Environmental Services Commission - Regular Meeting

It is 06:30PM. I called the May 7 Environmental Services Commission meeting to order. Next, I will do a roll call. Commissioner Juan is excused. Commissioner DePurtis? Commissioner Hainosh? Commissioner Laxon? Present. Commissioner Margolis? Present. Commissioner Tyson? Present. Alright. Next, I'll look to approve the evening's agenda.

I

second. Hearing no objections, the agenda is approved as motioned. Oral and written communications are now open. Remember, there is a three minute time limit per person and thirty minutes total per meeting. Public comment shall be limited to matters relating to city of Bellevue government and to subject matters encompassed within the power and duties of this commission.

Persons participating in commission meetings must not engage in speech or conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of the meeting. Disruptions may include and are not limited to failure of a speaker to comply with commission bylaws concerning public comment. Joe, are there any written communications?

There are written communications.

Please. Okay. We received an email this week. The subject utility budget process public comment. I would like to and this is from Jennifer Fisher at Bellevue Lifespring.

She's the executive director there. And she says, I would like to suggest expanding your utility bill assistance program to support low income residents with children in the household in addition to seniors. From 07/01/2025 to 03/19/2026, we have paid 51 water bills totaling 30,032 $30,032.92 for families, including 80 adults and a 112 children under the age of 18. Of these, 16 were paid directly to the city of Bellevue for a total of $21,971.94, an average of $1,373.25 per family. 35 of these were paid to landlords when families had eviction notices with utility balances for a total of $8,051.98, an average of $230 per family.

Thank you, Jennifer Fisher, executive director, Bellevue LifeSpring.

Alright. Thank you.

Thank you. We have two people signed up for, public comments this evening. Mister Nordhorn?

Thank

you. This one.

Good evening, and thank you for that others come and talk to you. Before I start, I know you just gotten this this evening, and the mayor's office has been so helpful in helping us. And Lisa sent us out yesterday, she said. And so as you go through this, I would just like to have you think about on page one. There's an underlining for public understanding and meaningful support.

And in the very last page is thanking veterans in tangible lasting ways. And so what I'd like to talk to you tonight is the city of Bellevue establishing a meaningful discount to a 100% disabled veterans for utility rates. I first approached the city council on this in early February. And subsequent to that, I received an email, and it states the utility department staff are actively reviewing your program and have stated that they will be reaching out to contact with you. Number two, the Environmental Service Commission will be including your request to review and update the utility rate relief program.

Subsequent to that, I met with the mayor. And subsequent to that, I we had a second meeting with the city council last week. And tomorrow, I'm meeting with Gerard Newnhaus. And as I understand it, what I would like to have happen is that this program gets on your agenda that you present to the city council sometime, and then the city council decides what what they do. And I don't know if that's the correct assumption, but that's what I'm understanding.

So the mayor asked me when we met with him, how significant is the population for dependent or Disabled. Disabled veterans in the state of Washington? And I said, I do not know, so I called Washington DC. And so the disability ratings for the Veterans Administration goes from zero to a 100%, and there are various degrees of percentages depending upon the level of disability. They told me that in Washington state, there are a 155,000 veterans from zero to a 100%.

The mayor suggested to me when I was asking about the 100%, he said maybe we could make it more inclusive. And he asked me what would be meaningful to be disabled and still be I said, well, maybe about 80%. I'm talking about my experience. And and then the next would be ninety percent, then a 100%. The 100% rating is very, very difficult to get. I mean, there have to be problems that's documented. But nonetheless so out of the 150, 5,000, if you look at the 80% group, there were thirty five thousand in the state of Washington.

If you can wrap up your comments here wrap up your comments shortly.

Oh, I'm sorry. Yes. And 90% to 25100%, there there are 7,000. And so I've been reaching out to companies, and I'm saying, we as a group do not want a handout. We just want a discount at Costco or wherever. Just give us a discount for whatever they're selling. And in the state of Washington, I'll just wrap this up. If you're a 100% disabled veteran, and in order to be that, you have to have a letter saying you are, and you have a a discharge for the military and a personal ID. Those are the three things you would need to qualify. Well, in the state of Washington, you get free license tabs.

You get free parks, free hiring license. And for a onetime automobile purchase, there are no sales tax. In King County

Alright. Thank you. Thank you for your comments. Thank

Thank you. Yep. I'm sorry. I ran out of time. Yeah. Yeah. Thank you.

Thank you. Thank you. Mister Zimmerman, did you have comments?

Yeah. I have. You know me.

Yeah. I in line. I'm not surprised. Come on up.

I'm vigilant too, but I have. I always have. Yeah. Oh, I'm sorry. Where do you put this? Oh, in this chair. Good. Thank you very much. Yeah. Oh, you're staying. Yeah. Stay. Stay in love like me. Yeah. Thank you very much.

Guys, my name, Alexei Merman. I don't come here talking to you because you to me is this dirty Nazi fascist bastard. Yeah. I am talking about my people, 150,000 people who live in Bellevue like me for forty year. Not everybody, only 30% is probably in 120 slave for this plantation, come for another seven year under mayor Robinson. So mayor Robinson, twelve year ago, when she a consul, is this all under camera, cut us right for constitution speak. You know what this mean? Yeah. Why is they doing this? Why is they doing this?

Why he doing this? And this all under camera, you can find this. No problema. Because we have a bad boy, Alex Zimmerman. You know what this means? So they cut as freedom of speech come to thirty minutes and then people, you know, in another BS, what is they have in these roles, only because Alex Zimmerman. When I am a bad boy, why they cut 150,000 people write, come, and speak Thirty minute for 10 people? This totally stopping us constitutional right for First Amendment. For this reason, and not only for this reason, I call her a cheap dirty prostitute. This is exactly what's happened.

So right now, situation's so unique because we have right now Mohammed, Iranian Muslim under Iranian citizenship. You know what this mean? Who asked men. Man would have been huge career what is he did, like Iranian Muslim. You understand what this mean? Yeah. For two year deputy, for two year after two year, he's a mayor. Why? No one city in this planet have a mayor who represent contribute who people fighting like we fight in with Iran. It's a war.

It's for fifty year war, but right now it's a real war. So how come mayor can be Iranian Muslim. Can you explain to me sitting chair in chamber with Iranian citizenship? You understand about talking? No. You don't. Because we you have human garbage, and I told this about many time. Guy, we need to understand what's going on. They prosecute me. They trespass me. And nothing changed. You know what this mean? I am in life. Yep. And I will come and ask very simple question to you dirty Nazi bastard. Are you hate America? Why you accept Iranian Muslim? Why? Because we have a war, Peter, and you're very quiet? Why are doing this?

You are number one American enemy. You come here for for free pizza. We were Trump. We were new American revolutions. Stand up slapping happy cuppa cuppa. Don't give them free pizza. I could just eat a bunch of great dinner. Thank you very much for your time.

And

is there anyone else in the audience that would like to speak? If so, if you're attending remotely, please use the raise your hand feature in Zoom, or if you're joining via telephone, press 9. No no other questions online, Joe? Alright. Joe, are there any, comments from council or boards or commissions or staff reports?

Just a couple things on the staff report. One is council heard from utilities and commissioner Juan, chair Juan, on the the ESG recommendations around the equity analysis Mhmm. Around the sewer equity analysis. Council adopted all of the recommendations that were came out of the ESC. Council thanks the ESC for the work that you did on this project.

Three three meetings and the recommendations that came out of that. So, council has directed staff to incorporate the commission's sewer rate recommendations into the overall utility rates to be considered by council as part of the upcoming biannual budget. So thank you all for the work you put in on this, and I'm sure we'll be back on it in a few years based on the the commitments made as part of the work. Thank you. Oh, one other thing. Next Monday night, just as a reminder, the boards and commissions appreciation event will happen next Monday night. So hope you all were able to

attend. Thank you.

Alright. At this point, I would look for an approval of the April 2 meeting minutes.

I second.

Pardon? Edit support.

Are there edits? I would like to hear them.

There's a small one, teeny one, on page two near the bottom of the page. It's a list of summarize the proposed CIP budget of 478,000,000 with the following breakdown, 287,000,000, 105,000,000, and $86. So the $86, I assume, should be a million. That's all.

Oh, should have an m after it.

That's all. It's teeny. Alright? Anything but a lot of money.

Yes. Taken with that edit. Any further edits? Hearing no objections. Those minutes are approved.

Alright. New business for the water system plan. Review of the draft.

Good evening, commissioners. We are here tonight to to further our efforts to update our water system plan. I'm here with our senior planning engineer, Jim Griber, and we're gonna be tag teaming tonight's presentation. Purpose of tonight's meeting is just simply informational. We are not gonna be asking you to make any, decisions or recommendations at this time.

Essentially, this is our our first introduction to the draft plan, which we have in your packet. I always like to start off by thinking, you know, what why are we doing this? What's what's what's the the the larger purpose of the water system plan? And I like to simplify things when I can. And the the point of the plan is is for us to have a plan to develop clean, safe, and reliable water.

And between our experienced operators, the engineers we have on staff, our regional water suppliers, we're really good at doing that. We have a really good mature system, and we are really good at delivering clean, safe, and reliable water. So tonight's agenda, we're gonna we're gonna review ESC's role, what the what the council has asked you to do because it's important for us to understand that so that we can provide you with the necessary information that you need. We're gonna look at this project history, how we got to where we are tonight. We're gonna take a little bit of a a refresh on what is in a system plan.

Really quickly, we'll touch on that. And then we'll get into the meat of the work that we've done since we've seen you last, and that is the system analysis and the recommendations coming out of our draft plan. That, the existing plan and the draft plan have policies. We'll we'll talk about the work we've done in reviewing the existing policies we have, and then we'll, of course, look at our next steps. In reviewing what what the what the council has asked of you, these three bullets kinda summarize the points I think are applicable here.

Advising the city council on utility system plans, policies, and finances. This is an opportunity to take public input. You've already had some of that this evening. And then, of course, what we'll be asking you, later in the year is to, once we've satisfied all of our regulators and and addressed any comments, we'll be looking for you to make a recommendation to counsel for the plan's approval. So as staff, we wanted to ask ourself, what's the how do we can how can we best use your valuable time?

And so we wanna make sure we're providing you with the information that you need to carry out what the council's asked you to do. Our hope is to demonstrate, to give you confidence that the staff has done the necessary work so that you can feel comfortable recommending plan approval. This is not going to be the last time you see the slide tonight, but the first time we're looking at it, we're looking back. We did an introduction to system planning with this commission in November '24. Then last year, about this time, we came and introduced the water system plan in particular and the work we were planning on doing.

And then here we are tonight to talk about the draft plan that we have before us. In system planning, we do it for a couple different reasons. In waters, in particular, we have external drivers, and we have internal reasons. Our internal reasons can be seen and expressed partially in the policies that are contained in the recently adopted 2044 citywide comprehensive plan. So I've I've thrown up all the utility policies here.

One of our goals tonight is to not have anybody's eyes glass over. So you are free in your free time to read the 95 policies, but we are not going to do that tonight. Instead, we're gonna look at a choice few that we feel are are specific and are driving the efforts for us to do our system plan. And we've we've selected four. The first one is basically the the it's our first policy, UT one, manage your utility system effectively.

It goes on to talk about providing reliable, sustainable, and quality service. The second plan says utilities' ability to provide water, UT seven, should not dictate where growth happens. We have really good planners. They did a lot in the 2044 comprehensive plan, yearlongs effort, to come up with how the city wants to grow. So we just need to make sure that we can plan for that growth.

And when the growth happens, we are ready with our water and can supply it. The UT 10 essentially says we should be good stewards, of of our system. We should plan on maintaining it at a at a reliable level. And in that in that UT 10, it actually has some language in there talking about conducting yourself in a way that provides for generational equity. And then the last one, UT 12, it's basically telling us you need to update your system plan periodically, and that's that's what we're doing.

We talked about external and internal reasons. The first one here is a external reason. We wanna make sure that we're compliant with state and federal water quality standards and laws. The second bullet, basically, it's documents where we're at. How is our system? Essentially, think of it like a a physical. How healthy are we right now? The third bullet looks at, are we headed in the right direction? Can we meet our future capacity needs? How are we operating?

And, of course, we have that twenty year look ahead. And then the last one is coordinate, coordinate, coordinate. We've listed some of the agencies that we have to coordinate with. They are comprised of towns that are within our service area, our neighbors, which we literally have direct connections with all of them. So we need to make sure we're coordinating with that water system plan.

And then, of course, our regional suppliers of Cascade and SPU, and then our regulators, currently, Department of Health. And through them, Department of Ecology and even King County will need to adopt and approve our plan. So this is just a real quick review, a refresh of what's in a system plan. Our our current system plan has 10 chapters. I've had the the pleasure, or challenge of doing water system planning in other cities.

And I have to say that the city of Bellevue system plan looks and behaves a little bit differently, I think that you'll agree with me when I talk about the differences that that's a good thing. I've worked in small cities where the system plan was essentially the only planning that we did. So think about every you get a bite at that apple every six or ten years. But as I'll talk about here, we we do it a lot more often, here. We we don't update our system plan, but we do some of the things that we'll see.

An example is chapter four, system analysis. In other smaller cities, they'll do the analysis once, and then they'll actually print out the results, and it's in the plan. And so for the next period of time until the next plan is done, that's what staff has to reference. It's a static one you know, snapshot in time. We don't do that here. We have a dynamic model. We have people on staff that model the system and the changes in the system that happen every year so that when when a developer comes in and says, can you supply water? We go to our actual model, and we can answer that question in real time. Yes. We can supply the water at this rate for you.

So that's a that's a difference here, a good difference, I think. We go through in, chapter five. I'll just touch on it. Water use efficiency, we rely on our regional supplier. Cascade really is the driver for that for us. We partner with them, but they're really driving that efficiency program. But couple other differences I wanna point out, asset management. Other other entities, this is their shot to to talk about their asset management. That's not true for us. We have an asset management program.

Jacqueline Noth, I know, comes to you before you and other times to talk about that. So this chapter isn't doesn't have to be as robust because we're just simply making sure that we're in alignment with the work, the good work that Jacqueline is doing. The capital investment program. Other cities rely on this. They they're budgeting three years from now. They go back to this to look at the long list. That's not our case. As you've already been presented, our CIP budget for this year, we do this every two years. And although we only presented you a six year forecast outlook, a little secret behind the scenes, we're doing it for ten years. So we're already every two years, we're already doing a ten year look ahead.

And so our capital investment program, chapter nine, isn't as robust as you might see other places because we're doing that good work outside of this plan. And then, of course, chapter 10, the financial information, other other system plans, you might find a rate study in them. You might find rates, a schedule of rates. That's not here. We do that outside this. We our financial rate planning is a separate effort. It's a more frequent effort, and it happens it happens on a yearly basis. So those are all good differences. And with that, I'll turn it over to Jim to kinda get into the meat of tonight's presentation.

Yeah. Thank you for that. And

we're both you saw the list of all 10 chapters and and the appendices. Altogether, there's about 2,000 pages between the system plan and and the documents that support it. We're just gonna focus mainly on the chapter four parts and IT, which is the system analysis and results. And so we have the four criteria that we evaluate in the in the system. It's the water supply, the water storage, the fire flow, and minimum system pressure.

And I'll just start with the results. Good news is that overall, the water system is doing well. There are some deficiencies noted, but many of these are already being worked on, like the current Maidenbauer South Reservoir project. And before we go through the analysis, I'd like to provide a quick review on service area, our major assets, and the population growth that we're expecting. So our service area covers almost 37 square miles and includes more than just the city of Bellevue.

We also provide water to the communities between Bellevue and Lake Washington except except for for Boards. Boarts. We also serve a small portion of Kirkland to the North and King County on the South. And we used to provide service to the South Cove neighborhood, which has about a thousand homes located in the city of Issaquah, but that responsibility is taken over by Issaquah in 2016. So as Eric mentioned earlier, with the comprehensive policies, we will we wanna be sure that the water system does not limit how people live and work in the city.

Anticipating population increases is a major factor in planning for system improvements. So we worked with both regional and city planners to forecast population growth for the next twenty years. City planners are anticipating that almost 70% of the growth will occur in the downtown, BellRed, and the Wilburton neighborhoods. These are the three neighborhoods highlighted on the map. And and our system analysis, for our system analysis, this information is used to evaluate water water use demand and system capacities.

So we have so we besides the hardworking operations and maintenance crews, these are the primary water system assets that are evaluated in the plan. The three that we we take a look at for capacity are the inlet connections that allow us to draw water from water supply lines, reservoirs throughout the service area where water is stored for daily needs and system stability, and the pump stations to move water from supply source to the reservoirs. Let's get into the question of adequate supply source. For this, we look at two things. First is whether there is enough water at the source.

Short answer is yes. There's adequate supply. Our current water source is from regional watersheds, which are maintained by Seattle Public Utilities. These are the green areas that you can see on the image. They're the Tolt River and Cedar River watersheds.

Bellevue switched from groundwater wells to this regional water source in the nineteen sixties because it was a more efficient and reliable source. Between Seattle's water supply and a new supply source being developed by Cascade Water Alliance, there's adequate water supply well into the future. And the other question for water supply is, do we have enough access to the water source? You can see on the map the blue line that runs up and down through the center and the lines running along I 90 in the lower half of the map. These are Seattle's regional supply lines that carry water from the watershed reservoirs to the communities.

And the red dots are the points or the inlet stations where water enters our distribution system. In the past ten years, we've added an additional inlet near the center of the city and made improvements to one other inlet for more access to water supply. The table on the left shows the projected water demand for the planning years, all of which are lower than the available water supply of almost 50,000 gallons per minute. And next, we look at storage capacity. On the map, you can see circles sprinkled across the service area.

Those circles are the 24 reservoirs or water tanks that store a total of 42,000,000 gallons. This is the water the city uses daily for, for daily operations, firefighting, and standby storage in case there is a supply disruption. The reservoirs the reservoirs we have are grouped into six storage regions. This is because topography limits how far the water can travel through the pipes. The large dark pink shaded area on the left side of the map is the West Storage Region where additional capacity will be needed.

The region that has a downtown, BellRed and Wilburton neighborhoods, which as we mentioned earlier, are projected to have the most population growth. Thanks to previous good planning, the Maidenbauer Reservoir project is already in the works to add 6,000,000 gallons and will address most of the long term deficiency. Construction for this project is scheduled to be completed in 2031. Also in the coming years, it will be important to monitor all areas of the city. Our city planners have given much consideration to where population growth is likely to occur.

But with the state's recent changes to housing laws, it's possible that different growth trends could develop and change capacity needs. For instance, the Newport Hills storage region, which is the purple area on the lower lower left part of the map, is projected to utilize all of its storage capacity by 2046. But this area is already fully developed and mostly residential. If this area redeveloped slower than anticipated, a capital project could be delayed, or we may see an unexpected trend to redevelop as current homeowners look to cash in on their property value, which could accelerate an improvement project. Staff will be monitoring these development patterns, and if necessary, plans will be adjusted to accommodate the unexpected growth trends.

The amount of water that flows from fire hydrants is another important consideration. State regulations set the minimum requirements for fire flow. In Bellevue's fire flow policy of providing 1,000 gallons per minute and fire hydrants meets or exceeds the state requirements. On the map, you can see red and blue dots. Those are the roughly 6,000 hydrants in the system.

The red ones are locations that have an inadequate flow. A lot of improvements have been made in the past ten years to increase the available water flow at hydrants, and the number of red dots have been reduced significantly. Continued effort will still be needed to eliminate the remaining deficiencies, most of which can be done through our water main replacement program. And we look at water pressure within the system. People notice low pressure when there is a weak stream at the faucet or showerhead or the garden hose doesn't spray across the yard.

Minimum requirement is 30 pounds of pressure or 30 PSI. Contour lines on the map represent the varying system pressures across the service area. The blue, green, and yellow colors are good pressure. Orange is on the low end, red is a 30 PSI minimum. The 2016 system plan flagged an area located on the border of the crossroads in Northeast Bellevue neighborhoods where pressure was getting close to that 30 PSI threshold.

In the blow up view on the right, you can see the pressure in that area is degrading from okay in 2016 to the minimum in 2046. This pressure reduction is a result of an increasing amount of water flowing through pipes as population and water demand increase. Staff will be working to address these future pressure deficiencies through our capital improvement programs. An emergency water supply doesn't affect system capacity, but it is an important item for us to plan for. In this region of the country, damage from ground movement during an earthquake is the greatest risk of catastrophic failure.

Both the Cascadia Subduction Zone, which is most often talked about in the media, and the Seattle Fault Zone, runs parallel to I 90 and right through Bellevue, could cause significant long lasting damage. Since our last planning effort, we worked with ESC and city council to develop an emergency water supply master plan, which was formally adopted through city council action in 2023. This plan focuses on improving system resiliency and system recovery following an earthquake. More work in the coming years is necessary to implement the recommendations from that plan, such as developing emergency groundwater supplies, creating a resilient pipe network, or what we typically call the backbone to serve critical customers like hospitals and community centers. So to recap the analysis, here's a summary of the more significant recommendations for capital improvements.

Much of the storage capacity need will be addressed with the Maidenbauer South Reservoir, but to meet all the needs, some additional storage will be necessary near the end of that twenty year planning period. For fire flow and minimum system pressure, these types of deficiencies are often addressed with improvements to pipe capacity during our water main replacement program. We will have to evaluate if a more significant capital improvement is needed to address that low pressure in the Northeast and Southeast areas of the city. And then system modeling is an item that we had not previously discussed, but it's a critical piece of analysis effort. Our computer model allows us to simulate real world conditions and determine the best ways to address system deficiencies.

It's important to keep the model calibrated through hydrant flow testing, which is a time intensive activity for staff. And then the recommendation for emergency supplies to continue with efforts proposed in the last planning cycle. More work will be needed to develop emergency wells and improve system resiliency, such as continuing to develop backbone routes and connecting critical infrastructure and replacing at risk pipe, like aging asbestos concrete pipe with more resilient pipes such as ductile iron, and also strengthening our infrastructure through rehab rehab and replacement projects. Now let's step into policy review. As Eric mentioned, the city's comprehensive plan provides general direction and establishes goals for good stewards stewardship of city resources.

Water system policies are functional and provide more focused direction for system operation and decision making. Our system policies often memorialize long standing operating practices or clarify regulatory requirements or acknowledge regional initiatives. The water system policies can be grouped into three categories, managerial, technical, and financial. Our managerial policies focus on administration and governance of the water utility, including organizational structure, staffing, customer service standards, and emergency response planning. Our technical policies apply to the design operation and maintenance of the water system to ensure clean, safe, and reliable water.

The financial policies pertain to the fiscal aspects of the water system, such as budgeting rate, setting, capital improvement planning, and financial stability. There's almost 50 system policies. We won't cover them all at night, but we'll step through a few examples for each category. These are some of the managerial policies. Policy for water supply source establishes that Bellevue will regionally source its water and consider environment and economic costs.

There's a policy for efficient water use. A whole chapter in the water system plan is dedicated to water use efficiency. And water is a limited resource, and it's critical that we work to conserve it. Cascade Water Alliance leads water conservation efforts for its member agencies like Bellevue. Some examples are offering rebates to replace lawns with drought tolerant plants or going going into schools to educate students on on water conservation or the drink from the tap at city hall event that we had here just yesterday.

And cross connection control is a policy for a program managed by our water quality group to make sure the water and customers plumbing doesn't does not flow back into the public water system and potentially contaminate public water. Here are some examples of technical policies. Policies set the bar for services like fire flow and service pressure, and and often they provide guidance to negotiate competing goals. For instance, the drinking water storage for emergency supply outages. We frequently refer to this as standby storage.

It considers the competing goals for the amount of water stored with the quality of the water provided. It would be great if we had enough water on hand to handle any emergency, but there are trade offs that come with large amounts of stored water. If you've ever opened a water bottle for a drink and then come back to it days later only to find the water is now stale, the same thing happens in the reservoirs. This policy balances the amount of water stored with the rate at which it is used to maintain water quality. Other policies like the one for fire flow or service pressure established responsibility responsibilities or ranges, such as when fire flow requirements are updated in the international fire code, New requirements only apply to new improvements and not the existing system.

And low pressure in private plumbing systems is not always caused by an inadequate public water system. Sometimes the problems are on the private side, and this policy for pressure clarifies what the utility is is responsible for. Our financial policy policies establish the goals for financial stewardship, self sufficient funding, and comprehensive planning. Almost half of the utility's policies are related to finance. This draft of the system plan includes financial policies from the 2023 and '24 budget planning process.

Our our policies are reviewed with every budget cycle. And just this February, staff met with you to review the utility's financial policies and how they align with the city's comprehensive financial policies. Capital investment policies keep rates smooth and spread costs evenly. The city relies on long term planning, financial strategies to fully fund projects and minimize costs by avoiding debt. And system expansion policies are in place to make sure that the customers who benefit from the public water system pay for the public water system.

Rate policies support equitable cost distribution and protect against the loss of capital savings for for sudden cost increases such as spikes and inflation like we've seen in the recent years. And no matter how well we plan, unexpected costs always happen, and the operating reserve policies make sure we are managing a rainy day fund to cover the unexpected and avoid having to put current projects on hold. So for this plan update, we're heading in the right direction. We're not proposing to add any new policies. And so looking forward at the remaining effort to update the plan, the next step for us is to share the draft with our neighboring cities regulate and regulating agencies for review.

We'll also be sharing the draft plan with the community, and that effort will be occurring in the next couple of months. We'll then address any comments, and later this year, we'll bring the final documents back to ESC for approval recommendations to city council. After it goes through council review and adoption, the final steps are adoption and approval by King County and Department of Health early next year. And then we start the cycle of working the plan all over again. And the last thing we just like to hit on is the community engagement.

It's an essential part of the system planning process In addition to more frequent community meetings and outreach efforts to share budget and rates or educational events like the drink drink from the tap at city hall event this week, we'll be reaching out to the community both in person and online to share about the water system plan. This summer, we'll have a virtual open house community meeting. And later this fall, we'll be back back to you with an update on the community and agency review efforts. I will also be getting the message out online through newsletters and social media. And, of course, the community is always welcome to reach out to staff at any time with questions or concerns.

So with that, any questions? That was a lot. It was a lot. Yeah.

I had a question, and it has to do with, you know, how we're addressing climate change. And this is coming more from a source perspective, which I understand is not really in our purview, but I am curious how conversations with Cascade and SPU, you know, what are they talking about relative to how they're preparing for changes in climate over the, I mean, really thirty, fifty year projections for source of supply. And just to give you perspective, thirty years ago I was working on power supply forecasts for the Colorado River, And I never, in my wildest dreams, would have thought I'd see pictures of Lake Powell and Mead And Glen Canyon Dam looking the way they are. So it's frightening to me. And, of course, I'm not in that area, so people have been working on it, I get get it.

But I'm just curious what the conversations have been with SPU relative to preparing for climate change.

So as as you mentioned, that the lion's share of that work will be done by the regional providers. And so, but even as early as today, I was in a Cascade Water Alliance meeting in which we were talking about the drought that we're currently experiencing and how that drought may become more normal than it has been in the past. And that is, I think, a direct impact of climate change. And so, our our job is to make sure that we're staying aware and active in partnering with our regional suppliers and making sure that, we're adding good input when when when asked, and and making sure that they're planning for that future.

A follow-up. You know, when we say there's surplus based on our is that based on a sort of average, you know, weather condition type of demand profile? Or

So when you were when when we're talking about the daily, how many how many mill million or how many gallons a minute we can provide?

Yeah. And the forecast is at twenty forty seven.

Yeah. That's just the capacity of our inlets to bring water in from the pipeline, assuming the pipeline conditions

Well, that's our capacity. Okay. Yeah.

That we that they are providing. And so if there was an incident that lowered the pressure in the supply line, then then that would become possibly an issue for us. But we'll we'll work and make make sure that we're partnering with SPU and Cascade, and in the future, Tacoma Water to make sure that we can, as best we can, plan for any of those future challenging conditions.

Yeah. I think it'd just be good to hear, you know, when we talk about water supply, and I I know it's not it's the regional supplier, but because climate is such a hot topic nobody intended. I guess it'd just be nice to know what's being talked about on that end. Thanks.

Can you give a little more detail on how you plan community engagement on this plan?

We can try. We as you as you're aware, we are doing all three system plans right now. And so we are we are working with Michaeline to make sure that, first off, that we're not hammering people with with outreach opportunities that may seem a little confusing to them because Right. I'm sorry. Is is it we just did a system plan.

Oh, that was water. This is sewer. And so we're we're trying to coordinate all of those outreach efforts to make sure that we're most effective use of of the citizens' time and our resources in reaching out and trying to get that input. And so, yeah, like like we had said, I I will say that because the water system is such a mature program, and as as you noticed, we are heading in the right direction and there's really no course corrections, I mean, thank goodness, that we don't have a a huge problem to try to address, that the outreach for this isn't as, dynamic as, for instance, the stormwater system plan, which has a bunch of ancillary things that we can talk about, like how much do we wanna do stream improvements. It's not required, but do we wanna do And so the things that we do for water, we have to do because we wanna deliver clean, safe, and reliable water.

And so, we will be doing, the required amount of outreach, but the it's just not as dynamic of a problem to address Okay.

I get that. Yeah. Thank you. Okay. Other comments?

Instead of kind of a meta question, you talked about the the contrast between the process that we have here and our, and others and elsewhere and the frequency frequency with which we're doing this and reviewing. So given that there are no changes, so I wonder how do you feel about the frequency that we do it? Are we doing this too frequently?

No. I I think that the the good work we're doing, like, well, I should ask the planners who just got through preparing your budget because it's a it's a large lift. But, I think every two years is appropriate. I think it it fits our biennial cycle. I wouldn't say we're doing things too frequently. I'd say we're we are ahead of the curve for certain. I mean, I don't know very many of our neighbors that that do the good work we do with the frequency that we do it, and it it just makes things like developing this plan, more, straightforward because we've just done all this good work in the interim.

Well, the the system plan is a regulatory component as well in every ten years.

Yep.

Well Thank you very much. Thank you, Jim and Eric.

Thank you. Alright.

Next new business item, the 27 to 32 utilities early outlook rate forecast.

As Matt, good evening again. As Matt, gets the slide presentation ready to go, I just wanna I'm here at the table just for a just for a moment to highlight a couple of things about the early outlook rate forecast that you're gonna see tonight. Couple of things. The first is that, the forecasted, rate increases that you see and the typical monthly bill, information that you're gonna receive tonight does not account for the sewer cost of service or equity analysis recommendations that the ESC provided to the council last week and were unanimously approved. So even though they were unanimously approved, we did not have time to incorporate them into the materials that you have this evening.

That said, Matt has prepared some bill estimates that do account for those recommendations, and so you he'll share that with you tonight. The second item, also sewer related, is the early outlook rates forecast does include, as you may expect, the rate projections, the, most recent rate projections for King County wastewater treatment division. That said, yesterday, we were made aware of King County wastewater treatment division needing to revise their twenty year forecast. So they've revised their capacity chart for 2027, which resulted in some minor rate adjustments, but rate adjustments nonetheless in their twenty year forecast. That includes years 2031 and 2032.

And in those years, specifically so I should say there's no change to 2027, first and foremost. But what you would see, not included in the materials tonight, there was no time, We have slight adjustments in the rates for 2031 and 2032. Whereas their, rate forecast that we have included, I think it was 11.25% in each of those years. King County increased those rates to 11.5% in each year, so a quarter of a percent increase. There's additional rate adjustments, I believe, in 2046 that whereas in the forecast that we have, in in their twenty year forecast, it had showed a 0% increase, so no increase in 2046.

The adjustments that they made us aware of yesterday now result in a point 25% increase for that year. So, again, the materials that you have this evening do not reflect those very recent revisions. However, as the process moves forward and King County does adopt the rate proposal for 2027 and and, obviously, the rate forecast that they have, you'll have opportunities to receive revised materials from us that will include those final rates that they project.

Great. Thank you. I think it's on already. Okay.

Evening commission commissioners. So I'll start out with, tonight's presentation is not about predicting the future. This is a forecast. So but we're not doing that. We're I I like the quote that, a forecast is not about predicting the future.

It's about giving us information today to make meaningful decisions about the future. And so with that in mind, tonight's presentation is really a continuation of discussion we've had over the last several months, of preparing for the 02/2728 budget. One of the first steps in developing that two year budget is to look out six years, so that we are setting rates for a two year period that won't result in us falling off a cliff in year three or year four. So back in February, we had an overview of the city's financial policies. And then in April, we provided the commission with the 2025 year end financial report for the four utilities.

In that report, I provided the estimates or provided the results for each of the four utilities, and we mentioned that for the water and sewer utilities specifically, they did have relatively strong financial years relative to the budget, and that was tied to higher than budgeted water sales. Then in April, Dave, back there in the audience, hiding back there, he he he and Barol provided the commission with the six year capital improvement program, which is a part of the rate forecast you will see tonight. They highlighted several changes from the previous capital program that are anticipated to increase the cost for the next six years. Some of those cost pressures included over programming of the water main replacement program, which is a good thing, projects that were in design in the last CIP that are now in construction. You tend to spend more money when projects go into construction versus in design, and then some revised scopes for some major projects.

So tonight's presentation is the commission's first look at the rate forecast over the next six years and is based on our latest operating and capital cost projections. We will provide you all with two more rate forecasts through this process, one towards the June and then a final one in September. K. We get more information, we're able to to to fine tune, the rate forecast. This is, about a thirty minute presentation including questions, I hope.

So but please interrupt me as we go through this. It's it's not gonna be as a as a sequenced as the sewer cost of service discussion, so we can start and stop as needed. Similar to previous budget cycles, I'll summarize first the commission's role in the budget review and rate recommendation process. We'll then recap the city financial policies that are specific to rate making. I appreciate Jim and, Eric's presentation.

They talked about the financial policies referenced in the financial plan. You know, it's just it's it's good to see that there's integration, across the system. I'll then talk about the key rate drivers for the six year forecast, and those will be primarily focused on our wholesale contract contractual increases tied to the cascade water lines for water supply and for King County wastewater treatment, and disposal, as well as the city's long term asset renewal and replacement strategy. We'll wrap up talking about the planned, outreach to the community over the next several months through the development of the budget as well as the the final approval by city council of the budget inmates. So the commission plays a critical role in the development of the budget.

The council, similar to the sewer cost of service work you all did, relies on the commission to thoroughly review and vet, the budget and the rate forecast. And then towards the end of the budget process, we hold a public hearing. So you all hold a public hearing, to and then formal vote is taken to recommend, the budget for the next two years and the rates. On screen is a graphic that I shared back in February on the city's financial policies as they relate to rate making. I want you to focus on that bottom row.

When we set up the rate forecast, such as the one you will see tonight, we are focused on those five boxes in the bottom row. One, that our costs, that we account for cost equity. And so I'll talk to the sewer cost of service results and how they affect the rate forecast looking forward. We are incorporating the ESC's recommendations in these early numbers on expanding the bill assistance program. Consistent with city policy, when we are showing cost increases to from King County and Cascade, we're showing those assumed to be passed through to our customers.

And so we're not, for lack of a better verb, cannibalizing our local system from the cost pressures of our wholesale customers or wholesale cost increases. And then, we evaluate rates on an annual basis. Typically, rates are set, though, on a biennial basis. And as you'll see tonight, our goal is where we can to have steady gradual increases despite cost that may not be gradual or or, steady. We use these policies as well as a standard industry methodology to develop the rate path.

The rate strategy evaluates changes in the utility's operating expenses and capital expenditures as well as anticipated changes in revenue sources to craft this rate path. So on the the numerator side, we look at our changes in wholesale operating costs, our local operating side, the contributions to our reserves, both operating and capital reserves to meet those financial targets, any debt service if we had some, and then any net cash flow in addition to, those expenditures. And we're gonna divide that by our rate revenue that anticipates future growth but not increasing rates. So, basically, rate revenue at existing rates but with future growth. If we see new homes moving in, we will generate more revenue even if we held rates constant.

And then we also deduct from that any nonred revenue, most notably interest earnings, because we don't either increase rates if we can rely on that money from other sources. To give you an idea of context for the size of the budget and the composition of it, we typically explain the budget through, a tale of two cities. On the left side, I guess, is London. It's internal drivers. Those will be things that, internal drivers are the local operations and the transfers to the renewal and replacement reserve to support the six year capital improvement program as well as the long term asset replacement program, and that comprises about 51% of the operating budget.

The remaining 49% on the right side is largely influenced by external factors, which include the wholesale agreements with King County Wastewater and the Cascade Water Alliance. The remaining portion are the state and local taxes and support services from other departments in the city. We pay our fair share for services from the city attorney, human resources, and so we have to pay it. Interfund is the wonky term. Interfund expenses to to pay for our share of those costs.

The following, several slides will highlight now some of the key main rate drivers for the next six years. Earlier this year, the Cascade Water Alliance updated its cost estimate for phase one of its long term supply program. This ten year capital improvement program sorry. Ten plus year, include the transmission line to connect the Tacoma water system with the cascade system somewhere near Issaquah. The previous cost estimate for this program was based on a preliminary evaluation and completed more than ten years ago.

So due to changes in steel markets, and development in the region, the new cost estimate is higher. It also accelerates some of the capital projects earlier on in the forecast. In March, Cascade provided its updated rate forecast for all of its members, including the city of Bellevue, and the revised rate forecast for Bellevue is around 9% per year through 2040. These cost increases translate to a 2.7 to 2.9% rate increase to the retail customer each year. We were expecting anywhere between 46% each year.

And so I can we can provide the actual cost estimates and the changes to the cost estimates from the cascade supply program. They've done a lot of work in the last several months to both explain what changed, both the scope of the project, the timing of the project, and maybe some of the assumptions in the previous cost estimate that really aren't holding, no pun intended, holding any water today. So, a classic example today is, still steel is expensive now with, both there is no difference between domestic and international steel prices due to tariffs, and that has completely changed the construction industry, in terms of the cost of steel. Okay. Any other questions on this one?

We can share that information. I don't wanna quote or or make up numbers on behalf of Cascade. They have done a, I would say, phenomenal job of documenting, the changes between the the two capital cost programs.

Wonderful.

You were you were forecasting a lot of.

Yes. Yep. King County's bowl filled sewer treatment rate over the next three years is generally on par with the forecast provided by the county last year. It is double digit rate increases, but it's the same double digit rate increases they provided to us last year. There are the rate increases for the next latter three years of the forecast are slightly higher than what was provided to us last year.

Of all the rate drivers facing Belle Bellevue, the rise in wholesale sewer treatment costs is the largest driver. We are forecasting, these cost increases to translate to a 6.2 to a 6.9% annual impact to our retail customers.

You know, say it, obviously. But do the it's less clear to me what the increases are for. Like, with Cascade, I get it. They're building its big pipeline. But for King County, I I had heard in the past it was nutrient removal's coming. Nutrient removal's coming, but I never I don't hear that now. So I keep thinking, is that still coming? Because that's gonna be a big number. So what is what are all these current increases for?

Sure. And so so for context and for preparations, King County will be coming to Bellevue City Council next Tuesday, to provide that narrative and explain their the twenty year forecast. I can speak. So I sit on the on the counties. I'm gonna I can't spell out the acronym.

It's MUPAC. It stands for something. I promise. I serve on their rate and finance subcommittee, and the main rate drivers over this next six years are in re response to regulatory pressures, for combined sewer overflows along the mouth of the Duwamish. A project that will cost upwards of 3 to $4,000,000,000 and through a consent decree must be completed before it's before 2040. I can't forget the exact year. The original consent decree, I think, was in 2009. It's been renegotiated and resettled several times since then. I believe 2009 was the first.

Yeah. That's important. Let's say anything. There we have it. Let me start this.

Say from an a so you head off. I agree. Can't so so Doug Wastewater will be here next Tuesday to describe those pressures. Yes.

And then back up there.

Yep. Here we are. Yeah.

And I I can speak to some of the work that, the the cities and special districts in coordination with the county are doing in response to this. There's an interest in the rates and finance subcommittee to move beyond, a one year rate setting process. Some of it is tied to county code, and some of it's tied to, in fact, state law in some cases. But there's a need for a longer term thoughtful rate planning, for sewer treatment rates, so that provides a longer runway for cities and special districts to create rate paths that are smooth and gradual. There's a need, expressed from the parts the cities and just special districts, for a long term asset management and renewal program that looks beyond just responding to regulatory pressures and things in the next five years and thinking much longer beyond that.

Here in Bellevue, we're not we're not, it's not a foreign concept here in Bellevue. It is likely, it's gonna be a hurdle for the King County system to get to that point. It'll take several years, to move beyond that. Yeah. It'll take decades. Yes.

Right. Yeah. So we not a video of my friends.

So the that that process is gonna take decades. Right? So what we can control then is our response to it, which is a coming back to our principle, gradual and uniform increases. And then that's really what I want what I wanna see. I I don't want unpredictability.

That's what the that's what I think our ratepayers are going to, I think, rightfully respond to is and it's going to appear that we aren't on top of this. They the Nuance that we are passing through cost that we can't control is going they're not going to think about it in that way. They're gonna want that predictability that we promise. It's within our power to deliver it. The tough message that hard conversation we're going to have to have is the because we don't know what this wholesale cost is going to be, we have to set we have to set rates such that they they we have a predictable path.

If we don't do that, we we trade we we trade that hard conversation for unpredictability, and it's going to get way worse. So I I think we have an opportunity now in the next few months to get ahead of this. If we don't, I I don't know how I don't know how to fix it. If we if we don't do this in the next four months or November, we're we're lost for years in the future.

And, well, any other comments on that one? We shift gears. We're still talking about rate drivers, but I'm gonna talk more about the local side, and rate drivers on the local side of the city's, utilities. Supporting the six year capital program and our long term asset management program continues and will continue to always be a rate driver. And now to that being said, we take a a prudent and equitable approach to replacing assets that sets our, the city apart from so many utilities in this country.

Rates that customers pay today include their fair share of cost to replace the assets that are in service today. Now how this portion of a customer's bill supports the asset management plan or the it really is specific to each utility. Utility is an active replacement like our water utility. We'll use a larger share of this funding to support near term capital projects. And conversely, utilities that are moving into active replacement, like our sewer and our storm water utility, will accumulate this funding to be used in later years as those assets come up for replacement.

You'll see this pattern play out here in the next three slides. I'm gonna use the water utility as an example first. So the first thing I'll point out is the dotted line, along the gears. That is our capital spend plan that, Dave presented last month to the commission. You can see our capital spend.

It goes up and down every year. Our spend is lumpy, and we can't set rates, based on a a a lumpy forecast like this. It would cause sudden spikes and increases in rates followed by sudden decreases in those rates. So we rely on our capital reserves, that blue section of each column, to help smooth out the spikes in our capital spend each year. In addition, we set aside rate revenue each year, and we transfer that amount to our asset renewal and replacement fund.

Some of that funding goes to support the construction of that year's capital projects. Whatever's left over is deposited into the asset renewal and replacement fund for future projects. And so I'll point out over the next from 2026 to 2030, that green box is our annual contribution to the capital program. What you can see is it's all going into current capital projects. As we move into twenty thirty one and thirty two, a portion of that annual contribution is itemized net gold bar exceeds our capital spend that year, and we will be putting that into the reserve for future years' capital projects.

This is what you will see in a utility and active replacement. We're using a lot of the money each year to put it right back into a capital program. Now if we compare that to our SUR utility, our capital program for the sewer utility that that that Dave's presented last month, we're spending between 8 to $24,000,000 a year in at in current capital projects. But we are contributing upwards of 20 to $40,000,000 a year into the asset renewal and replacement fund. We have some major assets that will be due for replacement in the next several decades along the lake lines, that we are setting aside money today, the fair share of each customers who are using these systems so that we can equitably fund the replacement of these assets even though they won't be replaced for twenty, thirty, or even forty years down the road.

You'll see a similar, example for the stormwater utility where, a portion of the annual contribution from rates to our capital program, it supports the capital program, the remaining goes into our asset renewal and replacement reserve. I'm gonna back up just a bit here, two slides. So for the water utility, this gradual increase of contributions to the asset renewal replacement fund translates to a rate driver. It will add three to 3.2 percentage points each year to our rate forecast. For the sewer utility, it will add two and a half percent each year as a rate driver.

And then for stormwater utility, it we have no wholesale component for the stormwater utility. It's all managed, locally, and so our capital investment strategy makes up the lion's share of the rate drivers for that utility. I pause. Any questions on on the capital investment strategy and how it translates to a rate driver?

Slide 11. Uh-huh.

Uh-huh. Absolutely.

Spreadsheet behind us. I have. Would be great. I can use the tech term, one key financial terminal. Yeah. Wholesale cost despite the one. What methodology? Exactly. Uncontrollable thing. Outside of the.

I think really interesting. I was told it's going really well. It vibrates. I don't know. You know? But

You know, if you take your deck,

you don't get an option of the rate increases. I think that that the playing back methodology.

I, yeah, I have some thoughts now. I I know I'm I'm pressed for Andy, maybe we can talk after this. I have some some thoughts I wanted to share with you on on maybe one way we could start that conversation. Okay. So now I'm going to move into the six year outlook.

We talked about the key rate drivers. Let's talk about the actual rate forecast now. When we develop the rates, and the budgets, we approach a one that we approach it from a one city philosophy. Even though we operate financially independent of the city's general fund, we receive direction from the city manager just like every other department. Any budget request that we submit is put under the same evaluation and critique, that a proposal would be coming from the police department or the parks and recreation department.

So the overall city landscape that we're looking at over the next six years is from at least a general funds perspective. This is tax supported property sales tax and other revenue is a pretty, a stable revenue environment, so minimal growth in these revenues. As a result, the city manager's direction is that any budget proposal has to ideally achieve one of two goals. One is that we are maintaining existing services that require some level of computer appropriation. So if it's a commitment we made two years ago, let's make sure we fulfill that commitment for the next biennium.

And then while not totally applicable to utilities for transportation and other projects, making sure that we the city stands ready to support growth when it happens in the short term. Our budget proposals are also evaluated against their alignment with the city council's strategic priorities. Of the six, there are four that generally tie to most utility spending. I'll go through those pretty quickly here. One is high performance government.

That is generally associated with our fiscal stewardship and our long term financial planning. High quality built and natural environment generally is tied to maintaining and preserving the built and the natural environment in Bellevue. Community safety and health. Dave and Jim talked about this, providing and maintaining reliable utility services. And then finally, thriving people and communities, stat ensuring that all members of our community have access to safe and affordable housing and utilities is kinda coupled into that affordable housing control.

So to align, our budget requests with the direction from the city manager and with the city council priorities, we've taken some early steps to assess our existing budget and our new requests as well as our revenue forecasting practices. I'd like to highlight some of those, here right now. So our team rightsized, number one, the basis for our rate revenue forecast. These are fine tuned adjustments, you know, that have big impacts on, revenue. And one example of that is we rightsized our commercial water and sewer flow forecast to better align with the most recent customer billing statistics for the utility.

Believe it or not, but 2024 was the first year that commercial sewer flows finally returned to pre COVID levels here in Bellevue. It has taken a pretty long recovery level, and so we've rightsized that forecast. It it translates to higher revenue without a rate increase. That makes sense. Another change is updating our forecast for interest earnings on investments.

Once again, a small change to interest earning rates translates to, rate less pressure on rates. As a reminder, we have a sizable asset renewal reserve, and we earn interest on that reserve. Interest on that reserve helps to reduce the cost or the rate drivers to support the capital program. Another change, is on the expenditure side, our utility managers reviewed their budgets on a line by line item basis. I know this because I went through it with them, identify opportunities, to reprioritize their base budget, and to absorb future cost inflation where possible.

As a result of this, what you'll see in the next meeting to go over the budget proposals, that our budget adjustments for our local operations are focused on new investments, like expanding the bill assistance program as well as a very limited set of adjustments to existing services that account for increases to electricity rates and changes to our labor contracts. So very limited cost inflation that's going to translate to rate drivers on the local side. So the next three slides are the early outlook forecast, and I'll orient you to this, layout, and you'll see a similar layout for the next two slides. The top half of the slide provides the forecast of the overall annual rate revenue increases itemized between wholesale, intel, and local operations in tan. The bottom half of the slide provides the rate drivers in 2027, 2028, and then the average from 2029 to 2032 for the main four main cost categories.

Left side to wholesale, the asset renewal and replacement strategy and in support of capital improvement program, taxes and interfunds, taxes to the state, and taxes to, cities, and then our local operations. For the water utility, we are forecasting 6.9% annual rate increases for the next two years, followed by 7.7% for years three and 47% in years five and six. About 2.8% of the rate driver is tied to the Cascade Water Alliance wholesale supply cost increases. Another three to 3.2% of the rate driver is our capital funding strategy that I went over. The forecast for taxes and interfunds are the most uncertain at this point in the budget season because, budget budget priorities from other departments will affect this number.

And so as they are submitting their budget request and they're either being approved or denied, it will drive results on that in this this third bucket. But right now, we're forecasting a a slight reduction next year followed by one little over 1% rate increases from taxes and interfunds. And then finally, for local operations, it's generally flat over the next six years. The main driver for the bump in '27 is to generate revenue to support expanding the bill assistance program. As we mentioned in March, that was a it will be translated as a onetime rate increase in 2027 to fund that assistance program.

I

work for free. No. Operations would be, yeah, in the fourth bucket. Yeah. Yeah.

Yeah. Is a big part of operations, and there are other costs that you could hold flat or decrease to offset salary increases. But I just wanna I mean, you you guys get annual salary increases. Right?

Yeah.

The staff.

Yep. So, one point of our overall strategy is how can we absorb cost, reprioritize cost on the op on the local side to Yeah. Make it so you're seeing virtually a no no impact to our rates. Once again, our managers went through and looked at historical actuals compared to what was in the budget. In some cases, they got creative, and they've made improvements to the system or to their operations without not without only holding their budget, actually reducing their budget. So

I I I appreciate all that good work. I just wanna make sure that, you know, workforce issues are just becoming more and more pronounced in the water industry as we all know. And it's hard to get, you know, people and keep people and, you know, we gotta train them. We gotta give them the resources. And, you know, I I just wanna make sure we're not skimping on that part

of the

ride. So I can speak. I talked about those limited Yeah. Increases to our operations. One of those examples is, changes to our our collective bargain agreements for overtime pay. And so that is something that we are asking to transit into a rate driver. K. We don't want to absorb those costs into our base budget. There's a real cost that we have to increase, expenses to pay for. K.

For the sewer utility, we are forecasting a 9.9% annual rating revenue increase for the next two years, followed by 11% rate increases in the next two years and then 9.2%. The the main reason why you're seeing a nine nine in the first two years and a higher 11 in the lat in the years two, three, and four, excuse me, is because of those revised revenue forecast. We were able to essentially reduce some pressure on rate revenue increases for the next two years by revising our our revenue forecast. Had we not done that, you would be seeing double digit rate increases for the suitability for the next two years. About 66¢ of every dollar of every new dollar from these rate increases support the cost increases for sewer transmission treatment and disposal from King County, and another two and a half percent of these rate increases per year support our capital improvement and asset management strategy.

You'll see a similar pattern for taxes and interfunds that you saw with water and a similar pattern on operations where that bump in the first year is funding, the expansion of the bill assistance program. And then finally, for the Storm Guard utility, I I always feel like this is these aren't popular comp presentations to give. But, you know, one positive note is, the stormwater outlook rate outlook you're seeing here is a half a percentage point lower each year than what we presented to ESC two years ago during the previous budget process. And once again, there is no wholesale component to the storm water utility. It's locally operated.

The capital improvement program and the renewal and replacement strategy that makes the lion's share of the rating rate pressures. On the operations side, there's a larger bump there in 2027. That's because this is the smallest of our utilities. So a large nominal change in dollars or a small nominal change in dollars can transit to a a relatively high percent increase. In this example, for the next buy in, we have to replace a $900,000 vector truck, and that's it's a onetime expense that is causing a little blip in 2027.

Okay.

Right. So I think I do wanna speak a little bit here and okay. So we bring everything together across the three utilities, and if we stacked all those rate drivers and express them as a typical single family residential monthly bill, what you would see is annual increases ranging from eight to 9% per year over the next six years. Focusing on 2027, the combined monthly bill would increase by about $18, and 10 of that $18 would go to support wholesale. The remaining $98 and 46¢ would support local cost pressures, most notably the asset renewal program and our capital improvement program.

And these are including all three piped utilities, these numb thank you.

On that note, the reason we don't show solid waste is because the city does not set solid waste rates. Those are dictated by our our contract with, our solid waste hauler. The monthly bill, if you go to the far right, we're looking at is each year, the bill would increase. Monthly bill would increase between 20 to $27 per year over the next six years. Scott mentioned that these numbers do not include, the equity adjustments from the sewer cost of service analysis.

Kind of ballpark figures. If if we incorporated those recommendations that were approved by council, it would add $3 to the bill estimate in 2027. So it'd be $251, and it would add a total of $20 by 2032. So it'd be $391.

Just for the slide.

So instead of showing the the I'm sorry. I'm

I'll break it into payment periods.

By month.

Bimonth. Okay. So as it shows on their bill.

Payment period. Family price, actually.

For the okay. The bimonthly rate. Got it. Yep. So it's about.

Which also then answers the question. You you talked about the equity adjustments going up another $3 on that, but only for single family residential because, overall, they balance. The three The multifamily rate

would be lower than the average. Yep. Right. So you'll see multifamily would hover between, on average, would be around that 6% per year.

K.

So in that gold line, you would see a typical combined sorry. For the sewer side, be 6%

on average. Yeah.

When we can provide those, that's a good point,

I think, for

the next meeting. Other comments, questions?

I do have a question about and I think I know the answer to this. It's it's it's about how we balance what we're gonna have to charge for the wholesale pieces versus how we determine what we actually need for the local. And and my concern is just that when we see these larger increases on the wholesale side that we might be sharpening our pencil maybe a little bit too much on the local side and not doing what we have to do because, I mean, my concern is that we're just not even doing enough in terms of, you know, renewal and replacement work, for example, or could we be doing more if it weren't for the pressures of the wholesale side. Right? So, I mean, I'm assuming you guys do these separately.

You know, you do your local budget, whatever, and then you see King County and Cascade, and you go, oh, what does it look like? And

I I will say that for the capital planning, we try to, work that in a separate room from the wholesale room so so that we don't have that temptation to lean the capital improvement program for the local operations, which is one reason why Jacqueline shows up here in January well before we get any wholesale cost forecasts from King County or Cascade. From the operations side, it's a good observation, Anne. And, I would say that we we looked at kind of our method was not to go out cutting, but looking at how have we spent money in the last three to five years, how does that compare to where we think we're gonna spend next year, and how does that compare to the budget we have for those programs? K. So in some cases, the budget we raised it, in some cases, we we were able to reprioritize those dollars.

I mean, I'm gonna always lean on you guys need to do what you think you you need to do for the local system. And if anything, I'd be pushing for more. If if we need to grow staff to do more r and r, if we you know, whatever it takes just because I I don't feel like we're replacing as much as we should be. I feel like, you know, we've got aging infrastructure, aging every day, and it and we're just, you know, behind. And so I just don't wanna feel those that pressure to be cutting.

I mean, I I wanna I know affordability is very important. I I respect that and appreciate you guys looking at that, but there is such a great need for renewal and replacement in this industry. These, you know, percentages are high, but, you know, I think our customers will understand it. You know, we can explain that to them that we're we're placing pipe that's been in the ground

for sixty years. You know? I will add that on the cuts

that we take in operations, for example, operating, The the customer service level is all that lens of the service level is always at the forefront when we look at those. And and they're very,

very

there's a lot of thought that goes in those. Yeah.

Very challenging.

Yeah.

A little too restraint a bit constrained because of the pressure in the muscle.

Yeah. And I can so if I can also alleviate, hopefully, a little bit of your concern because I I share the same philosophy. When we revised the rate revenue forecast, we're looking for is on water water revenue forecasting. You don't wanna be too aggressive in forecasting a hot year that might not happen, but you also don't wanna be too conservative. And so I think we're able to to thread that needle with some of these adjustments so that we are still maintaining a relative level of conservatism.

But it did allow us to generate essentially plans for additional 1 to $2,000,000 in additional resources per year that we could use to support these local changes to our system without impacting rates. And so that's another way that we've managed to still fund the system without creating a rate driver from it.

But the point about service level is very, very good one. Not only is that math hard, glad you guys are out there doing Excel. Repositioning the spend to make sure that we service level. There's as much art science to that.

And Understand. So so spoiler alert in in the the seventh. Yeah. So June June June, we'll be coming back with some of those proposed budget amendments that will many of them are operations focused. You'll see kinda what we're planning for both for next year and also recurring in investments.

So, I mean, when I look at these percentages, I almost want to cover, like, one of my eyes and kind of squint just because what I also see is pain, like genuine pain at rates increasing faster than the consumer price index, faster than wages in any organization I've ever worked in and knowing that many families and individuals are already on the cusp of affordability as it is. So seeing a compound annual growth rate of almost 9% into the future, this is hard to look at. And I and I also anticipated there'd be some tough numbers to look at for rates because of what we've been talking about for months. But it does beg the question. I don't think rate payers are gonna be like, yep.

That's cool. No problem. I think there's gonna be a lot of questions, and that's just with the first increase. You know? And I'm thinking about, you know, the individual that was here tonight to look for, you know, rate assistance for one group of rate payers.

And yet as we looked at earlier in our commission meetings, the rest of rate payers have to pay for any concessions or rate assistance we give to any single group. So there's a limit to what can be done for rate assistance. But I think it it's just asking that question to ourselves again of what is in our control, what levers can we pull with Cascade or with King County. And I'm sure, you know, they're so used to all those questions that everybody's gonna say there's not much we can do. Right? But, these are very tough conversations to have with ratepayers.

Yeah. And and so we'll we'll talk in the community outreach some of the the I agree. And so what we can provide to our our our homes and our customers on a way that they can slow the growth in their bill or have more control. One of the things that we emphasize to the council and to the commission as part of the sewer cost of sewer's work is where we can in our rate design, creating ways where folks have more control over their bill. So if it is getting to a point where it is just it is unaffordable, there are realistic and feasible ways that they can lower their bill.

If they cut back on, you know, the watering the lawns and, you know, some of the discretionary, some of the bigger spending of household water of laundry and running the dishwasher all the time, things like that gives them some power to influence the cost that they themselves experience.

So I just I have a couple slides to wrap up and just going over the the next four months as it relates to community engagement of the rate forecast and our budget. Our goal is to make the process as transparent and understandable for our customers as possible. Oh, that was not supposed to be there. And so to talk about that, what does that look like? We are using a mix of tools to reach out to people where they are, starting with a dedicated web page that's already online.

We are in the process of holding community meetings throughout the city. I was at, Crossroads yesterday talking about our capital improvement program. We have several planned for the next several weeks, at the North Bellevue Community College, the South Bellevue Community College, and then one here at City Hall as well, throughout the day, different days of the week, different times of the day. We'll be doing social media, which allows us to share timely updates and engage with a broader audience, news releases. Lucy was on Bellevue TV last week to give a to talk about cost drivers, with with our partners from Cascade Waterlines and with King County, actually.

So it was more of a a regional discussion on rates. And then our city newsletter provides, consistent direct communication to our community members. What it's going to look like over the next, four quarters is, as I mentioned, we already have a website online. In February this year, we are having community meetings, in person online, and on demand meetings. In q three, we'll move into clearly communicating decision points that were informed by input from our community.

And then q four focuses on providing outreach to our city council, through this process, the public hearing here with ESC, and then the formal reviews from city council. In q one and in q four, we also proactively, out go out to our customers through our billing process, let them know of the upcoming changes, and then once they are enacted, follow-up with any questions that they have. So just wrapping up here. The next month, we have three meetings with this group. June 4, we will be going over the operating and capital budget proposals for the two year budget.

In June 18, I'll come back with that second forecast, so with the latest and greatest information on how that translates to rates. And in July 2, two weeks later, we'll provide you all with the recommendation of the two year budget to the city manager. I won't go through the list. We'll do this bite size at a time, so I'll give you the next step, the next meeting. So, thank you for your time. And I know I went a little over, and I really appreciate the the thoughtful questions, and, I'll try to follow-up as needed.

Alright. And next on the agenda, we're gonna talk about changes to construction connection charges.

Any on technical difficulties? Push it this way. Yeah. That's Yeah.

Perfect. K.

This one's quick. So yeah. Of course. Good evening, Commission. I'm Dave Bish, the assistant director of engineering. And, you already know with me, I got Matt Hopson, our utility's fiscal manager. So we're here tonight to talk to you about proposed changes to utility connection charges. So tonight, we're gonna discuss and get your feedback on proposed changes to utility connection charges, that would require amendments to Bellevue City code. This is informational. We aren't officially asking for your concurrence today.

Our plan is to get your feedback and then come back with an official recommendation in June. So agenda, why we're here. The connection charges, we're gonna talk about why we're here, connection charge background, and then we're gonna identify three challenges and propose changes, for those connection charges. Then briefly discuss the fiscal impact, our community outreach and feedback to date, a summary, and then timeline and next steps. So why we're here?

Bellevue Utilities is proposing updates to utility connection charges. The proposed updates would align Bellevue with neighbors and industry best practices as well as improve affordability, increase transparency, and preserve equity for Bellevue's growing community, aligning the with city policy that growth pays for growth. The three proposed changes include, one, eliminating one of the connection charges, two, simplifying the charge calculation, and third and last, changing when the charge is collected. Here is a background on the two types of connection charges utilities currently has. The first is a capital recovery charge or CRC, and you can think of this as a system buy in charge, which is a fee for new connections that pays the equitable share of the existing utility system.

The second is what we call a direct facility connection charge or DFCC. And you can think of these as localized system expansion charges. So this fee recovers city costs of system expansion projects, such as sewer extensions, from new connections that directly benefit from it. So these are localized expansion charges. Bellevue's utility systems have changed over time.

Connection charges were last revised in the nineteen nineties when the systems were still actively expanding and acquiring other utility systems. Now that the service area is mostly built out and the type of development has changed, it's an appropriate time to revise the connection charge methodology to better align with current development. Now we're let's see. Yep. Now we're gonna walk you through the challenges and the current connection charge methodology and share our proposed changes.

So our challenge one is our direct facility connection charge. Or you remember that system that localized system expansion charge? So they recover our costs of assist expansion projects. For example, a city project to extend the sewer system into a neighborhood on septic would be assessed at local DSCC. Any property with a new connection to that extension would be charged their portion of the project cost.

The big upfront cost can be over a $100,000 per connection, creating an affordability barrier. We have seen prop properties on septic often elect to not connect to the city sewer extension due to the high cost. The city then doesn't recover the project costs, and the existing septic system limits development on the property. In fact, historically, the city has only recovered about half of the cost of these expansion projects from DSCCs. Our proposal is to retire DSCCs completely and absorb those future CIP expansion cost via CRCs or those capital recovery charges.

Retiring DFCCs will significantly reduce connection costs, improve affordability, promote development, and help facilitate citywide expansion projects. Absorbing DFCC costs into the CRC results in only a small increase to the overall charge. Now we'll look at the current CRC calculation methodology. Water and sewer CRCs, remember, that's our buy in charge for new connections, are currently calculated based on single family equivalents or the number of units and fixture counts. While a rational basis for the charge, this method can be complicated to understand and administer.

The cost can increase with no limit on the maximum charge, negatively affecting multifamily housing. So structures with big units, lots of fixture counts, those costs can grow exorbitantly. Our proposal is to simplify the calculation to be based on the water meter size. This is also an accurate way to calculate a water and sewer connection fee based on its demand on the system, providing a transparent and equitable cost structure. Meter based calculations are a regional common practice and allow flexibility for developers to reduce connection costs through water conservation design.

Here is a water and sewer fee schedule for new connections and that would look like based on water meter size. A few things to call your attention to. You'll see the bigger the size of the meter, the higher the CRC amount. You'll also notice the meter size caps the charge. Later, we'll show you how this compares to neighboring cities when we talk about fiscal impacts with Matt.

K. Here's our last charge or change proposed change. And this has to do with the timing of when our capital recovery charge or that buy in system buy in charge is collected. Currently, new connection fees are charged on the property's utility bill for up to ten years with interest, which is often unexpected additional cost to customers. The current methodology is also not aligned to regional common practice.

We are proposing to shift the timing of this development connection charge from the utility bill, which is intended for a u as a usage charge, to permitting consistent with all other Bellevue development fees and aligning with neighborhood cities and industry best practice. This creates greater transparency to the customer, and they have more finance options such as including this cost in their mortgage. Multifamily owners also would then pay this charge as a development cost and not as an operational cost. Now I'm gonna turn it over to Matt, and he's gonna talk to you about the fiscal impact.

There we go. So you can see how the proposed capital recovery charge for Bellevue would compare to neighboring cities capital connection charges for water and sewer. These numbers are all based on a three quarter inch meter size or similar size. As, as Dave mentioned, every other city and our peers charges it based on meter size, so we are kind of the the the oddball or really good ball. I don't I don't know.

We're really the oddball in terms of the practice. Before you kind of start comparing where Bellevue would fall relative to the other cities, it's important to note that, state law does dictate, how much a city can charge for these types of of connection charges. The state law says that you can charge up to a maximum allowable charge based on a formula of of what, the existing assets that you have. But city councils can and oftentimes choose to charge below that amount. So you can charge a maximum.

You just can't go over that amount, but cities may often say we'll charge below that to encourage development, or maybe they they they they're a growing city. And so the charge you see here, are kind of an apples to they can be an apples to oranges comparison because some cities may be choosing to charge full cost. Others may be choosing to charge somewhat below that amount. But this gives you an idea of where we would stand relative to our peers, a little more towards the the lower, average end. The next thing we wanna talk about is, generally, from this change, we would likely connect generate less revenue from connection charges.

However, connection charges have been and will continue to be a relatively small part of our overall funding source for the utilities. Last year, connection charges in total generated $5,000,000. By comparison, our rate revenue, what we just talked about in the last presentation, generated $205,000,000. So while we do anticipate slightly less in revenue each year for connection charges, we can manage that difference with existing funding source without having a direct and measurable impact on our rates.

Next, I'm gonna talk to talk to you about community outreach and feedback. It's something we've been gathering through existing and new channels for these proposed changes. First, we have a new project website that details out the proposals. In addition to a plain language description of the proposals, it also includes a timeline and an FAQ based on what we've heard so far. Our customer service and billing team is a source of ongoing customer feedback from both residents and developers who contact us when they're surprised by connection charges appearing on bimonthly utility bills.

We also took the opportunity to collect feedback directly from our development community as part of the quarterly Bellevue development committee meeting. I'll share a little bit more about this engagement and what we learned. We held a listening session and gathered feedback on the proposed utility connection charge updates from Bellevue's development committee At this quarter at our quarterly meeting on April 8, there were representatives from multifamily developers that focus on senior and affordable housing, single family developers, as well as participation from organizations such such as Master Builders Association and Bellevue Downtown Association. In total, there were 23 participants. We designed this listening session with an opportunity for attendees to learn about the changes and engage with the subject matter experts in small groups.

Overall feedback was supportive for simplicity and transparency, especially for the elimination of the DSCCs and the meter based calculations for the CRCs. There was mixed feedback on the CRC timing change. Some were outright supportive. For instance, the affordable housing developer indicated that current processes, where they have to pay an unexpected charge after occupancy absolute was absolutely the worst timing for them. We know from previous questions received to our customer service and billing team, properties such as senior housing centers have had to allocate funds away from planned programming toward paying for the unexpected CRC charge.

In the same meeting, other developers preferred

hang on.

In the same meeting, other developers preferred to not raise the amount they must finance for developer costs and would prefer to keep it on the customer's utility bill. They did note that Bellevue is the only city where they don't pay at permit issuance. Their feedback was that if the charge timing was changed during permitting aligned with regional common practice, they would prefer the flexibility to have the option of paying later in near certificate of occupancy. An output from this listening session, we've created a published and published an engagement report summarizing this feedback, and it's available on the project website. We've also community communicated back with this community, encouraging them to visit the website, review the FAQ and timelines, and continue to provide any feedback that they may have.

So we sent out emails to them, letting them reminding them about the website. There's a opportunity to enter in more feedback, and we started receiving some already. So in sum to summarize the proposed three changes to our utility connection charges, we wanna increase transparency, improve affordability, and preserve equity. First, we wanna retire the use of DSCCs and absorb those in their capital recovery charges. We wanna change the water and sewer CRC calculation to be based on water meter size.

And lastly, change the timing of the CRC charge from utility bill to permitting. All of these align with regional and industry best practices. Here's our high level timeline and next steps. We're working with the goal of trying to implement this in 2027 and plan to engage city council in q three or q four of twenty twenty's of this year following, both the commission's feedback, and developers' feedback. We're planning on coming back for commission concurrence in June.

So with your feedback from today's information, we'll come back in June, as I mentioned, and gather all of that to present for a final concurrence. Any questions? Okay. Hold

on. Please.

From a storyline perspective, can we jump back to the competitive intelligence slide? I guess that's not the right term.

Sorry. Which slide?

The chart with the different cities?

Ah, this one.

That's not competitive. Wrong wrong term. I don't wanna over index on what we're doing versus cities that and I I think you I think you need apples to oranges. Right? Mhmm. And I know in the in in the all up budget review, we also compare against other cities. But the point you made when you when at the beginning of the evening was we do things better. Right? We're providing a different level of service, not only quantitatively, but qualitatively as well. We're better in planning.

So I don't I don't wanna get I don't want the that, I think, right storyline to get caught up in we're charging more or less than Spokane. Right? That's just not that's it's it's intellectually interesting, but without a great deal more data about how we're comparing them. And then once you go down that path, I think you're just gonna be 10 levels of the rabbit hole down into making that that comparison. So it's interesting. I just don't wanna over over index on it. We could we could we could find ourselves taking away the wrong message.

But just to to clarify for me. So is this does this effectively shift the cost from a resident to the developer? Is that is that what's happening?

For the connection charge for the CRC?

But as an effect of this, that that's that's what it's doing? Is that

Yeah. Would it it would be charged by the the developer. Yeah. Yeah. It would be assessed during permitting. So whoever applies for the permit, and is developing that new connection, it would be charged to rather than currently, it's charged on the utility bill of the property owner.

Okay. So that seems like an important shift. Okay. So that helps me.

Touch on the the septic aspect of a home where the property's already developed and they have to get off septic because they can't maintain the septic anymore. Then they're off, in a sense, their own developer trying to bring it up to code, and that absorbing the DFCC into the CRC makes that much more accessible to those homeowners.

So so to follow-up on that, so that's what I'm wondering is about making this kind of change, what kind of behaviors does it encourage or discourage? So that sounds like one example where so that makes it easier or encourage somebody to to shift off of septic, which sounds like we would want Mhmm. Generally. So there are other things like that that this encourages or discourages behaviors from developers or customers, either intentionally or unintentionally affects.

Just speaking from the the region of development here in the King County area. We are the only city that, in the area that puts this bill or this charge on someone's utility bill for ten years. So in every other city in our region where developers are doing business, they are paying that city's connection charge at permitting. And so will it deter or encourage development? The the marketplace near their every every their city is, you're paying this fiat permitting. Yeah.

I guess at some level. So does that does that actually encourage or discourage people from developing here versus if I'm a developer, do I do it here? Do I just go I'm like, oh, screw that. I'm just gonna go build in Kirkland or Spokane or whatever.

Be tough for us to, I think, demise. Then the anticipation is that that this would help spur development, especially by the elimination of the DSCCs, because it'll neighbor enable the city to have capital improvement projects, sewer extension projects, where we can bring it to unsewered, neighborhoods that will then, be able to connect at a much afford more affordable rate, and, they will develop, in those neighborhoods where they currently can't because of the existing septic system. So, I that's what we'd anticipate from the DFCCs. From the changing of the CRC timing, it's tough to surmise whether that would really have an impact on development, especially as Matt had mentioned, this is the way developers are paying for connection fees everywhere else. So

So so it seems like a different way to tell me if this is right. But it seems like a different way to explain what you're doing. One is to bring it in in line with what everybody else is doing, which I don't know if that's good or bad. Like, oh, okay. And the other thing is you're you're mostly shifting it, except for these other because I'm mostly shifting it from resident to developers. And it it's just to me, essentially, I think about I tend to think about things in terms of, like, it's a policy. So what's the effect of the policy you're trying to accomplish? Mhmm. But you guys don't really talk about it that way. So that's why I'm asking these questions.

Like, what is the effect? I understand it's affordability, but it is affordability for some and not for others depending. So that that's why I'm asking that.

Well well, sometimes it's nice to be like the other kids. And so, like like, I would say that that the driving factor behind aligning the timing is because these charges across industry are a condition of development. And so in some of the for example, the American Water Works Association says these are onetime charges, to pay, for the capacity that you will be buying prior to connecting. Right? The idea is that I'm demanding this this use, and and the city has to upsize its infrastructure before you connect so you they have adequate water supply.

That's the theory behind these charges occurring prior to connecting is that, you are buying into the capacity, of the city's capacity for for water or sewer. But that's kind of the theory behind the timing piece.

And so just to continue on Michael's example too. So in that last case, basically, it seems like perhaps one of the catalyst is consumers calling, rate payers calling and saying, hey. Why do I have this big charge on my bill? And And it's not that they that there isn't a real cost that somebody needs to pay. It's just because perhaps we charge differently that it's a surprise.

And in general, maybe just any consumer wouldn't expect to be encountering that on their water bill. So I think in that sense, it's just a little bit of a process change and making sure that the builder, the developer, it's a real cost that they know is going to occur and has been occurring for the rate payers. It's just where it occurs and making sure it's not surprising the wrong people. I guess on the septic tank example, it's interesting to me just I don't have a lot of experience, direct experience with septic tanks, but just understanding how expensive that process is. So if in essence, we would be saying someone who's on septic today can join sewer, and while it's been very expensive in the past, now it's basically they have no cost to join or like, so the the rest of rate payers will therefore pay.

Because there's still real cost.

Correct.

There's still real out of pocket.

So what would be proposed is that, the cost, the unrecovered portion that that Dave talked about on the DFCCs, that that portion of the unrecovered cost be rolled into the connection charges assessed to all new growth. So it wouldn't be borne by rate payers. It would be borne by all new connections. So the idea that the charge wouldn't be so localized anymore. It'd be spread across all new growth as opposed to new growth from block a to the end of block b.

Okay. That that clarification is really helpful. Thank you.

So can I just clarify the who pays? The way I'm thinking about it or at least from my experience is the develop the developer will pay these facility charges, and then they pass it on to the buyer, the homebuyer, right, along with all the other impact fees. And so they're they pay it, but they don't pay it over, whatever, ten years, I guess. And it's not a surprise. Mhmm.

Right? So I don't know if that helps, but that's kinda how it looks. So I like these three changes. I I think may being consistent with what the developer community expects in the region is a win win, I think. I am I I have a question on the the level of the at least the water CRC.

And when you talk about being based on a buy in charge, are you being specific about that in in that it's not gonna capture growth or or it's not based on growth? Because there's a lot of growth happening in Bellevue. And so I I guess I'm just kind of thinking, usually, higher growing communities have, you know, higher, impact fees.

So, this is kind of step one. As as Dave mentioned, we the last time these charges were reviewed was 1996, I think, was the year. And so updating the charges to kind of current and best practice, it's going to take probably at least more than one by change here. And so the first change is let's let's let's propose these three changes to our our our connection charges. To your point, Anne, many cities, including and Cascade Water Alliance and King County, when they develop their connection charges, they also are forward looking to say, what am I building in the future that will support growth?

And and you can include, as a city, the cost of that future project into your current connection charge. But I think that'll be another discussion with ESC later down the line as another potential improvement. But, yeah.

I noted the developers had a preference for paying later in the cycle potentially, and that that seemed to make sense to me that, you know, a permitting fee upfront at the time you give your permits, that's when the city is actually doing work to to to do that, to approve that. The transportation fees I mean, before the building can open, there probably has to be new stoplights and new stop signs and and upgrades to things. But here for the utilities, they're really since we're projecting ahead, there is not really any investment by the utilities department until the first resident moves in and starts using water. Correct? And so

Yeah. It's good. It's a demand on system. Yeah. So

on the system, and therefore, it would make sense to me to have a later charge, like, maybe at occupancy or or something as an option. As they say, if for those developers that would wanna include it with all their other development fees and include that, that would be fine. But I would just be open to making it later in the process.

Yeah. I appreciate that comment, and that is something that we're evaluating. You know, as as long as it's still at some point through the permitting time, we really wanna get it off of our our utility bill usage.

100% support getting it off the water bill. Yeah.

Yeah. Yeah.

K. Any other questions? No?

Thank you very much for that presentation, which brings us to the moment of our agenda. Joe, do we, wanna look at the calendars?

Yeah. Let's do that. Let's see here. I'll get this pulled up.

Alright.

So first order of business, on the ESC calendar. In two weeks from tonight, we do wanna do a field trip recognizing that a few of you are out of town, out of country even possibly. But we do we yep. And, certainly, we we very much appreciate the ones of you who can come. So we're we've talked, and we have four that we expect will be here in two weeks. If that changes, let us know. But that's a quorum, and we would like to get you out and walk you through a few of the CIP projects that are going on. We'll try to keep it as lively and as informational, functional as possible for you. So

But not too much fun, though, for those of

you who are not

quite fit.

You wanna make it still In

two years, you're gonna people around this thing. Alright. And then, so in June, what's not on here is I was reading the bylaws. We will do elections, the first meeting in June, and then operating and capital budget rate forecast. I am not gonna go through what Matt already went through. It's been a long night already, and, he did a great job summarizing all the budget coming. So I'm gonna jump ahead to council calendar. In May, King County wastewater treatment division will be in front of council. You had some questions on this earlier tonight. So if you have a chance to to watch that, that would be helpful.

In June is the bill assistance program update. So, again, some discussion tonight around that early on in the meeting. Moving on, July cascade, we'll be coming in to talk about budget rates and the supply program. And I am going to well and then, let me see here. I may have skipped over in, nope.

It's there. So then in October, budget rates presentation will go to council from all the work you've you've been doing along with our team. November solid waste contract procurement, that isn't something that gets forgotten. All year, that will that'll be being worked on, and then, we expect that to go to council, in the fall. So with that, it's a busy year, and it continues. Thank you.

I would entertain a motion to adjourn.

I move that we

adjourn. Second. Hearing no dissension, the meeting is adjourned at 08:43PM.