when Phase one ends. We need to be planning Phase two as we are starting design of Phase one because we have that declining block. We're going to lose 1,000,000 or 2,000,000 gallons a year. We need to keep building this pipeline north further and further so that we don't run out of water and that we can provide water to everybody.

The last thing I'll say on this is many times I get asked, when are you going to be in our city? When are you going to be working in our zone? So if you remember back to the map, Kirkland's the yellow, you're the farthest north. We probably would not be building in Kirkland for around twenty five years. We probably won't have facilities coming up here until February.

So don't hold me to that date right now because we're still working on it, but I just wanted to put that out there. Let's keep moving on this. This is our board action calendar. This highlights some of the big items that we are bringing forward to the board. The next ones that you see up there, the board oversight plan, so that is written and in draft form going through our committees right now.

And then the other star that's coming is the capital funding plan and the biennium budget process. You will be hearing a lot about the capital funding plan and the biennium budget process at future meetings and throughout your rates. Trying to think if there's anything on here. Oh, the other ones that are coming this year, the land acquisition communications and engagement strategy. So those are big ticket items for our Board to know how we are engaging with the public through our outreach program, and we have a lot of land to acquire to build facilities like this.

I'm just going to blaze through the cost because nobody really cares about how much it costs, There's typically a lot of discussions around cost. We talked in the previous presentation about high uncertainty and cost of programs like this. So we are in that Class V red zone on this slide right now, which means we are in the 0% to 1% definition of a program, which puts us that we could be anywhere between 100% and minus 50% on our accuracy, on our estimates. It is a very, very early stage of the program. And so when we talk about costs, we are going to throw out some big numbers.

We are going to throw out some big contingencies and some big risk numbers that come along with a program like this. Trying to think what else I want to highlight on this to keep in the interest of time. So we've done multiple costing assumptions. Two big assumptions that changed at the beginning of this year that we should talk about. Originally, there was thought of purchasing the Eastside Supply Reservoir from Seattle Public Utilities.

That is a 30,000,000 gallon reservoir kind of in South Bellevue. That is not going to happen. Seattle needs that for their own storage purposes now. That's a huge swing for us to now go out and find five to 10 acres and build our own 30,000,000 gallon storage facility somewhere. The second, I mentioned the Coronation facility.

When this program was originally envisioned twenty ish years ago, we were going to take the full flow from Tacoma. So that pipe was going to be flowing full. We would not have that chlorine decay that I mentioned before. Since we are taking such a small amount, because we pay for that block, so if we go back to the earlier conversation, the block from Seattle, we pay for it whether we use it or not. We do not want to be then using our Tacoma water and paying twice for water.

So we want to bring on Tacoma to basically match that declining block. That means we're going to build this giant pipe and pull a little bit of water through it. So it's going to have a long resident time. We have to do the Coronation facility. And I'll just say there were no maintenance and controls facilities.

It was envisioned that would be in a future facility that we would build this. It'd be new, it'd be working great. And I don't think that's sound judgment to go into something of this size without having spare parts on hand and leaning into that replacement. With that, I'm going to show the cost, which is a big number. And we are calling this a preplanning cost projection, which is a mouthful of a title, represents where we are. We are preplanning. We have not figured out a route. We have no design. We have nothing yet. We just know we need to go about 20 miles.

We know we need a tank. We know we need these other facilities. So this is preplanning, and we're calling it a cost projection, not a cost estimate because you need something to estimate, and we don't have that yet. We broke this into two main sections that you see up there, core components and discretionary components. Core components, think of those as really nonnegotiable.

We need these to make a functional water system to make this work. That's the transmission pipeline, the storage tank, the re coronation, and some major permitting So a program like this, we actually have to pay the agencies to do our reviews and go through our permitting. Discretionary components, these are things that would be ideal in phase one. They would help the facility operate, they would help the facility function and would make a better water system. So that's where we get into the SCADA and the operations building maintenance facility and then a potential emergency intertie at Lake Young's with Seattle so that we could flow water back and forth between our agencies.

The numbers are up there. I don't really want to dwell on them, but you guys can ask any questions about it. But we are preplanning at this point between 1,130,000,000 and $1,350,000,000 for Phase one. That includes a management reserve. This gets back to some of the conversations that were in the earlier presentation that we need to have a reserve.

I call them black swan events, but they're the unknown unknowns. Things like COVID, when that happened on sister program like this down in Oregon, it increased the cost of the program by several $100,000,000 to deal with that. There are things that will happen that we have no idea what's coming in the next twenty five, thirty years of this program. The management reserve is there to help buffer that and to help try and make sure that happens. So when we come back and talk about rates, you will see that we start building that management reserve every single year.

We cannot get to the end of the program or go to construction and say, well, it's a good thing we have a management reserve and there's no money in there. It takes time to build that. We don't want to just say, we want $200,000,000 in there tomorrow. So you will see this small little increment of $5,000,000 $10,000,000 $15,000,000 going in every year with the intent of by the end of our six year CIP, so by 2032 when we are going into construction, we would have about half of that management reserve available for those unknown what ifs. I think with that, we did put some of the questions that were in your briefing just on a slide here if that prompts anybody or makes you all think of questions.

But this when I'll just take questions.

All right. I'm going to start with Councilor Pascal, then it's Arnold and Tim Chisholm.

Thank you. Thank you, Brian, James, and Helena for being here. This is a lot, I think, to digest. I know it's taken me several years to digest what we're you're presenting in, you know, the last hour or so. It's been a great honor to represent Kirkland on the board this year, but I also served as the alternate for the last six years or so.

We've been talking about this for a long time. I know I've mentioned this in some of my reports over the last several months that we're talking about a billion dollar plus program. And I don't think that really starts to sink in until you start to see the magnitude of some of the things that have to be done here. And it's good to see some of the same questions that are being raised here tonight that we've talked about at length at the board level because these are all really robust, significant, challenging questions that we're faced with in delivering a program like this. I think the one thing that I would like so thank you my colleagues.

I think you kinda sinking your teeth into this is helpful. And and I think that anything you can share with myself and mayor Curtis that we can bring back to the board is gonna be helpful. The one thing I wanted to just point out for everyone that has watched us is we kinda just jumped right into the supply program. And that's great, but I want everyone to understand that this was many years in the making in terms of determining whether this was the right step and whether now was the right time to do it. And we really weighed a lot of different information and decisions around that whether to continue with Seattle.

And I remember being at those meetings where we talked with the SPU director about these things and the Tacoma Public Utilities director. And we looked at the costs. We weighed the differences and the risks and everything. And I remember being very skeptical that this was the right choice. But I remember the due diligence that the Cascade staff did in this process to lead us down that path to where it was it was more a clear choice at that point.

But I know that you're not you haven't seen that that information. That was workshops and those were many meetings, and that was pretty convincing at the time. So I don't know how that information can be shared if you do have questions. But it's really valuable information to see how we reach this decision because now that we've reached it, yes, there's a risk. There's gonna be a risk no matter what whether we chose a different direction or not. But I do believe it's the right direction. It's a lot of cost, but I do believe we have the right team. That's why I'm excited to be on board personally. This is a huge generational thing. So thank you for being here.

Thank you, Councilor Pascal. Councilor Arnold?

Thank you. First, building on to what Councilor Pascal had mentioned, we really appreciate Cascade's forward looking approach. The fact that we have been looking at this for years and have had options to look at to say, okay, what's the best option to provide water for all of our residents in the future and that you're looking twenty five, thirty, forty years ahead. I think as we look at some of the other utility discussions, we're seeing some spikes in other areas because there might not have been the same level of long term planning. So hats off to that.

As Cascade goes from being a wholesaler that's a partner of these cities to construction, do you have the authority that you need to actually go construct things building on what counts our Deputy Mayor Black had said, for example, does Cascade have eminent domain authority beyond all the work that you want to do for partnerships?

We do. Okay.

Very good.

I didn't want to throw

that out there, but we do. He asked the question in a number of ways. I think that's where he was going. Okay. And then finally, as we look at this looking long term, I know we want to avoid big spikes. I know you don't know exactly is this what the final costs are. We know it's in the range of $1,000,000,000 I just would encourage as we look at rates to say how can we make this not a shock over time because we are thinking long term. Thank you.

Councilor Mayor Tim Chisholm.

Thank you. So some of this water comes from Seattle and some comes from Tacoma, right? We've been getting water from different places. Is there any difference in taste, quality, chemicals? We start getting water from different places, residents going to say it tastes different? Right now,

you don't I get any

mean, I want to know before it shows up and it tastes.

So the study that I mentioned was a desktop study. We did not go into tasting all the waters at this time. But I will say that Covington Water District, who serves Tacoma water, just won the best tasting water in the state. So I'm going to give that shout out to Tacoma. But, yeah, we can look into that further.

All right. Well, not just taste, but chemicals and purity and those type of things. Haven't seen if there's any significant difference. And if I talked about it, I missed it, I apologize. But I haven't seen if there's any significant difference in purity between Tacoma and Seattle.

Perhaps what we can do is, as Brian said, we just our consultant finished a study earlier this year on comparing Tacoma and Seattle water and looking to see what would happen if those two are blended. The last thing we want is a Flint like situation by blending those two sources of water. And the desktop exercise that they did shows that we're in really good shape. And Takoma water is as good, if not in some cases better than Seattle. But perhaps what we can do is to do a summary of that blending study and provide it to the Board and to the council.

Good. Thank you.

That would be interesting because if we switch one day and all of a sudden our residents are noticing differences, that would be something we would hear about from them.

We'll be gone. It's it's 2060, so Oh. Future council.

Alright. Well

Council Member Prem.

Why are we even alright. Well,

you never know, right? With technology, maybe we'll all live to 01/1960. Who knows? So one question I had was around just the funding of this. Would you anticipate that as we're transitioning from the Seattle source to the Tacoma source, that people are going to start seeing significant increases in their water bills? I know this is also many, many years down the road, but how does it typically work, right? We've been paying a certain amount. There's this existing infrastructure, and then we have to kind of create a completely new infrastructure. Does that add like a significant premium to what residents will eventually have to pay? How does that work?

Do we want to wait till the You're

anticipating our next presentation where we will talk in terms of what this program getting this program up and running, connecting to the Tacoma system, how that will it's projected to impact rate payers over the next ten, fifteen, twenty years.

All right.

Wait for that. Thank you.

All right. I think that's questions, and I was gonna ask what's coming for the next presentation, which you just answered. Thank you. So, Brian, do you have a wrap up?

No. I was waiting for questions. That's my wrap up. Okay. Thank you. My wrap up.

Well, then, counsel, the last question is, what do you want to see in upcoming session? Molina did talk about what we're going to talk about. So if there's anything else that you want to know about in the next session, and when is that taking place, Deputy City Manager?

Right now, there is a brief session, a regular council meeting session scheduled for the sixteenth, June 16. But I think part of what we want to do is kind of huddle after this and talk about how much time do we need and what's the best way to stage that. So it may or may not stay there. Okay. But that's the next

And my suggestion to counsel is share questions with staff so they can figure out how much time we're going to need. So thank you all. We appreciate you coming All right that concludes our study session for the evening. We'll be back at are back in session following Kirkland utility rates overview and a briefing from the Cascade Water Alliance on Cascade Supply Plan. We are going to begin with our honors and proclamations.

I love seeing so many people in the room tonight. Councilmember Falcone will be reading our Older Americans AARP month proclamation and Councilmember Arnold will cover our Mental Health Awareness Month proclamation Deputy City Manager

Thank you, madam mayor, deputy mayor, and members of the council. Receiving our proclamation tonight is Joy Stone, who is the chair of the Kirkland Senior Council.

Hi. Welcome. Please all join us. Wow we have a great looking crowd up here with us tonight thank you for being here again as the mayor said I'm council member Amy Falcone and I'll be reading our proclamation to occurring Older Americans Month in May 2026. Whereas Older Americans Month is a national observance during May to recognize the contributions, vitality, and resilience of older older adults.

And whereas the United States Department of Health and Human Services Administration for Community Living has led the celebration of older American months since 1963 and whereas compared to surrounding municipalities the city of Kirkland has the fastest growing population of people over the 65, making up nearly 15% of the population in the city of Kirkland. And whereas the Kirkland community becomes stronger and more resilient when people of all ages, abilities, and backgrounds are encouraged to participate in active civic life. And whereas since 2001, the Kirkland Senior Council, an advisory group established by the City Council, continues to advocate for, support, and create programs and services that meet the needs of older adults in our community and whereas in 2025 the city of Kirkland officially enrolled in the AARP network of age friendly states and communities which encourages communities to focus focus on and strengthen the features and services that help make communities livable for residents of all ages from the cradle through retirement.

Excuse me.

Now therefore, mayor Kelly Curtis, on behalf of the City Council proclaims May 2026 as Older Americans Month in the city of Kirkland and invites our community to prioritize meaningful social connections with the older adults in our lives. Thank you.

Hello

Thank You madam mayor and all the council members The senior council works hard to improve all areas of seniors in their lives through outreach programs transportation housing committees We really make sure Kirkland is a great place for all seniors as We grow older Sometimes we don't feel heard or feel like ideas are important but you madam mayor and all you on the council members make us feel heard and valued as members of our Kirkland community, so I am grateful Kathy Iverson was on the senior council since the beginning up until including this year Last week she passed away at the age of 90 So on behalf of the Senior Counsel and in honor of Kathy I Proudly accept this proclamation

And we have a special guest tonight. Do you want to introduce her from AARP?

Madam Mayor, I think I

Okay. Have

Thank you. Thank you. You'll also be receiving on behalf of the Council the official enrollment certificate to the Network of Age Friendly States and Communities from Marguerite Rowe, the state director of AARP Washington.

Welcome. Why don't you come up there? Alright

Okay Hi, thank you very much. Good evening mayor Curtis members of the senior council and City Council members. Thank you for having us here tonight I'm Marguerite Roe the state director. This is Heidi Wong our community engagement one of our community engagement directors. We represent, over 830,000 Washingtonians, and we're so proud that Kirkland is moving forward in the age friendly.

So on behalf of AARP, I'm proud to officially welcome Kirkland to the AARP network of age friendly states and communities. It's especially meaningful to do that during Older Americans Month as we recognize the contributions that older Americans make every day. And what is so encouraging is that Kirkland is not starting from scratch. This community has already shown what it means to be age friendly by helping older adults stay active, connected, and supported. Your senior council is amazingly strong, and we're lucky to have representatives of the senior council on our as AARP advocates as well.

And they're going to help you shape that vision for what it means to be age ready, age friendly here in Kirkland. I also really want to acknowledge an AARP volunteer that is a member of your senior council who's near and dear to us, John Barnett, without whom these things don't happen without, you know, John has been the driving force. And let me just say, it's not just in Kirkland and not just in Washington, also in Washington, D. C. At the headquarters of AARP.

So John has long extended arms for all of us. And I just want to acknowledge the Peter Kirk Community Center and the programs like Enhanced Wellness, which is an evidence based program, and the caregivers support groups that reflect the commitment to supporting healthy aging. You know this is what age friendly is about. It really is about thinking about what it takes as a community to support not only those who are 50 and older but those of us who are family caregivers as well and we're all connected in one way or another. When I think about Age Friendly, it's not only the built environment and it's not only the services and supports, but it's really about building community.

And it's been really remarkable as a Washingtonian to see Kirkland grow, and I'm so thankful that you're joining our network. So thank you so much Thank you so

there you go.

Thank you so much. Thank

you. Thank you, America. Thank you.

Oops, I'm trying to go sit down and we're doing mental health awareness. Deputy city manager.

You, madam mayor. Receiving our proclamation tonight is Youth Eastside Services mental health counselor, Caitlin Mullican.

You're welcome. A proclamation proclaiming mental health awareness month in Kirkland, May 2026. Whereas Mental Health Awareness Month has been observed since 1949 to raise awareness and understanding of mental health challenges and impacts. And whereas mental health is essential to every person's overall well-being and ability to thrive, yet stigma and systemic inequities affect access to care and support. And whereas nearly forty percent King County residents have reported ongoing mental health challenges highlighting the urgent need for accessible and inclusive care.

And whereas 988 the suicide and crisis lifeline provides free twenty four hour resource that individuals experiencing mental or emotional crises may call or text for support. And whereas the city of Kirkland invests in mental health programs that deliver responsive, multilingual, and trauma informed care offered by organizations such as For Tomorrow, Asian Counseling and Referral Services, Indian American Community Services, and youth east side services, which collectively meet the diverse needs of Kirkland residents. And whereas Kirkland along with Bothell, Kenmore, Lake Forest Park and Shoreline created the Regional Crisis Response Agency, a mobile team of trained mental health professionals that provide immediate response to individuals experiencing a mental health crisis. And whereas the city encourages community members to understand and use available mental health resources including calling 988 247 connections Kirkland, a 247 walk in mental health and substance abuse crisis facility open to anyone and Washington Warm Line, a peer support helpline of volunteers who provide support and information. And whereas the city honors the strength and resilience of individuals experiencing mental health challenges and recognizes the professionals, advocates and community organizations who support healing recovery and connection every day.

Now therefore mayor Kelly Curtis on behalf of the city council proclaims May 2026 as mental health awareness month in Kirkland and encourages all community members to learn, reflect, and act to support mental health, reduce stigma, and ensure access to care for all.

Good evening everyone. Thank you so much council members and mayor Curtis. My name is Caitlin Mullican. I am a behavioral health support specialist from Youth Eastside Services and I am the full time mental health counselor at the Kirkland Teen Union Building or KTUB. I want to start by thanking the City Council for proclaiming May as Mental Health Awareness Month because it is important to acknowledge mental health as a critical component of wellness and to acknowledge the needs of youth and teens in particular when it comes to accessing mental health services.

But beyond just the acknowledgment, the city of Kirkland has demonstrated its commitment to youth and teen mental health and wellness through the creation and ongoing funding of the Kirkland Teen Union Building, where I am lucky to provide low barrier, completely free individual and group mental health services to about 30 to 40 teens each year. It's also where we provide completely free and accessible arts, sports, music, academic, cooking, and life skills programs to hundreds of teens each year since 2024. And though I'm the only mental health counselor there, all of our City of Kirkland staff and our other nonprofit partners from the organization for tomorrow are committed to ending stigma associated with mental health, and they infuse mental health and trauma informed care into all of our programs and activities and how we handle challenges and how we celebrate successes. And above all, K Tub has become a safe space where teens can hang out and be themselves, explore their identities, build relationships with their peers, ask for help, and I think most importantly connect with trusted caring adults and that to me is the clearest demonstration that the city of Kirkland takes mental health seriously every month of the year.

So thank you so much and if you have a teen in your life who could use some of these services please send them our way.

Thank you.

Thank you again, everybody. We are now moving on to items from the audience. This is the time in our meeting when we normally hear from the public. Please limit your remarks to three minutes. We will provide up to a total of forty five minutes for our items for the audience, with no more than six speakers on a subject regardless of the position on the subject.

To address the council during these items from the audience period, please sign up using the online public comment instruction link or the posted QR code in chambers. Those participating by phone, please dial 9 to be recognized to speak. Items for the audience is an important part of our business meeting. We ask that everyone be treated with kindness and respect. Please do not clap or applaud or otherwise openly express your agreement or disagreement with the speaker.

When that happens, even when being supportive of a speaker, it can be disruptive of the meeting and discourage others from sharing a different viewpoint. We discourage people from using obscenities and making personal attacks against others. And we ask that you direct your comments to counsel, not to staff or audience members. In addition, because they can be disruptive, signs and placards are not allowed in counsel chambers during our meetings regardless of their content Kirkland prides itself on being a respectful welcoming community want everyone to feel they belong in council chambers expressing their viewpoints Thank you city clerk who do we have signed up

Thank you, mayor. We do have five guests wishing to speak. The first three, Alicia Ramirez, virtually, Veronica Shakotko on-site, and Shushmita Srikant, virtually.

Alicia, go ahead.

Hi. Good evening, counsel, and thank you for letting me speak tonight. Kirkland is one of the wealthiest cities in the state, yet more than 40% of renters here are struggling to pay rent and are cost brute, meaning they are spending more than 30% of their gross income on housing, a statistic which includes my own household. I watched many of my neighbors, coworkers, and friends struggle to make enough money each month to pay their rent, often while working multiple jobs. While Washington's minimum wage is higher than most states at $17 and thir $17.13 an hour, it is still not enough to keep up with inflation and the increasing cost of living.

Neighboring cities like Seattle and Burien have raised their minimum wage to 21.3 an hour and up to $21.63 an hour, respectively. I believe Kirkland has the ability, resources and responsibility to increase the city's minimum wage to match those of our sister cities that have already increased theirs. I urge you to continue on the pathway of increasing Kirkland's minimum wage. Thank you.

Thank you, Alicia. Next we have Veronica.

Thank you. Good evening. Mayor Curtis, Deputy Mayor Black, Council members, my name is Veronica Chikotko. I'm with the Master Builders Association. We want to thank you for including this check-in on affordable housing fees and revisiting the methodology before it takes effect in 2027.

Tonight we're asking the council to direct staff to bring potential alternatives back for consideration in June. MBEx values predictability, however, we believe there's still time to make positive improvements before these requirements take effect. With middle housing issues now deferred until 2028, fee relief becomes even more important to helping projects move forward. You've heard many of these concerns from our members both in writing and here. We encourage the council to ask staff to evaluate four alternatives.

First, to exempt garages, porches and other non heated spaces from the square footage threshold. Second, increase the exemption threshold from 2,000 square feet to 2,500 square feet. Third, to credit the square footage of homes being replaced and tear down rebuild projects. And fourth, explore opportunities to defer payment of fees later in the process, whether that be a certificate of occupancy or through escrow at closing. More broadly, we encourage the council to consider these fees in context of all the other costs that builders face.

Affordable housing fees do not exist in isolation. They are layered on top of permitting costs, utility costs, frontage improvements, tree requirements and other development standards. Our concern is that this continued layering of costs will have a chilling effect and slow the housing production that the city is trying to encourage. We're already seeing this in other East Side cities. We hope you'll provide direction to staff tonight and revisit these alternatives in June. Thank you for the opportunity.

Thank you. Shusmita? Shusmita, go ahead. Good

evening council members. My name is Sushmita and I'm a Kirkland resident since 2000 applied this year to serve on the Cultural Arts Commission. I'm here because I believe in the city and in this process. That belief is why I completed the Kirkland initiative last fall to deepen my understanding of civic service and prepare myself for exactly this kind of contribution. So I was genuinely surprised when following my application, I received no communication, no interview, no feedback, no explanation of how candidates were evaluated.

Then I read today today's agenda carefully. The council's own procedure allows up to three finalists per vacancy. For the Cultural Arts Commission, the ISC advanced only two. I'm not asking why I was not selected. I'm asking how the process worked, what criteria were weighted most heavily, and why fewer than standard number of finalists were presented for this commission specifically.

That is a fair question, and I think the council is the right body to answer it. My background speaks directly to what the commission does. I have partnered with Lake Washington Schools to expand music and arts education for children. I organize wholly the Indian Festival of Colors celebrations that brings neighbors of all backgrounds and cultures together on Finn Hill. I participate in Microsoft's community theater group built around making live theater accessible to everyone in Seattle.

I reviewed the commission's work including the 1% for art program and its partnerships with neighborhood associations because I wanted to contribute to it meaningfully. This is not a resume. This is my life in the community. If this background does not clear the threshold for an interview, the residents deserve to understand what does. Kirkland says it values diverse civic participation.

The commission itself reflects that value in its current membership and I would be honored to contribute to it. I'm proof that diverse residents are willing step forward. The question is whether the process will meet us at the door. I respectfully ask the council to share with residents the criteria used to evaluate and advance candidates and to explain the decision to present fewer than standard number of finalists for this vacancy. Thank you.

Thank you.

Alright. City clerk. We have two additional guests wishing to speak both on-site. Lolita Hawkinson followed by Alex Zimmerman.

Lolita.

Hi, I want to address projects that are $75,000 that is allotted to the neighborhoods that they can apply for up to $75,000 for safety projects in their neighborhood. And this was discussed at the last board meeting or the council meeting. So I had the opportunity to go to the Moss Bay neighborhood. I am a Norcirk neighborhood resident of fifty years, but I got the opportunity to go to the Moss Bay neighborhood. And the issue came up that of the projects, they are number eight.

And they asked for $71,000 well within the $75,000 Above, Norcirk has been approved. It looks like it approved for 128,000 And their their point was this doesn't seem fair that Norcirk, and I'm a Norcirk resident, but that Norcirk does should not it's not fair for them to be funded when they will not be. And since I had been to the meeting and I heard the discussion, said I might be wrong, but I think that all the projects are going to be funded and they'll come up with the extra money. But then the project, it came up that if you are going to apply for more than your $75,000 and $75,000 does not go as far as it did at one time. So I can understand that needing more than $75,000 for some of these valuable projects.

But if that's the case and you apply for more, it was brought up that maybe you should go skip the next year of the roundup funding. And this also I told the Moss Bay neighborhood that that had also been brought up. So I'm hoping I've I think that is fair that starting next year, if anyone applies for more than 75,000 they understand that they will not be able to apply the next year if they are funded for more than that amount. So thank you.

Thank you.

Bye bye.

All right, Alex.

Hi. Yeah. My name Alex Zimmerman. I president of Stand Up America. I can do that for fifteen election. I prosecute I believe

that is a violation of our policies and procedures.

Thank you, deputy mayor. Alex, you need to take another direction.

No. 15 times. What does this mean?

Alex, don't challenge me. Pick another direction.

No problem. But it's not legal, what is you doing? Okay. No problem. I seven times prosecute by Bellevue. All cases dismissed. I have seven thousand day of trespass from country government. Nobody in America have seven thousand day of trespass. Yeah. It's nothing different because, yeah, I have different opinion. Yep. For almost thirty years. So they treat me like a enemy, number one. Yeah. They don't care about freedom of speech.

You interrupt me because I doing everything legally. Yep. So situation right now very simple. Almost four months ago, I give question to Nick Black, deputy mayor in King Country Housing Authority, commissionaire and director. Yeah.

And I have question in every meeting for the last four year. I ask for answer. This exactly who you are, what is you bring fascism, what is I call fascism with idiotic face. When you have this brochure, how to in judge with the city, you have this ask question to counsel. I ask question for months in every meeting I ask simple point.

Please give me answer and no answer for four months and I come in every meeting for four months. The question to deputy mayor and I'm senior, disabled senior citizens. So you have a month right now. Can you explain to me why you're acting like this? Why you bring King County for last thirty year in number one for Swiss County in America? You cannot answer, but you ask. You see, I repeat again for people who don't understand English. Ask question. I did. Four months I don't have answer.

Can you explain to me what is going on and how is this possible? Who are you? Even you stop in acting like American citizen, no, like fascist. Exactly what has happened now. So we were Trump, we were new American revolution, stand up slave and happy cow. And I have question, but it's absolutely critical. Guys, his important answer from Nick Black, deputy, supposed to be give answer.

Alex, time's up.

Yeah. Thank you very much. See you at the other time.

Alright. City clerk, anyone else?

No additional guests wishing to speak.

Alright. We are closing items for the audience. We are now gonna move on to our consent calendar. Behave before we have a motion I'd like to ask deputy mayor black to present the audit of accounts and to highlight the proclamations we have on consent

Thank you madam mayor. By the way, it's Nick not Neil Thank you Sorry. Gotta be lighthearted at some moment. We had payroll in the amount of $7,609,246.96 and bills in the amount of $5,187,799.70. And tonight, the mayor, on behalf of the city council, will be issuing three additional proclamations.

First, May '22 is proclaimed as safe boating and paddling week, which encourages everyone enjoying Kirkland's beautiful waterways to boat smart, boat safe, and please wear life jackets. Second, May '23 is proclaimed as Public Works Week, which provides us the opportunity to celebrate and recognize the vital behind the scenes work of our public works professionals, whose efforts every day support the health, safety, and quality of life in Kirkland, almost always behind the scenes. So really proud of their work. Finally, May is also Building Safety Month, which allows us to highlight the importance of safe and resilient buildings and invites the community to engage with educational activities about building safety throughout the month.

Thank you, Deputy Mayor Black. Is there a motion to approve the consent calendar?

So moved.

It's been moved by Deputy Mayor Black, second by Councilor Mayor Falcone To move the consent calendar is there are there any questions comments or discussion Question on the motion to approve the consent calendar all those in favor, please say aye aye any opposed Moat consent calendar is approved seven zero. All right. We are moving on to our first business item. Our first item is a business as a check-in on the affordable housing requirements and low density residential zones. Deputy City Manager.

Thank you, Madam Mayor. Planning and Building Director Adam Weinstein is going to make the presentation, and staff is looking for feedback on several issues.

All right. Good evening, Mayor Curtis. Good evening, Deputy Mayor Black, And good evening, council members. Good to be here. So yeah, we're here to talk about the methodology for our affordable housing requirements in low density zones. I just have about nine slides. Two of those slides are just this introductory slide that Cassie will put up in a sec, and then the last slide, which is basically blank. So there's really only seven slides, and they're really just intended to highlight some of the important things in the staff report. Thanks, Cassie. Cassie.

So this first slide let's see. Try and move the mouse. Cassie, can you move the slide by any chance? Oh, there it is. Okay.

This first slide is really just a context setting slide. We're not here to talk about the affordable housing requirements in our medium and high density and mixed use zones, but I want to provide this as context because this is sort of in the background of I think the Council's decision to adopt new affordable housing regulations in our low density zones. So we've had these affordable housing requirements in our medium density zones for over fifteen years. They basically require 10% of units to be set aside. These are really what we characterize apartment districts in the city, our natural apartment districts in the city.

This is where higher density housing is getting built in the city. So under these regulations, if you are a developer, say, and you're building five, fifteen hundred square foot or 1,800 square foot family size units, you are required to pay a fee to account for the fractional affordable housing unit that these regulations would require you to provide. That fee is going to amount to something like again, varies across the city, right? But it will amount to something like 40,000 or $50,000 per unit, a fee that you will need to pay in lieu of building a unit on-site. There are no exemptions for small units.

There are no exemptions if you're knocking down an existing unit and rebuilding. So I just want to provide this slide as sort of a comparison to the regulations that we have and that we'll be talking about for the lower density areas. I'm not doing very well at advancing these slides. Okay, I think it's just a delayed reaction. So this slide is really just covering sort of the guiding principles that we developed when we were talking to you last spring about the affordable housing requirements in our lower density zones.

So there's three key ones. One is basically what I just talked about, ensuring a consistent treatment across different housing types. So we have one affordable housing requirement system in place for higher density, medium density mixed use zones, and then this other one. For many, many years in Kirkland, continuing actually through today, if you were building, say, 10 or fifteen, four thousand square foot housing units in lower density zones, you would not need to pay a cent of affordable housing fees or set aside any affordable housing. So our system today has really focused just on requiring affordable housing set asides in the apartment zones.

Those are the zones that are most likely to actually result in housing that is affordable to the work force. The second principle is utilizing value from the new density allowances. We talked about this a lot last spring, but really the key here is that under state law, we can only add affordable housing when we're creating new development allowances, so things like rezoning areas. And that's exactly what we did in 2025 with our middle housing implementation project. And then the last principle was about middle housing.

Middle housing is not necessarily affordable housing, but it's housing that is the most accessible to people who are becoming entry level homeowners. And we've made really good progress in middle housing over the years. And so this guiding principle is really about not messing with the good progress the city has made on middle housing production. So we really wanted to craft affordable housing regulations in our lower density zones that would protect middle housing. And then this slide is really just to highlight that last point.

This table shows our track record on middle housing over the last several years since we adopted major reform for middle housing in 2020. So again, in 2020, we had just a little over 30 units of middle housing that were built in the city. Fast forward to 2025, at the beginning of twenty twenty six, over the last year we produced something like 166 units of middle housing. So we've shown really good progress. Almost every year the amount of middle housing that has been built in the city has increased.

So that's a really good thing. I would compare these numbers to any other Western Washington City. I think they are pretty good. But again, this is entry level homeownership, or what accounts for entry level homeownership in the city, and this is really what we wanted to be protective of when we were designing our affordable housing regulations in our lower density zones. This slide here is it's sort of telling the story of the discussions that we had with you as counsel in 2025.

It shows where we started with our affordable housing requirements in low density zones, what we call the PC guidance option, the Planning Commission guidance option, and then where we ended up when the city council actually adopted the affordable housing regulations in the low density zones. So I'll just go through this and highlight a couple of things quickly. The early guidance was to have some sort of delayed effective date for the ordinance. We ended up adopting a delayed effective date of 01/01/2027 to really make sure that people, developers who had housing applications in the pipeline could get a permit issued without having to pay any of these new fees. The square footage threshold, there was sort of a range that we provided in that Planning Commission guidance option, 1,700 square feet to 2,500 square feet, that would be completely exempt from fees.

The Council ended up adopting a 2,000 square foot threshold. So you only pay fees beyond 2,000 square feet. Exemptions, also that was something that Council talked about quite a bit. Small rebuilds was sort of the general guidance for what the exemption should be. What Council ultimately adopted, and again this was in response to a lot of master builders' feedback as well, was we really adopted exemptions for very large rebuilds actually.

So for instance, 100% of added square footage is exempt if you have an existing house. That means that if you have a 2,000 square foot house and it burns down, or if you just want to remodel it and make it a lot bigger, if you make it 4,000 square feet, again, under this exemption that you adopted, you would not pay any fees whatsoever. So that's a pretty lenient exemption.

Thank you, Adam. Sorry

to interrupt, but since you're right on this topic, somebody builds a 5,000 square okay, their 2,000 square foot house is torn down, burns down, or removed. If they build a 5,000 square foot house, do they pay on 1,000 or 3,000? Thanks, Councilmember Tim Chisholm.

It would be 1,000 square feet.

Okay. Thank you.

Yep. Thank you.

Thank you. Sorry, can you go back to Thanks. Just to wrap up the slide, the 10% set aside, very consistent with our other zoning districts. We kept that the same. The in lieu fee methodology, we have a very complicated way of identifying the in lieu fees for projects in medium and high density zones.

What council opted for instead was a much more streamlined flat fee of $15 per square foot imposed only on every square foot above 2,000 square feet. And then lastly, the original proposal didn't have really any council check ins. What was adopted by council has two check ins, and I'll talk about that on the next slide. These are the amendments that were introduced by Councilmember Tim Chisholm, again calling for two check ins with Council. These were adopted ultimately by City Council.

The first check-in is the one that we're here tonight to discuss, which is the proposal of alternative methodologies for the calculation of in lieu fees that would look at a couple of specific things, deferring payments of the in lieu fee, exempting the square footage of garages, and non condition storage areas, potentially increasing the square footage exemption to 2,500 square feet, requiring that council approve all allocations of the revenue generated by these in lieu fees, and then exempting the square footage of any house that was removed prior to the construction of the new home, even if you're just building a brand new home without any of the components of the old house, like even if you're getting rid of the foundation and all the walls. And at the very end of this presentation I have a slide that goes through these options.

All right,

so this slide is, again, just really a summary of what is in your packet, but what we looked at was we compared our adopted in lieu fees to the fees that were adopted in a similar fashion by a lot of our other peer cities. We looked at four other cities, our other peer cities. And the main thing I wanna point out here is that in every case, the fees that were adopted by these other cities were more lenient than ours. So they impose less of a cost on developers. So a couple things I'll point out.

The city of Redmond, for instance, requires 12.5% of units to be set aside as affordable, which is more than our 10%, and they also impose a fee of $30 per square foot starting in 2027. There are no exemptions for smaller units. Sammamish, similarly, they have a 10% set aside like us. They only exempt housing units that are smaller than 1,500 square feet, so under our 2,000 square foot threshold, and then they impose a quite high per square foot fee of $35 a square foot. And then any rebuilds and remodels in Sammamish that expand the size of the house, again unlike our policy, are also subject to a fee.

And then Bellevue has sort of a complex set of regulations. This is kind of a subset of Bellevue's regulations, but in many of their zones, when they adopted their middle housing requirements, they allow for the construction of six units per lot. Their requirement is that two of those units be set aside as affordable units at 60 or 80% depending on whether they're owned or rented. And then if you are not providing affordable housing units on-site, in Bellevue and these areas, you're paying $150,000 per unit. So if weren't going to build two affordable housing units on your property and you wanted to pay in lieu fees instead, you would pay $300,000 in in lieu fees.

I was able to touch base with my colleagues in Rebbe and Sammamish. I've also confirmed that there have been no legal challenges to any of the cities that we presented in our staff report, no legal challenges on their affordable housing requirements. There's weird things happening in the housing market right now, so one of the things that I asked my colleagues in Sammamish and Redmond is whether they had seen any changes in permit activity after adoption of these regulations. They are not seeing any right now, but they're watching the market really closely because the housing market is strange right now. Alright. Can you advance me? Oh god, sorry. I don't know why

I'm so bad at this.

Can you go back? Can you go back one? Okay. Alright. So this is pretty much the last slide that I'll go over. And these are the options for counsel consideration. Mayor, if you want, can just go through them one at a time and then pause for discussion, if that makes sense.

Let's do that. I think that would be good. Okay.

Again, a lot of these reflect also the comments that were made by master builders in their letter, which we appreciate, and BlueLine Group also sent a letter in that raises some of these issues as well. So hopefully this will answer some of the questions that are raised in those letters. In terms of deferring the fee payment, so right now under our existing regulations, you don't pay an affordable housing fee until the certificate of occupancy. That's basically when somebody moves in. So we thought about other options.

There aren't really a lot of other options beyond that. The other option would be basically the certificate of occupancy is issued to a developer, meaning they can sell the house and somebody can occupy it, and that if the developer doesn't pay it, then the homeowner at that point would likely get a bill for the affordable housing payment. So that would be sort of an awkward thing that would be also awkward to enforce. So that's sort of the first request for alternative methods for the methodologies.

Thank you. All right. Does anybody have any questions or comments on the deferred fee payment schedule? Councilmember Tim Chisholm.

Thank you very much for the explanation here. I think you've explained it very well, Mr. Weinstein. I appreciate that. And I think that Kirkland is really doing everything we can within reason to time this so that the money they're not being forced to take a loan against us for more time than is absolutely necessary. So thank you for that.

Thank you.

Anyone else? All right. Anybody have objection to defer payment at certificate of occupancy? All right.

All right. So second topic is just the square footage threshold. So right now we have a 2,000 square foot threshold. So if you're building a 2,001 square foot unit, you pay $15 If you're building a 3,000 square foot unit, you pay $15,000 So the options here are pretty straightforward. You would just pick a different square footage threshold. That could be 2,500 square feet, it could be 3,000 square feet, it could be anything really beyond 2,000 square feet or less for that matter.

Thank you, Adam. Any comments, questions on this? Councilmember Tim Chisholm.

Are we on We

are on 2000 versus 2500 to 3000.

Oh. Was the Planning Commission's recommendation was 2,500, is that correct?

The Planning Commission had there was quite a bit of discussion about the square footage threshold of Planning Commission. I think what ultimately got proposed to you, taking into account the Planning Commission discussion, was 2,500 square feet. But there was, again, sort of a wide range of square footages they were talking about.

Okay, so it was all right, that makes sense. Thank you.

Anybody else have comments, Councilor Ibrahim?

If we go back to the slide with the number of permits that have been issued for ADUs and cottages, would you say what would you say is the approximate square footage of those issued permits, like on average?

Would you

say that they're less than 2,000 or greater than

2,000

square feet?

Yeah, think it's that graph slide, right? So yeah, right now in Kirkland, ADUs are in almost all cases limited to 1,200 square feet, and cottages are limited to 1,700 square feet. You also get an allowance for a two fifty square foot garage. So in all cases, cottages Kirkland are less than 2,000 square feet. And in almost every case, ADUs are 1,200 square feet.

Okay.

Yep. All

right, thank you. Anyone else? Councilor Fairclough?

Thank you, Madam Mayor. Well, thank you, Councilmember Prem, for that question and Adam for this discussion. I just have a follow-up question to that. Can you answer that question for a typical like duplex, triplex and townhomes as well? I know we don't we're not seeing a lot of duplex and triplex.

Obviously, that line is pretty close to the bottom there, pretty small numbers, and they don't see townhomes on here. And so I assume that means we're not seeing a lot of those applications. And part of this is obviously to be fair in the inclusionary zoning, but we also want to incentivize more missing middle housing to be built. So I'm interested in those as well. And would the answer be different not only for what's currently being permitted and built, but what a typical we would expect for typical duplex, triplex and townhome as far as square footage and garage space?

Yeah, thanks Councilmember Falcone. That's a good question. We have not really seen any standard townhouse projects in our lower density zones. So it's a hard question to answer what would end up getting built hypothetically in the lower density zones. We did actually, as planning staff, recently visit a townhouse project at the southern side of the Southern Industrial Area in the Totem Lake area.

And those are I think fairly on the big size townhouses that are a little bit over 2,000 square feet. I have to say those are not built in our lower density zones, those are medium density zone townhouses. The developer told us they did build on the bigger side for those townhouse units because they wanted to get three bedrooms all on one floor. So again, I think generally speaking our townhouses are in that 2,000 square foot range in Kirkland. They aren't a lot higher than that, I think typically.

It's not to say that we wouldn't ever see, say, a triplex or probably more of a duplex project get built in Kirkland with big units, but I think that is unlikely to happen. If it does happen, I think the fee that would be associated with that would be fairly modest. I think the square footage would likely be not 4,000 square feet, but probably in the range of 2,000 to 3,000 square feet.

Well, mean, obviously we're seeing a lot of ADU and college development, but we also want to see more duplex, triplex, and townhouse development in the city. And it sounds like, from what I'm hearing your answer to the question, that a difference of either exempting garage space or adding an additional 500 square feet could potentially impact duplexes, triplexes, cottages, although maybe not ADUs and cottages.

Yeah, so I think what you're asking is would beneficial it to townhouses, duplexes, triplex to exempt a garage? Possibly. I mean, it's hard to say, I think. I think what we think about when we think about exempting garages in unconditioned space is that that's what's gonna get built. So if all garages, say, are exempt, then every developer is probably gonna build a really big garage and append that to their housing units, which will not actually probably help with affordability, right? So yes, it might make it easier to build houses with big garages, but I don't think it will bring the cost of the housing unit down.

But the 2,500 square feet, that extra 500 square feet could potentially be used either for something like three bedrooms on the 2nd Floor, for having a primary suite on the Ground Floor, or by having garage space could eat up some of that 2,500 square feet, which could potentially help see more townhomes and duplexes and triplexes.

Possibly, yeah. Again, it's also possible that folks will adjust and just build smaller units in the absence of that.

Yeah. Thank you. Councilor Pascal?

Yeah. Thank you. Could you

go back to the slide, the table of the different choices here? Yeah. Thank you. Oh. Keep

all the way at the end, Cassie. Yes.

So I I I recognize we're I think we're on the second one down. Correct. Okay. But I think what you're hearing is there's some interrelation to these. And I I guess I just wanna I wanna talk about this square footage threshold for a second because I mean, the way that I I think about this is I really take to heart what the home builders are telling us and what the market's demanding.

And I recognize the fact that, you know, not all homes that are gonna be built are going to meet affordability requirements, but they're going to provide opportunities for people to possibly move into other affordability affordable units that free up. And so I'm interested in the in the 2,500 raising it to 2,500 feet because I was also interested in the exception around the garages. But I see those two things kinda being interrelated. Like, I think council member Falcone was was saying. I like the flexibility of of the 2,500 foot exemption like the master builders were was saying was saying rather than the the the garage exemption.

If you had to choose between the two, that's the one I would choose because I think that could result in better kind of layout of homes rather than just big excessive garages. So anyways, I just wanted to talk about that because I think those two are related, and that's kind of where I'm coming down on this. And I'd like to see options on that. Thank you.

Thank you. Councilmember Timchison.

Thank you. To Councilmember Pascal's point, if garages, porches and nonheated spaces were exempted, would that create an administrative burden in defining would builders be arguing with our staff about what a non heated space is and what a garage is and what a shed is and what a porch is and would that create

issues? Thanks, Councilmember Rich and Chisholm. I appreciate the question. Yes, think so. What happens is that there are plan sets that are provided, right, and then we would have to look for unconditioned spaces.

That's not always super clear on plan sets. That's sort of one issue. I think the second issue is that, again, if there is free rein to build unconditioned spaces and garages, for instance, what also might happen is that people buy those houses and then they convert those garages into a man cave or something or a children's play area or something, they make it conditioned, so that would sort of create awkward administrative difficulties about how do we Are we gonna go in and charge people fees once they do that? That seems not a thing to do. So it would raise questions like that.

So I agree, I think the administrative complexities increase with exempting garages and unconditioned spaces compared to just an increased square footage threshold.

Thank you for that explanation. Based on your explanation, I concur with Councilmember Pascal that if we were going to adjust something, I would favor adjusting the square footage threshold as opposed to exemptions. Thank you.

Thank you. Anyone else? So Adam, in the packet, you talked about increasing to 2,500 could possibly impact missing middle housing. Can you elaborate on that more?

Yeah. So what we hear a lot thanks, Mayor. What we hear a lot from developers of middle housing is that they find it hard to compete with single family developers. In The US, we have decades and decades and decades of culture and financial policies that promote single family homes compared to other housing. In Kirkland I think that is extreme.

We're a relatively affluent community, and so there's huge demand for single family houses. Developers that we talk to who do middle housing often talk about being outcompeted. They cannot pay the same price for land that people who are building big single family houses can. The lower square footage threshold is an attempt to even out that a little bit to make it a little bit more competitive for people who are building middle housing. I think that would be one of the impacts of increasing the square footage threshold. Again, is it a huge impact? Probably not because we're not talking about a very significant fee to begin with. The fee for 500 square feet is only $7,500 It's a very small fraction of what somebody pays for a new single family house.

I had another question, I forgot it. Oh, remind me, when we go to phase one of missing middle housing optimization, what's on the table for phase one?

What is on the table for phase one? That is a good question. We haven't figured that out yet, but I think what the Council has told us is that they're looking for changes to our middle housing regulations that will have a big impact Mhmm. That might not have big adverse impacts, a big positive impact on production, but not necessarily big adverse impacts on, say, neighborhood compatibility.

But that will be the time that we will look again at the long list from master builders of their requests such as

Yeah, exactly. FAR ratio setbacks. Yeah, all those things, yeah, are certainly going to be on the table for that optimization project. And that is another time that we can look at affordable housing requirements.

Yes. Okay. Thank you. So counsel, I told Adam and deputy city manager that one of my goals when we finished this conversation was there was no ambiguity on on the direction that we're providing. So I am gonna ask us to be specific about whether we want to stick stick with the 2,000 that was in the original ordinance or enlarge it to 25 or 3,000 square feet I heard two council members say three that they were interested in the 2,500 square feet.

So I guess the easiest thing for me to do is ask for a motion, and we'll vote on it. I do want to say that I am in the camp of leave it at 2,000 feet, and we can look at 2,500 when we do the phase one of the optimization because we will be looking at many things at that point. I do hear and agree with it's a trade off between 2,500 and what is it called unconditioned spaces like we don't we wouldn't want to do both like sort of it's a double dip so I would prefer to stay with the original ordinance and then explore increasing when we look at all of the menu of possible things that we could do. So that's where I'm telegraphing where I am. Councilmember Arnold.

Thank you, Mayor, and thank you for letting us know about this approach. Planning Director, you mentioned our cottages are 1,700 square feet. This is the largest size. And there were more than 100 that were built? Yes. That's right. I want to make sure that I had that So given that there is a demand for housing at 1,700 square feet and we're looking to incent these smaller starter homes, I am in favor of maintaining the 2,000 square foot limit here. It and or 2,000 square foot exemption. It's not a limit. People can build more.

But for that extra 500 square feet, it's a $7,500 fee. And I think it would be important to implement this where this goes in effect in 2027 and then adjust if necessary if it is having impacts because we can't go the other way. Once we move it to $2,500 can't lower it back down. Thank you.

Deputy Mayor?

Thank you, Madam Mayor. I had a question for the Planning Director. So we got a couple of things this is all time related. We got a couple of things on the horizon here. So we have a 2020 let's start backwards.

So we have a 2028 check-in where you're going to come and report to us what are we actually seeing after, I guess, let's say, after a full year of implementation. So we've had about one years, point or if not two years, of sort of long range forecasting to the building industry. This is coming other cities our peer cities didn't do that. We did. Then there'll be a one year of implementation, and it'll be that 2028 check-in report.

That's going to be where you tell us, Hey, by adopting this, you guys slammed the door on development of middle housing, or we're seeing this trend, whatever it might be. There's that. Then there's the middle housing optimization, and that's on what time frame based on the work program we adopted most recently? This year. In 2026.

So the one I guess, we're not going to go back and revisit the timing of the work program, but one of the things is we're it'll be interesting to do some optimization after we actually had some more data, especially with this introduction of affordable housing. But we're not going to go back and do that. But I just wanted to understand how that was all going to flow out. So thank you. I my computer just shut down.

And I did have a couple of notes that I want to refer to. So I'm in favor of sticking with the 2,000 square foot. One of the things that I'm reminded of is my wife and I have owned two homes in Kirkland. The first one was a 1,500 square foot house that was that got built at one time in Kirkland, it was available as an aging, naturally occurring affordable home. One of the things we're trying to incentivize here is that creation of those type of starter homes, and they won't be affordable on day one.

We know that. But as they age, they become the 2,000 square foot home that a couple like me and my wife could buy. And that's important to me. And that's why I really as much work and conversation and debate and discussion that went into the adoption of the 2,000 square foot, I really am not looking to crack the door open to see a larger construction until I have real information about what the impacts of this will be. And I'm also reminded that my wife's and my second home was a 2,600 square foot home with three bedrooms.

So what we're talking about is a 2,600 square foot house with three bedrooms and an affordability payment of $9,000 or something to that effect. And that three bedroom, 2,600 square foot home sold for a lot more than the two bedroom 2,000 version of the time. There was money there was let me just put it this way. There was value to be extracted from the fact that it was a 600 square foot bigger than the 2,000 square foot home and had an extra bedroom. And that's a reality to what we're talking about here.

And we're only talking about a $15 fee on the overage. So I have more comments associated with some of these others, but when it comes to the square footage, that's what I'm this is where I'm coming down and this is why I'm really, really focused on trying to foster the creation of those homes that are truly going to be our naturally occurring affordable homes in the future. And I think, again, if there's no restriction on a 2,200 square foot home is there, but there's a fee, there's a small fee associated with it. So thank you.

Thank you. So counsel, We can stay with the 2,000 square foot that was in the original ordinance that passed or Someone can make a motion for larger and we'll just take a vote

I think the vote would be to bring back language for approval. Thank you. Actual code language for approval. Okay.

Well, I'll make a motion that we that. That. We

ordinance.

Yeah, sorry for a clarification on that. The 2,000 square feet is the existing language.

Okay, then I'll move that we bring back language of 2,500 square feet consistent with the Planning Commission recommendation.

Okay. It's been moved by Councilor Timchin, second by Councilor Mayor Falcone to bring back language to explore adding the 2,500 foot square footage threshold. All those in favor, please say aye. Aye. Wait. Let's do a voice.

On a motion to bring back code language to increase the threshold to 2,500 square feet consistent with Planning Commission recommendations. Council Member Tim Chisholm. Aye. Council Member Arnold. No. Council Member Prem. Aye. Council Member Falcone. Yes. Council Member Pascal.

Yes.

Deputy Mayor Black. No. Mayor Curtis.

No. Ordinance passes five-two.

Motion passes you, motion. Yes, motion.

I was too busy counting. Okay. Motion passes five-two. Thanks, everybody. Four-three. Four-three? I counted incorrectly. Okay.

And just to confirm so that we're clear, Council Member Arnold, Deputy Mayor Black, and Mayor Curtis voted no.

Thank you. All right.

Okay. Thanks. So I think we can go through the next couple of ones pretty fast. I think we talked about oh, sorry, we didn't probably talk too much about the oh yes, we talked a little bit about the exemptions. So basically the options here we talked about how if you're doing a very large rebuild you get to double your square footage, and that's all exempt. If your house burns down and you're doubling the square footage, no fees. So the options for the exemptions category would be things like exempting a certain square footage of garages, exempting a certain square footage of unconditioned space, exempting garages completely, exempting unconditioned space completely.

Thank you. Council, anybody interested in changing what we did in the original ordinance? Council member Tim Chisholm.

No. Sorry, maybe you want us people only. Based on the difficulty with definitions, think I favor not adjusting this.

Thank you. Anyone else? All right, let's move on.

Okay, all right. The next category is credit square footage of homes that are replaced. So this is basically about you're a developer, you buy a lot with a house, and you completely scrape the lot of that house. You get rid of everything. There's no foundation left, there's no walls left.

Right now, under the existing ordinance, again, the first 2,000 square feet of that new house that the developer builds on that property is exempt. So the alternative methodologies would be things like all of the square footage of that existing house gets credited towards the new house. So say it's a 3,000 square foot house that is existing, that gets demolished, and then the developer wants to build a 4,000 square foot house under the all square footage of existing houses credited approach, the developer would pay fees on 1,000 square feet, the difference between 4,000 square feet and 3,000 square feet.

Councilor Arnold.

Question that's kind of related. During conversations with counsel this past week, I had a constituent come up to me that discussed a development in his neighborhood where two lots were purchased, two adjacent lots were purchased, both houses were scraped and somebody built a larger house and kind of created what this constituent described as a compound. How would the fee structure work in that particular case? Is it tied to the lot or just the production of housing?

Yeah, Councilmember Arnold, it would just be tied to the production of the housing. It would not be on a lot basis. So, again, under the existing standards that council has adopted, only the first 2,000 square feet of that compound house would be exempt, and then they would pay that developer would pay a fee on all the square footage above that. Is that what you're asking?

Yep. If we were interested in something that would assess a fee to in the cases, to kind of incent no net loss of housing. Is that something we could add at this point? Or are we is that something that would have to be looked at the next time we are adding development capacity?

Yeah, thanks. That's an interesting idea. I think it's something that we would want to add when we're adding new development allowances. It would be sort of a more I think what you're talking about is a more restrictive, a more potentially onerous approach to preserving existing housing, which is a good objective, but I think that's something that we want to do in conjunction with new development regulations. I think we'd like to understand a little more about how that would be crafted as well. You.

You. Councilor Mayor Falco?

Thank you, Madam Mayor, and thank you, Director Weinstein. I a question related to this. You received some questions from myself and I think at least one other council member about the situation for unintended consequences. Like what if someone's house burnt down and their house was, say, 3,000 square feet? Could you provide the answer that you provided to counsel Yes.

Thank you.

To the public for those listening?

Thank you, yeah. So you have a 3,000 square foot house, your house burns down, you want to rebuild it, you rebuild it to 6,000 square feet or less, you don't have to pay any fees.

Thank you. And that applies more broadly than to just rebuilding after a fire, right? That's for remodel, rehabilitation, conversion, or alteration that does not add more than 100% of the existing square footage. Is that correct?

Yep.

Thank you very much. Thanks.

Thank you. Anyone else? All right. Does anybody want to change what was in the original ordinance? Seeing none.

Okay. All right, last category. And this is, again, the last slide, too. So the last alternative methodology concept that was added to the ordinance was ensuring city approval for how collected fees are used. And so I just wanted to review really briefly how the existing in lieu fees that we collect in the city are used.

Basically, what we do is we collect in lieu fees that are generated, again, right now in our medium and high density and mixed use zones. We collect those fees, and then they are conveyed directly to the Kirkland Housing Trust Fund that is administered by the city of Bellevue. So it's our Housing Trust Fund, but the City of Bellevue administers it. And then every year, if those funds are being used by Arch, Arch presents their proposals for the use of the Housing Trust Fund, and that is approved by City Council or not approved by City Council. And so that's how our existing in lieu fees get approved.

I would mention we have a longstanding relationship with Arch. They've helped us build several 100 units over the last decade plus, so that's what those funds get used for, and there is city council oversight for all of that. If the city council said, hey, we don't like the use of these housing trust funds for these Arch projects, you would be able to say, no, we don't want to approve our funds to be used for those projects. So there is a lot of council discretion on how those funds are used. It was also hard for us to think of other alternative methods for how council would have even more oversight over those funds.

I suppose you could have a resolution every time we collect fund in lieu fees that are then funneled into our housing trust fund. That's something that would be maybe a little more oversight, but it wouldn't really give you greater authority over how the funds are dispersed.

Thank you. Councilmember Tim Chisholm?

Thank you. Can I see the slide of the original amendment from June? Yeah, that one. So, yep, right there. So the original language, and I don't know that this language is correct. It says require that the City Council approve all allocations of the revenue generated by the fee. Is that happening now? Sounds like, or would that happen under this? Thanks, Custom Merchant. Yes, would. Right?

It would be subject to the same process.

All right. Well, okay. So, would there be a difference if the money was kept in a city of Kirkland bank account as opposed to would we have more control?

I don't think so. It's just the city, yeah, the city of Bellevue just, again, the keepers of all the trust fund accounts for all the Arch member cities, so I don't think there's any meaningful difference whether it's in our bank account or whether it's overseen by Bellevue.

Only thing I might ask as a clarification is we, in theory, could have our own process to do project by project type elements. But I think, as I understand the benefits of the Arch structure is because we're pooling funds, more will get done. So I think less would get invested if we had to do each project individually because it would just be our funds, where, if I understand correctly the current process, they put a slate of projects that our funds, you approve our funds going toward. And so if you didn't agree with the projects, you could not approve the recommended projects that Arch was funding. So I don't think where the money resides would make a difference.

It would be an entirely new process of how we fund affordable housing if we did it item by item.

My last question. If there was a building in Kirkland that we wanted to buy and we had designs on, as has happened in the past, could our current process accommodate that if the city of Kirkland said we want to use these funds for this building, this building's $5,000,000 and we believe that acquiring this is what we want to do with these funds?

Yes, we could. Okay. Well, all right.

Sounds good.

Thank you, Madame Mayor. I think his last question was pretty much my question. But I wanted to first start off and just say that I do fully support us continuing to support work through Arch and any additional that our additional funds would go to Arch and Arch projects. But I had this similar question just about flexibility, not necessarily about purchasing something, but we've talked about piloting other things such as having a local voucher program to help offset the cost between the monthly rent between, say, 6080% AMI or something like that of piloting things such as that with developers. And so just want to make sure that flexibility is built in. Again, fully support us continuing our partnership with Arch, but just wanted to make sure that flexibility was there in case we had a good idea of something that would help get more affordable housing here.

Thanks, Councilmember Fuchlin. Yes, we have the authority to decide how much to put into that trust fund.

Anyone else? All right, back to you.

Okay. I think that covers it. Unless there are other questions, I think we've gotten good direction from counsel on what draft code amendment to bring back. I think that'll be a very surgical amendment. It's going to be crossing out 2,000 and adding 2,500 square feet. So hopefully we can do that quickly.

Okay. Thank you. Council, any further questions for Adam? Councilor Mapra?

Yeah, just one comment. When you do bring that language back, I think it would be really helpful to just have more information also on square footage of townhomes. Okay. So outside of ADUs and cottages. So if we're not building them in Kirkland, in other cities, what is the typical square footage

of Okay.

Thank you.

Thank you.

Councilor Fekel?

Thank you, Madam Mayor. I would just add duplexes and triplexes to that. I know sometimes there's overlap in the Venn diagram of the definitions of But that would add that too, please. Thank you. And also, not just what's being built, but current and recent permitting, because I know economic conditions are shifting pretty quickly, right? And so I'd be curious not only what's been built recently, but what permits have been submitted as well. Okay. Thank you.

Excellent. Thank you.

Last comment. All right. Thank you, Adam.

Thank you. Okay. Thanks.

Okay. We're going to go ahead and move on to our housing dashboard. Deputy City Manager.

Thank you, Madam Mayor. Senior planner Scott Guder will make the presentation on the housing dashboard update.

Is he teasing you, Adam? Welcome.