City Council - Regular Meeting

Ready to get started with our city council work session. Um, I think everyone is here except council friend Sosa is excused today. So we'll just go ahead and dive right into our presentation.

Uh, I'm Sarah Hudson, senior policy analyst and city manager's office acting in capacity for rest Grayson, uh, operations office. So we shared a very lengthy memo. So we will kind of do a light touch at the front end of this presentation with the idea that we'll leave a lot of time for questions and answers and discussion. But we do want to provide some grounding and context just to make sure we're all on the same page. So in terms of the purpose of this discussion, I really want to dive into how infrastructure requirements affect infill housing development specifically. And we'll talk a little bit more about what that is, and then I'll go into in-depth as well. There's just some unique policy considerations because infields operate very differently than greenfield development. Uh, we do want to provide context on recent changes, including at the state level that really influence the conversation that's happening on the ground. Um, including highlighting some key challenges and trade offs that we're encountering on a daily basis. So where council guidance will be really, really helpful. Um, and we do have approaches that are currently underway that we're doing this year, some kind of administrative action. So we'll kind of outline that in more detail today. So council gets a sense of the things that we're already moving forward to address some of these challenges. But then there's some more new year policy and funding considerations, some concepts that we put forward where we'd really like to get council guidance on do we want to advance these things and what priority, just so we know how to develop board plans accordingly. So what we're really looking for tonight is some of that guidance on some of the trade-offs that we're encountering and direction on those longer term policy approaches. So here are some key value questions really at the heart of this discussion. of boil down to what's on this slide and a little later we'll have some more specific questions that drill down a little bit deeper that are a little bit easier to provide guidance on but just for council to be chewing on as we kind of go through the presentation so some things that we're really thinking about at the heart of this discussion should infrastructure requirements be tied to project type or project impact so for example three units all on their own separate blocks through a middle house and land division, or a tri-flex, you're talking about three units, but they have different kind of requirements associated with them, but is the impact mostly the same? What are the considerations there? In general, should every new dwell That's kind of a key trade-off that we think about. And when should infrastructure costs be shared more broadly? So we'll get to kind of dive into that more in a little bit, but kind of that roles and responsibilities So just quickly, the agenda that we'll go through today, again, we're gonna try to, you know, we endeavor to move through this pretty quickly just because of the read-ahead materials, but we will kind of talk about infill development, how infrastructure requirements work today, some of that context. We won't dive into the case study highlights, but we do have a few options here in case it would be helpful to ground some of the discussion to kind of look at a particular example, and then we'll get into that discussion in just a bit.

in terms of why we're having this conversation now so first and foremost alignment of council goals so

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

Thanks, Sarah. We're going to share slides as we go through this presentation and I'm up next. So I'm going to get into a little more of the details about what we're talking about and what is infill development and start there. So there's a description of what infill development is on the slide and it's development occurs in areas that are already developed and served by existing and often aging infrastructure. A broader definition of internal development, which says it means development of vacant bypass lands located in areas in an area that is already developed. So pretty pretty clear what infill is. It's usually. on a smaller scale. The key characteristics are that it occurs within built-out neighborhoods. They're smaller in scale, usually about an acre in size or smaller, constrained by surrounding development. And this is an important point that Sarah just brought up. It's reliant upon older infrastructure. And you'll hear this theme throughout this presentation. We're seeing today, the permit staff are seeing today developments that we didn't see five, six, seven years ago. House Bill 2001 was passed by the legislature in 2019, and that allowed significantly more density within the existing neighborhoods than was anticipated when those neighborhoods were built. For transportation system, it's not that big of a deal because a lot of traffic can fit on a road. However, for sewer and water, those pipes that are buried under the grounds, There can be deficiencies in providing those, not only in just the size of those pipes, but also in the age of those pipes. Some of them have been in the ground for close to 100 years in the older parts of town. It introduces higher densities than historically planned, and then because of that, and because of the scale of what we're seeing for these infill developments, which can be An existing single family dwelling turned into a duplex or a triplex you're adding 1 or 2, or maybe 3 units. So, spreading the cost of upgrading the older infrastructure and extending that infrastructure on a per unit basis can be challenging. And that's what we're talking about things where we don't end up. We don't get the infrastructure or the housing because it's out of balance for what we're expecting the developer to extend. The next slide, I'm going to contrast the infill development with greenfield development. We don't have a definition for greenfield development. We use that term quite a bit, but essentially what it means is larger scale developments Classic example of these are our expansion areas where you're seeing master plans come in for areas that were agricultural. They're rural. We annex them. We're, we're extending brand new infrastructure into those areas other other areas. And this is where it gets a little bit interesting where you think about what I just talked about for info development. Think about the timber yards that was actually a industrial site for a while. However, and it's being redeveloped with a significant number of dwelling units turning to residential. We would consider that to be more greenfield just because of the scale of it, because all of that new infrastructure that's going to be built in there. It's not really looking into it's not extending or hooking into the older infrastructure. It's large enough to almost be considered greenfield, even though it's sort of an input. So it's, as you'll see, the complexities of it are very site dependent. But in general, green field happens on undeveloped land. Infrastructure is built to current standards. Larger in scale, the constraints are low because there is an ability to install infrastructure that meets current standards. And importantly, the cost dynamics is different than infill because there are usually many more units and the cost of that on a per unit basis can be spread out. It makes financial sense and their performance tend to work out a little bit, tend to work out better than the infill. Um, in a bad context, what's the existing infrastructure was built under the older standards, which we just talked about, which makes the info development tricky. And the major reason behind that is because our development code. As many development codes from cities around around the state were written for greenfield development. That's the way. We anticipate most development to happen and so when we get infill, we're trying to apply standards that work very well for a master plan area on a very small scale. And we're going to talk about some details of that that we see on a, on a day to day basis. And I'll say here, I don't go into it a little bit later. Every single 1 of these info projects is different and it brings me a completely different set of factors and challenges. So. Next slide. So how infill requirements work today, you've probably heard the term concept is expressed in the regulations. But the idea is that infrastructure, when a development happens, that the development extends infrastructure not only to serve the development itself, so like where a pipe would come and serve the development, but also extends that infrastructure through the frontage of the site so that the next property along the road or along the utility corridor, can pick up that infrastructure and use it for their development. So if there's a development on a street, it brings infrastructure all the way across its development or across its frontage and ends it so that the next development comes in and does the same thing, extend it, so that that third development along the way can just pick it up and take it across their frontage. So in theory, it's a good way for each development to basically extend their part so that the city grows in an orderly fashion. Where that works best are in large greenfield developments where infrastructure already meets city standards and where projects are large enough to absorb the infrastructure costs. Where that concept becomes challenging is on these smaller scale infill projects because the costs are higher relative to the project size. And then the infrastructure upgrades maybe disproportionate to the impacts just because of the number of units and because there may be additional infrastructure upgrades beyond just that two and three, just because of the age or capacity of that infrastructure. I'm going to now turn it over to Renee to talk about how the permitting works.

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

OK. Well, I'm going to talk a little bit about what we're experiencing, what we're seeing from the applicant's perspective, and what we're experiencing from a staff perspective because of this. So the applicants, obviously, it's going to be cost and delays, the impacts of the construction. There's proportionality concerns, and that gets back to the per unit. If you're able to spread cost over multiple units, it's more proportionate. because in full development we're trying to make so many exceptions it's difficult when we come into like a pre-op situation to be able to advise based on this greenfield code we're trying to apply to an infield infill development and again the unclear requirements we've talked about because each site is so unique from the SAS staff's perspective we're seeing these complex involving rules every legislative session we're getting new types of permitting requirements that we're putting into our local processes. Every project is unique. As Rene just said, we have limited flexibility because of the clear and objective standards. We would like to be able to be more nimble and make case-by-case decisions, but that's a little bit challenging because of the legal framework that we're operating under. Um, it's a time intensive process, uh, trying to put in full development or 5 units or 3 or 4 units on a smaller lot. Um, is much more difficult than putting 4 units on 4 lots in a traditional subdivision where there's plenty of room to put all of the utilities in the stormwater, et cetera. So there's a lot more time per unit spent on trying to. Solve all of the issues that arise. Threshold uncertainties, Renee just talked about. For a regular subdivision, we know what that is, but when it comes in as middle housing, the same number of units, we have different thresholds for what gets triggered. And then balancing competing priorities, and that's should we prioritize the housing or should we prioritize the infrastructure? We want to do both, but sometimes they're self-defeating. And this leads to some core tensions. This is the near-term development versus the long-term system needs that I just talked about, the flexibility and predictability for clear and objective standards, and then the project These these 5 bullet points are going to show up later on during the discussion section, but where they show up is in primarily in right away dedication because we have insufficient rights of way throughout the city sidewalks, whether or not to require sidewalks or to replace existing sidewalks because they don't meet current standards frontage improvements. That's the 2 and through that I talked about a little bit. Utility extensions and upgrades again, the 2 and through, um, and then the site constraints, um, they're everything and is not flat. We do have rock. Um, we do have other, um, uh, constraints within the existing environment that affect infill development. Um, so that does, uh, affect where we get into, like, a waiver or a variance and and how we apply those criteria. I'm going to turn it over to Ben to talk about where we see these in some specific examples. As Sarah said, we're going to try to stay at a high level with these and not dive in too deep because there's a lot of details that we'll spend a lot of time on. We're trying to keep this at a policy level.

Yeah, thank you. I think really the most important thing on this slide is just understanding that you can have the same scale of development, triplex, duplex, quadplex, or in this case a cottage cluster on Marshall. And your requirements for what you need to do just depend on what someone did 60 years ago, 40 years ago, when the standards were different and we thought about infrastructure and long-term maintenance in different ways. If you don't have a water main in front of your site, you have the to and through requirement. You have to extend that water main. Same thing with sewer. A lot of the example projects we have are up next to gravel roads. And that triggers sometimes, depending on the scale of the development, would trigger paving, curbs. As soon as you're concentrating stormwater by putting in hard surfaces instead of having gravel, you can have erosion concerns. And so then you're talking stormwater infrastructure. which can also vary depending on what part of town you're in. If you're in Aubrey Butte, you're on a lava cone, there's not really anywhere for that water to go. If you're in other parts of Bend, it might be easier to get the water into the ground and you can have smaller stormwater infrastructure. Depending on where you want to put your quadplex in town and exactly what's going on next door, the price tag for that development could vary drastically. We can move on to the next slide. 4 projects here, um, they actually have. Fairly similar requirements across them for sort of different reasons. 8 and and 5th and Franklin both are missing substantial sections of paved roadway in front of them. So those would need to be. Paved curbs sidewalks installed. It's going to be actually has sidewalk for part of the development, but doesn't. Meet our current road cross section. All of them have some sort of utility extension. And then quick point about costs on these. When we get infrastructure permits, part of our warranting process and closeout is that we get cost information from the contractor in order to scale the warranty and the bonds that we might receive from a development. It's a great way for us to check unit costs over time. So we have a spreadsheet where we track this information. I tried to pick a consistent number that was more or less in the median of our costs for particular types of construction, and then did some very rough cost estimating. So these are order of magnitude, very rough planning cost estimates. They could be off by a little bit, but the idea is to give you a sense of scale across all of the 10 or so developments in the memo. Yeah, we can just skip over these and come back to them potentially later if you have questions.

Can I ask a question about it?

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

So I was not around for the 5th and Franklin permitting process. But my understanding is the original idea was that it was going to be a six-unit development. to hide for the developer to want to continue with that project, and they turned it into a safe-stay area. So when we say modified, they decided that they wanted to do something productive with the land in the short term while they figured out whether or not they wanted to proceed with a six-unit development or something else that might scale more proportionately to the cost of the infrastructure.

Is that something that you see often, that they say, OK, well, then we're going to do x because we can't afford this?

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

Okay. Thank you.

Steve?

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

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

It could potentially. With short-term, we're going to discuss sidewalk fee in lieu, right-of-way dedication. So I mean, we could get into lesser transportation standards. If we skip forward to 8th and Quimby, Try not to get too far into the weeds on this, but if you look at the left image in red, there's a sewer main and a manhole. And then you can see off of that manhole. I mean, everything about this is very out of standard, but off of that manhole, we have two, four inch sewer services going to the last houses on the block. Okay. Um, typically. We would have that sewer main extended through the footage and we would have a lateral perpendicular to those houses to serve them. And we end up with these diagonal lines. It creates. larger utility conflicts and when you have things like water and sewer crossing them, you want to minimize the amount of time that joints in those lines are near each other because it creates a potential cross-contamination issue. In this situation, there are sewer lines on the alley to the north of Quimby. There's a sewer line on the next street to the south of Quimby that would serve all of the developments in that area. The 4 collects here, maybe an 8th. Likely, we could consider something like reusing the existing diagonal lateral, putting several houses on it instead of requiring the sewer main extension. But this is a very, it's, it's. vacant lot next to this that wasn't owned by that property owner, we would probably recommend a to and through extension so that we wouldn't be putting the entire cost of a longer sewer extension through someone else's frontage and then the property's frontage on the other owner. In this situation, there's not really anything else that could develop. Even if one of these existing houses decided to demo and put a quadplex, triplex, whatever on that property, They would be able to get sewer from somewhere else. So it.

You end up in a situation where a 4 inch line is a little bit smaller than we like to see for combined development.

But if it was something that made the difference.

To the applicant in the situation, we would consider it, but you weren't able to do that because the current code doesn't allow it. Because this one is moving forward, right? So what actually happened?

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

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

Something did happen here. So I guess what I'm trying to understand is, I thought, isn't there some flexibility to allow this to move forward? What would happen?

Sorry, I'm reading the long story. We don't have a discretionary process. The discretionary processes that we have are variances and waivers to public improvement standards, which are land use decisions. They have costs associated with them for planning and engineering fees and minimum time requirements for notification purposes. So some of the... by a neighbor. Whereas some of the examples that Rene gave for the middle housing, we're seeing those housing types being approved just through building permits. So if we're able to approve something through a building permit, but we have to then do a land use decision so they don't have to do to and through, it extends the permitting Timelines to extend the permanent cost. Uncertainty.

OK. And I just want to make sure. It was hard for me to see. Those green lines are the diagonals. And that's given me the heebie-jeebies. That's bad. That's not how you should do it. But they shouldn't connect to a mantle.

They shouldn't be diagonal.

But that is what's there. And so what do we do with it that can be safe? That's the tension that we're talking about here. Okay.

Since we're on the two and through, I'm sorry.

Well, okay, I just want to check in that from what's coming, are we going to go each of those five?

We're going to go each of the five.

Okay. So we'll get there. So one of them is the two and through that we're going to talk about, right?

Okay. And just to follow up on this one, I mean, it was a pre-application meeting. Staff are generally reticent to start promising that we're going to make a certain decision on a waiver or a deviation.

We would want a little bit more.

moving along through those discretionary types of decisions. So in this case, we were able to talk about 8th Street, which is an arterial. It should be 100 foot wide right of way. It has a substandard sidewalk on it. And when I say substandard, I mean it should be a multi-use pathway, eight or 10 feet wide. Right now, I think it's four or five feet, essentially around our minimum for any street to remain existing. Or even our local street standards have a six foot wide sidewalk. The right away with this doesn't meet the current standard. I talked to our transportation mobility department about how 8th street works and we did say we would likely support a waiver to leave 8th street at its. Current right of way with, but I, I think all of the infrastructure requirements that we discussed with the applicant. Made them at least nervous enough about the potential for their development to work. So.

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

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

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

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

Underground work is generally going to be more expensive.

Underground is hard, and pavement is expensive. And it's variable, too, because the rock hardness changes depending on what part of town you're in. So that's another way to think of that being sort of unfair. Sometimes you're just going to end up hammering. I mean, you can't blast an infill development as well, because there are houses next to it. You might damage someone's existing home. And hammering can take a really long time. I had a job a few years ago where a contractor

equipment with someone in it the entire time and you're excavating yeah that's very context no that's good thank you good okay neighbors love that too oh yeah absolutely which is very you know that's unique that is sort of a unique thing with bend yeah folks that come here from the valley we talk about why are you so obsessed about water and sewer fish So, some of these things, you know, when the state talks about policy and infrastructure requirements, it's a little bit of a different ballgame here. And then, um, that's folks just don't because they don't see it. They don't, they're not opening up the hood to see what's underneath the surface.

So, yeah, and just like another, like, infield versus greenfield kind of comparison. I've heard from some developers that at the greenfield scale. You can run essentially a rock crushing operation. So you can, um. You know, clear the site, you can blast, which is cheaper and then you can run all of that rock for rock crushing machine and then build your roads with it. Um, instead of what you do in the valley where you excavate and then you contract to the quarry, you bring in rock to the site. Like, you just do all of that work on the site.

And if you have a big enough space, essentially.

Is is the same as the cost of bringing in rock from a quarry if you're hammering the remove rock from a trench like it's. It's just the infill becomes much more expensive.

Yeah. Got it. So back to the council discussion, and here are the five categories that appeared on an earlier slide on the left-hand side. It doesn't say to and through, but one of them, the frontage improvements, we can just kind of consider. Basically to and through, yeah. So this list of things that I talked about earlier, and then we have some administrative approaches to addressing those, and then the first as far as policy or future. So things that we are considering and or working on is from an administrative perspective, Right now we have a list within the development code for roads that we do not want to widen, even though they may show on our transportation system plan it's a collector or an interior street. We recognize that because of the built environment, we do not want to widen them. And so when a development comes in, we do not require them to go through some form of waiver to not have to dedicate improvement right away. An example is like 14th Street. There are other roads in town that should be on that list and so we're actively working The sidewalk discussion This is something that We would like some input on it, but we're also somewhat working on it and the biggest, I guess the 2 biggest things that we grapple with are where there is no sidewalk and there's an infill development that comes in and we said, well, the code says you're supposed to put a sidewalk in. So you need to build a sidewalk, even though there's no sidewalk on either side. So it really never gets used. Or there's an existing sidewalk there, but it's 4 feet wide and it was built in 1973 and it should be pulled out because it's either failing. A couple of panels are failing or it doesn't meet our 6 foot minimum standard right now. What should we do? Or should we replace that with a more modern sidewalk? We'll talk about that on our next slides, but this is the drainage intensity that we've heard about. We, for many years have had this stormwater sort of regulation that you keep stormwater on your property. That's how you treat it. but with infill development our lots are getting a lot smaller so we're looking for other options to do that because we there's not enough room on these lots and that would be to be able to share or to mix the public and the private storm water and dispose of it within the public ransomware Um, we also, if you move in a little bit to the right, this is where we're going to need some direction. Um, so for, for waivers and deviations, um, this is where somebody would perhaps not do a waiver to a, to widen the right away or to install a sidewalk. I think if we can get more direction from council, we can put those into the development code. And your criteria, so that we are not guessing whether or not we're making the right decision when we're asked to make a waiver or deviation or variance. As we move further to the right under policy. Um, and this is where we're going to need some help on on refining those infrastructure thresholds and this is the intensity of the use. So, as Renee pointed out earlier, it was a lot easier when. For from a permitting perspective before that, the hospital 2001, when we knew that a 4 lot subdivision would have 4 single family dwellings on it now. Now, we're not entirely certain if we're going to get, you know, 4 single family duplexes or triplexes on there. So we're not 100% certain about what that intensity is. But the other thing is somebody could build that same intensity through a middle housing and not trigger any of those. And so what it would require a code amendment, but we'd like to be able to. Remove the application type as the trigger and and focus more on the intensity of that development and make that consistent across the board. So it's not that somebody comes out of a pre app and says, well, I'm not going to do a land division anymore. I'm just going to do middle housing. A middle housing, because the land division was going to trigger all of these improvements, even though I'm getting the same number of units. A limited discretionary path for qualifying info projects. This one is an interesting concept where because of the clear and objective standards that we have to deal with and those examples that Ben showed you are examples of how complex and different and unique each one of these infill developments can be. However, the standards that we apply, even if we adopt new standards that anticipate infill development rather than greenfill, still have to be clear and objective. And it's virtually impossible to anticipate all of the variations that that could be so that we could create A clear objective path that everything would fit into. So this concept would be to have a voluntary process where a developer could say, hey, I recognize that this doesn't fit into the clear objective box rather than putting a variety of variances and waivers altogether and stacking them. Let's just go into a full on discretionary process for this where we work with city staff with our design team and we just. figure out a way to make it work. We'd have to fold it into a land use decision, but we could do it, I think, with agreement with the developer, relatively simpler than trying to do it by stacking variances and layers together. So I think that would be a procedural path that staff would recommend that we investigate. Legislative advocacy. Eric Hansler's here. of the 2027 session. I don't have any great ideas to throw under the table right now.

That should be in the funding side. Maybe in the funding side.

Honestly, that really is. And other things like prevailing wage. We could work to use public funds with private. There's some partnerships that maybe there's a lot of discussion that we can have over the course of the next six months and the year after that.

Quick question on the limited discretionary path. That's allowed under current law? We don't need any of them.

I think the keyword was voluntary. Yeah, yeah, yeah, I understand.

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

Uh, and then and then going under the funding category, uh, the program, um, we, we actually have a few sidewalk program in for, um, it has been in place for over 5 years now. There's a lot of larger properties to do land divisions and it doesn't make much sense to put a sidewalk that doesn't really lead to anything out there. So they pay a proportionate calculated cost of roughly what it would cost them to install a sidewalk that goes into a dedicated fund to put sidewalks or pedestrian facilities in Wood River village. The funds did help build a sidewalk that goes from the park that's in Woodward village up to McClellan along the hill there. So there's already some actual. Physical infrastructure that was put in the ground, so we are collecting it there. So the idea here would be to expand that to a more of a city wide program, but that's a project, but I think it would be very helpful for info development.

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

And then the last underfunding is deploying the city funds. And this is fairly wide open. And this would just be to help with the extension of infrastructure. something to replicate that for other areas where there's like a revolving fund. Sort of wide open for the discussions on that one. And then we'll go to the next slide. And so these are council guidance we're looking for to help inform us on our decisions. So here's some sort of problem statements. I'll just go through them and then kind of open it up for discussion. So something to think about is should we require new dwellings, all new dwellings, to contribute to the multi-mobile network, either at their frontage or in in lieu of programs, and we'll expand on that a little bit, but should each unit be required to help participate in the infrastructure? Should we be prioritizing the right-of-way data a road for a while, or are we okay with just requiring the adequate setbacks so the state can come in and buy that property in the future? The trade-off is it gets to remain in the property for the time being, which reduces costs project to build that up because we'd have to buy that.

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

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

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

It's more the improvement of that right-of-way. Okay. Good. I think the struggle is more on whether or not we should require that frontage improvement, that to and through. Okay. Or either picking it up or requiring a setback probably doesn't impact the development quite as much as requiring the frontage improvement. The improvement is the expense of that.

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

Right. Okay. I'm wondering a question, just thinking about how we went through Franklin with a lot of neighbor discussions and trees that were in the wrong place. If we get a dedication, do we think that makes it more or less likely that proper and we're going to end up with a tree or a little garden box or if it's dedicated to us, maybe that's easier or maybe that doesn't matter.

if it's city right away it's easier in the future to maybe say hey don't plant that tree there that's not the right spot okay the more things that get installed there if it's private property the more it's just you have to take care of it later well we changed design on franklin we tried to accommodate right because we wanted to be neighborly but um that is there's a cost to that so okay i'll just go through something we development or are we okay with like a decision tree where if it's built within a certain amount of time or if it's a certain width that it's allowed to remain even though it doesn't meet today's standards. The next bullet is requiring a full frontage improvements for larger developments even if adjacent properties are not fully developed or matching existing conditions. This is a little bit more of a to and through. And this does talk about larger developments, but I would like to have the council weigh in on just generally about to and through with infill development. The exploring the development intensity threshold, we talked about that, tying the intensity rather than the application type to the improvements. And then allowing exceptions to to and through extensions where the adjacent infill potential is very limited. vacant property and some of that stuff could be built into the discretionary pathway right some of those things could be solved that way rather than separate policy okay I thought it might these are really good questions I thought it might be good to go to that one that had kind of everything on a page and just to talk about

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

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

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

Because that's what's required to make this work. I generally support that. I think the key part's going to be the definition of what qualifies for that option. Right.

Okay. As a concept, yes. Okay.

I have a question on the first bullet there, but I support that.

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

Well, so on the expanding the do not widen list, I think the hardest thing there for me is envisioning what do we want the city to look like in 10, 20 years? And so the answer kind of depends on, well, what are we anticipating the future of that corridor looking like? If it's, you know, a five-lane, 45-mile-an-hour boulevard, like, I don't think anybody wants to see that. Well, some people actually do.

Oh, yeah. Don't say that.

But if it was, you know, like, I spend a little bit of time looking at, like, what are the smallest cities that have streetcar systems? Like, sometime in our future, I think that would be really cool to contemplate. But if we're not planning ahead to actually provide the right-of-way for that, it's never even going to be an option. So I feel like I think I'm a yes to expanding the do not widen list with maybe the asterisk being I would like to see a transit master plan or a bicycle master plan that says actually for these designated routes, we are going to set aside some right of way. But for everything else, yeah, let's not... require widening, let's not acquire additional right-of-way. But that's another step that's part of the TSP and a future conversation.

I can speak to that. We've been working on a list for the past six or seven months of streets in the city that do not meet their transportation system plan designation, but essentially function. So there are plenty of streets in River West like this, Collin brought up 14th. There are a bunch of named streets in between 14th and the river, Newport-Galveston, that are like 50 feet wide, or alleys that are a little bit substandard, but there are a bunch of garages in the way, and we're never really gonna get to the full Right of way dedication, we have to go through a waiver process and that costs people, you know, 4,000 dollars to do something that we already know. We don't want to do, but because we don't have it written down, it wouldn't be equitable for us to pick and choose who gets to do it. So we want to lay that list out early on. 8th street is we're not that's that's never going to get wider. There are enough houses in that area and the quarter essentially functions. Um, as I mean, maybe from a bike and pedestrian perspective, we're not quite where we want to be, but it's, it's unrealistic to assume that we're going to. To get to the place that's our ideal in that specific street corridor for certain segments of it.

Yeah.

Um, so it's, it's really just about codifying where we know. We're, we're probably not going to get to the right place and you're going to have a chance to talk about that in the upcoming transportation system plan. That's when we would be talking about do not widen. It's just sort of a preview that that's where we're going and you'll be.

Yeah.

I think that is part of accepting more of existing conditions basically across the team comes up in multiple places probably, especially with the sidewalk stuff and. You know, I mean, on that core 8th street is an example. That's why we're trying to get people to think about biking on the on a different corridor.

Yeah. 6th street. Yeah.

6th street. So. You know, we have to accept some of these limits because we can't, we just don't have the resources and it's practically doesn't make sense. And the conflict that would generate is enormous. So. That I think that philosophy has got to conform to thinking.

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

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

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

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

Yeah, anyone else on the panel jump in if you feel like there's more to add, but I think that there's a little bit of attention between our maintenance funds and development. We're not. Old water main improved or utilities placed in the right part of the street or. 2, and through, we're either putting costs on future developers or putting costs on to our water services, maintenance funds, streets, maintenance fund, or in some cases, you know, if we're talking about things, like, whether or not there's a sidewalk, it's. You know, comfort walking around a neighborhood. Do we want kids to be able to walk on the side of the street or do we want them in the road? Do we want excessive like 88 pathways for people who use wheelchairs versus like, are we are we thinking about specifically kind of housing? Not at all costs, but but with with a reduced investment in the sort of. Like, ideal version of the city, or are we willing to absorb the costs of getting where we want to in different ways? So there's, there's a little bit of a, like, we might get sort of a less good finished product. For citizens to use, or we might be not getting an investment in public infrastructure that would reduce the sort of burden of our maintenance funds.

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

Yeah, I think even with the limitations on notice and who can appeal land, these applications related to housing, as I said, really, the lines are getting pretty close to each other as it is already between middle housing land divisions and the middle housing itself. And in fact, a code package of amendments that Pauline's working on right now that you'll see pretty soon, Um, just explicitly removes right away. Dedication is a requirement for middle housing land division. We have the option in state law and we're just proposing to remove. That is a requirement because in many cases, the middle housing is already on the ground. We get pre apps for triplex and. quadplexes that have been there for 20, 30 years, and they want to come in and do a mental housing land division. They just want to basically put lines on paper so they can be sold off separately. And historically, in the development code for the last two years, it's triggered a lot of infrastructure improvements. both through state legislators and our council priorities. We're just trying to remove some of those barriers if the house is already there. The impacts are on the ground already. So to answer your question, I can't right now think of an immediate downside to doing that, to focusing more on unit count and not whether they're on their own lot or all in one. There's like water and sewer implications for that, which we're also wrestling with in terms of how many laterals they're supposed to you wouldn't capture that through an intensity use the water and sewer.

Uh, some of this is just about. Like, billing implications and what's easier to, um. Like, in the long term for folks, so it generally makes sense to have. Individual water services with meters going to separate units so that people are paying for the equivalent of water. Sure. On the sewer side, we care about it a little less. So, um, the 27th in Wichita. is I think the example that in the memo that speaks most closely to this and we'd be looking at new water services to each of those units and then probably keeping the shared sewer service.

I think one of the things we're trying to avoid is like what I talked about earlier where people come out of the the pre-app and said well i'm not doing that because this application triggers improvements right i'm going to do something similar because it doesn't we're letting we're letting the improvements drive the application or remove that so for example if somebody came in and they wanted to do a three to divide a property into three which is the partition that would require a lot of infrastructure but they could come in and do a triplex which is the same three units and then come in later and do with just a building permit and come in later and do a middle housing land division and then not have to do

the improvements that that for that that partition would have triggered so we just want to sync up just lining it up yeah yeah intensity through improvements and not play this game i would have a patient type of my filing right yeah defendable to me to go that way yeah in terms of the two and through stuff the thing i worry a little bit about are we just transferring some of the cost of future development especially in a context you know if there's one where basically everything's developed and it's just a lot that's different because you're not going to have to worry about that but in an area where there might be future and I don't know the answer to the question because the who pays and when they pay, especially if it's the site serving. I've been trying to think about it as site serving infrastructure versus system or community serving infrastructure and it seems like I mean, water and sewer, I guess, are both. But they seem more site-specific to me when I think about public health and safety. And you want to have good quality water that shows up and is reliable and that we can bill correctly and all that stuff. And the same thing on the sewer side when it leaves the building. So I don't want to just transfer the costs here. And I've even been thinking like, well, maybe the site serving stuff is the stuff that we, you know, maybe there's still discretionary paths. So in the circumstances, we make some changes, but that's what we're focusing more on. And the system serving stuff, we're really backing off the requirements, right? Because we're never going to build the sidewalk network, for example, without a public investment of some kind, in my opinion, it's just never going to happen.

The sidewalk is the easiest one to conceive of there, right? It's the water stuff that's hard.

But that framing of site serving and kind of core infrastructure, water, sewer, and roads and access are important to some extent, right, for sure. So what the answer is to that question, but I don't want to just push the costs off. To 5 years when another infill development happens, and then then have to pay more because we did something today. Yeah, I don't know if you can answer some of the in lieu, right?

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

It's also on the city.

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

I'm sorry.

Go ahead.

I was just gonna say, I also like the, that idea of the, like, accepted to store, but. Doing it for other things too. I mean, having that sort of evolving one, but I think that's a great idea that maybe we could.

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

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

any of them if you were to do one for a water main or some other frontage like what would how would you look like a latecomers agreement or like like a reimbursement district like something that's a little bit of a different discussion i'll come back to that but right now i'll just talk about the wood river village one there's a basically a

A formula for how much sidewalk you would have had to build and then on a square footage basis of that. That's translated into a fee when they pay that when they pick up the building permit and it's based roughly to build it roughly. Yeah, roughly. I mean, you could do that for other utilities as well, or you could set it at 50% or 75% or you need it. It's kind of a policy thing, which if you know that there's going to be some matching funding coming from another source.

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

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

Absolutely. Megan, what were you saying about some?

Well, I just wanted to ask, I mean, those are some things that we do, like, in larger greenfield.

Yes, so what is talking about is a concept where, where a developer puts in a piece of infrastructure that would serve potentially serve the neighbor. And then we have an agreement. There's actually a portion of our municipal code that allows them to install a reimbursement district that's in place for a certain amount of time. And if that neighbor develops and taps into that, then they pay their share back to the original developer. So that those are options. We don't see them used a lot.

Okay. Okay. All right. So back to the questions. And maybe we could take a look at next steps. Can I ask one other thing? Go ahead.

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

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

We've talked about a lot of these, so refining the do not widen list. You're going to be seeing a middle housing land division code package next month from the planning division. The drainage and density discussion is moving through staff right now.

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

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

Instead of having to build your own swell or whatever.

Yeah. And just we're evaluating different options for that. How that would happen in infill developments versus green field, starting an internal discussion about that. And that's actually eventually going to feed into a rewrite of the central Oregon stormwater manual, which we're in the process of kicking off. So a lot of stormwater. discussion coming up i think before we present any of those options or where we're at with council we want to get a little bit further along okay the pathway but okay working with carrie and her team on the developer toolkit through the housing grant

Um, we're also, uh, looking for, we're going to be discussing, um, policy and funding approaches, uh, that can be addressed. I mean, this biennium and we'll be doing goal setting for the next biennium. I think some of these are going to quickly, I mean, just practically need to be pushed off of that. Um, there will be the transportation standards and talked about moving forward, uh, the drainage density, the home committee recommendations, and then again, the pro housing grant.

I don't think we specifically called up a home committee and of course, the state have all been talking about the sort of infrastructure revolving loans and other ways to. Just help pay for the infrastructure. Maybe on 1 side is the regulation and the other side is just funding the stuff to get it done. So, yeah.

In some of the email exchanges I had with a few people in the last day and a half or so 1 of the suggestions per ideas was. Really identifying what are some specific infrastructure investments in certain parts of town that if they were made would reduce the obstacles and the financial challenges unlock and. That's not really showing up here on this list. I'd like to see that show up on this list because I think it can inform. Conversations about how resources get used in the future, or what resource needs might be. How we might spend some of that money if we were able to spend it as a city and do some of that work. via any funds that might come from the state. It just seems like an important piece of data to have to inform the ongoing conversation.

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

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

I mean, what about like, the inventory of vacant lots where there is adequate infrastructure there or there does seem like there could be a lot of opportunity where these are already lower cost. Yeah, that's kind of the flip side. Yeah. Yeah.

I'd also like to point out too. I think we have opportunities with when we have a renewal districts. Humming right and we have resources. That's really what that's a tool for to put that. in and put a corridor in place that's kind of why we did second street yeah right we can you know sort of catalyze not only place making but also remove some requirements for development with use of those funds but i mean urban renewal districts are i mean certainly the central district um the other the other ones aren't so much places where there's as much opportunity for yeah but also to point out the site reinvest the value that you are creating with this project back into that project that can be used to help pay SDCs, put infrastructure requirements in place. So we have some of these mechanisms in place, but I think we're looking to expand that toolbox with Some policy work and some funding work beyond just use of a renewal as a source.

I think what you just said might sort of put in that 2nd, big bullet of like that policy and funding of looking at how to unlock. Are there places that it makes sense for us to just address it and unlock it versus the investment might be water.

They might be sewer, right? It could be. It may not be a huge project, but it might be 8 or 10 blocks and then it might be something.

I would say our Southeast Interceptor is a great example of that. That was a $70 million investment. It was very big, but that is really what helped to address some of the septic to sewer, but also helped to expand capacity and allow for some infill development that we wouldn't have allowed otherwise. in that direction, but we could even be more explicit.

It's fair to say that our GO bond projects are also reducing costs for our developers all around the city, and we're collectively paying for that.

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

Well, that puts a bow on the whole conversation because the reason that we have a GO bond and a TUF and all these other things is to address infrastructure deficiencies because we haven't kept up for various reasons, be they decisions in the past, be they inflation or whatever. important to think about if we are reducing these requirements what that means for the future but i think if i think what i'm also hearing in this discussion is about is about this small scale infill that we really want to get going that is the target here so just keeping that in mind of like we're not deregulating the whole city right we still need development to build the infrastructure but these are the ones that would be really good for us to build for housing reasons, for climate reasons, right? This is what we want to be doing. So I think it aligns.

Is there a tiny TIF pathway that is specific to infill? Yeah, that's what I was thinking. Maybe not.

We did lower that threshold to five. What is it, like, how many units? Jonathan? Four.

Yeah, you can do it with four units. Thank you.

Because of the administrative...

It's hard with administrative burden, but it is possible. But that's something to think about. Is there a way to tailor something similar for small?

Okay.

Sarah, anything we didn't answer that you need from us?

I'm almost looking to you all. I think we got the guidance that we need to move forward. I mean, maybe a general sense of priority of...

You know, yeah, I think I think there seemed like there were some. Somewhat simple things like looking at the intensity and so the application type. Starting to create that discretionary pathway, those feels like those can sort of move forward. Um, I think the, the, the fee and Lou is like, maybe more complicated, right? So I don't know what prioritizing.

Certainly for sidewalks, that's going to be part of the TSP discussion coming up.

So I think there's going to be... Because that's like five years out before it's finished.

It would be a portion of it. It would be part of the overall process because I think one of the things we want to talk about is like... I think you can create a safe routes to school or places where maybe if he and Lou would go, sorry, the program, we have a framework already and we just expand it.

So that's not that hard. I think in terms of where we apply the funds.

That's no, no, I understand, but in terms of removing this obstacle, let's get that done.

Yeah, I think very common. Yeah, I think. Those frontage, how we can reduce those frontage seems like a priority. Right.

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

Yeah, I think we are.

Yeah. I mean, I call it a widen to do not widen list.

All right. With that, let's stop this discussion.

Thank you very much.

This is really, really good work. The background information was really good.

Great prep. Thank you.

More discussions to come. So we're going to transition now to the utility stuff that we do build, what we're just talking about, all the cool systems that we do need to keep our water and sewer going. And we are a little bit behind.

And really, just to preface this before staff presents, so in between work sessions and study sessions. So what you just had was a work session because it is asking for some direction. We're kind of co-creating with you. This is more of an information session. This is grounding information, nothing that we're needing to come out of tonight with some big decision, just general kind of like are we in the right, are you kind of tracking with us. You'll see some general questions at the end. So I think we can cover this and make up the time that we've lost a little bit. Sure.

It's just information. Absolutely. All right. Good evening, Council, or afternoon. Ryan Oster, Director of the Engineering Department.

Brittany Barker, principal engineer.

Jason Serr, principal engineer. Dan Quick, budget financial planning manager. And I'm the designated slide clicker, so this will mostly be the three of them presenting. But to preface this, I was here in May. We were talking about transportation, CIP, focusing on the GO bond and the transportation capital fund. We've ran out of time, so this is our revisit on the utility side. And it's a great segue into what you were just talking about, because I think you were all hitting on it. The housing goal is wonderful and all that increases demand on the system, whether it be an outback with our distribution with our collections or over at the. So, what you're seeing here is a reflection of some of these council goals that are having consequences on our utility system. So, agenda for today is real quick. It'll look familiar. Just kind of the mix. And then we'll hit on the water storm water and water rec funds and then Dan will do a high level introduction into utility rates and we'll just confirm a few council related. Priorities as we roll into starting these higher level utility rate discussions. So, once again, this is really, you know, we do this every year. It's an annual update to our 5 year capital improvement program. So we added fiscal year 31. That actually has been officially adopted now and so it is 1 of the attachments in the council packet as well as some technical memorandums from both Jason's team and Brittany's team. And so reference those, if you would like, and really just making sure we're still in alignment with council goals and with all the other influences we have on our system. So, where we are today, we, in May of 2026, we were talking about transportation and geo bond in June. We actually did do the mid by any budget adjustments that was last week. And so here we are today towards the end of June. Jason will speak on this a little bit more, but we are anticipating the collection system master plan. the wrf facility plan as well as the public facility plan which are separate and distinct things all coming back before you for adoption later this year but because of the needs out there we are leaning ahead we are getting into these already some of that which council has already approved so we're getting a good jump start on that and then Towards the end of this year, in December and into January, we'll start the formal biennial budget process again, and included in that will be a more robust utility rate discussion. So with that, I will hand it over to Brittany.

All right, thank you everybody. As a reminder, I know you've heard me talk about these many times, but we have many guiding documents, but the three on the screen here, the 2021 Integrated Water Master Plan, the 2024 Inconduit Hydrofeasibility Study, and the recently adopted 2026 Outback Facility Plan are all the guiding documents that are generating our five-year CIP list. And some of those key items are resiliency, Capacity with condition requirements, that's growth and then maintenance. Repair and replacement program, and I'm going to touch on some funding opportunities. So I just wanted to give you an update on some of these larger scale projects that are triggering a lot of the discussion from the water fund. Our outback facility improvements, we have exciting news. Our NEPA process was completed last week. So we are moving forward with our town site act process. You'll be seeing more of that in the coming months. We recently awarded the owner's rep contract for that. They're developing an RFP, the request for proposal for design and a construction contract. So you'll be seeing those shortly. That's for the pretreatment and in conduit hydro work. So, later this year, you'll see that. Brick funding the application is due next Wednesday to the state. We are working on that and I know previously we talked about if we're not successful with brick, we'll look at we did evaluate that due to the city's excellent credit rating. Our interest rate is about the same as if we were to go through with general revenue bonds. So. With you does require excessive amounts of reporting and an additional initiation fee. So. We're still exploring lots of options there. As far as Franklin water line improvements go, last month they started night work. That was for water line specific improvements. So that's going, which is exciting. We also have Aubrey inconduit hydro power design. We are at about 90% right now, anticipating final design this fall. And then our construction package will come to council in Winter time of this year, so we're getting much closer there, which is exciting. And then we have the river. Well, 1, we're calling it the renewal design contract that river. Well, 1 building that's adjacent to the amphitheater has settled. And the casing, the outside pipe that goes down. uh to suck that water out is failing so we are working on a design contract to work through that to get that operational right now it's being used for emergency use and intermittent use so all of these things are coming up you'll see a design contract award i think in august for that river well one

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

We applied in fiscal year 23. We were not successful. And then we put together an application for fiscal year 24. And the week before they were due, they terminated the program. But at the end of March, they reinstated the program. So we had to modify our application to the latest requirements because they did change some of the criteria. but we're working with the same consultant that helped us with that last application, and we're feeling very promising. So, yes.

I rode my bike on Franklin today, and there was a huge hole as you're going east just after the underpass, and it looked like some really old pipe. I thought maybe we'd have a piece of it here tonight to show off.

We want to see it. It's a good reminder. There's a 1930s, 1950s pipe that we're still using today.

You want a souvenir?

Yeah.

Not to wear mine.

Thank you.

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

Yes, oh my god. We love Thomas. Yes, yes.

It's your inner geologist. I know.

Whatever this is, it's cool.

It's very fascinating. So we did two core samples along Saginaw. down to 100 foot depth to try to understand if there's any sort of fractured layers in there that we could get some good infiltration. That segment is basalt. There's little gas pockets there from the lava. We essentially, that was at 100 foot depth. We did not get any infiltrating layers in that 100 feet. It's all of that. Yeah, we have a dozen or so dry wells that are up on the Butte we have maybe Four or five of them that work really well and everything else doesn't perform very well We did some geophysics survey, which is drilling 18 inches down putting these probes in and there's ten of them or so on a run and they do an evaluation of what's underneath so they could see if the layers up to 100 feet, and we were using these core samples to kind of correlate between actual and what they were seeing with the colored layers. We were hoping we would be able to put in some stormwater injection wells. Those are the deep underground injection controls in this area. However, as part of all of this geotechnical work or geology and looking up record maps, down to at least 200 feet, if not more, is solid rock up on the Butte. And the edge of the Butte is right along Newport. So the volcanic rock of the Butte is very, very old, two and a half to 25 million years old. and then you've got um the next youngest is the bend pumice layer which we all are hoping to get into when we're doing our storm water work and then you have the tumulo tough and chevlin park tough which you may or may not get some infiltration there so the challenge that we have on this project is we were hoping we could go deeper and get into those well infiltrating layers our design had proposed 56 dry wells all throughout the butte and after we did more investigation it's telling us that that's not really going to help get that water off the butte and and down into the system so we're kind of switching gears with this new information we're closing our current contract because it was a contract from newport so that's been a long time and we're going to go out for a new design contract to kind of explore some creative solutions likely all surface improvements and maybe some land acquisition to get some detention basin spacing which can tie into what you were talking about of a public space where private storm water could integrate together with it send it there yep okay Yeah, and then Barry did a great segue into the butte. He was talking about how it's solid rock and that's what we have discovered in this process. So, yeah, it's unfortunate because it's taking us longer to complete this design, but we feel like we did a lot of investigation here and what we would have proposed would not have been effective. And I think that would have been. Poor investment, so we're excited that we went forward with this exploration. We'll have a little bit more to do to pinpoint our improvement areas. And then, as far as funding goes, we are pursuing the clean water state, revolving funding for South. We do have 2Million dollars of principal forgiveness that we are allocated for this project, which is exciting. It's going to change to half a 1Million dollars annually per city in the future. So this is our last big chunk. THAT WE'LL GET. AND YEAH.

ALL RIGHT. WE'LL TRANSITION OVER TO THE WATER RECLAMATION FUND NOW.

YEAH. RYAN DIDN'T LET ME BRING IN ANY COOL PROPS. I WAS WONDERING IF THAT CAME OUT OF A PIPE OR NOT. YOU GUYS CAN ASK WHERE THAT WAS.

WE'LL LOOK AT PICTURES. THAT'S FINE.

So, yeah, Ryan mentioned that we're actively working on both the master plan for the collection system as well as a facility plan for the, so that's the master plan out there. In combination of those 2 master plans, we also are delivering the sanitary sewer system, public facility plan, the, if you're tracking. So, that that is really the competence of plan level document associated with a master plan that is actually driving the critical path for adoption of all of these 3 plans. If we want them to happen in concert, which is estimated as Ryan said earlier in the fall of this year. Both of those mass plan efforts started in 2024 and so we are. Deep into the effort there, we are starting to consider landing these efforts. We are starting to get into the financial planning associated with the delivery of the solutions that we are identifying. And so through that master plan process. We are looking at the 20 year planning horizon with year 0 being next fiscal year or the beginning of it as we talk from projects from 0 to 5 years. Year 0 is the start of the next fiscal year as Ryan said, we are taking action on some projects, namely the large digester for project that I'll talk about in a 2nd. That's the 1 you guys adopted these findings for a little bit exemption a couple of weeks ago. So, those are coming in, we are doing what we can to take action rather than wait until adopting these master plans before a project is initiated on the collection side. The main 2 aspects that we look at our capacity and condition. What the master plan is also showing us is our continued need for programs, such as the repair and replacement that's maintaining our existing system, making sure it's in good working order. As well as the septic to sewer program, which was mentioned several times in the last agenda item here, but overall on the collection system, what we're finding is in that 1st, near term to 0 to 5 is there are not many. capital large scale medium scale or even small scale capital improvement needs that we have identified what we do have is a southwest sewer phase three which is extension through the romaine village which is a pump station neighborhood and out to a septic area so then those neighbors would have an opportunity to apply to the septic sewer committee for potential selection 5 to 10 years, we're looking at several other projects. Once again, these are kind of in that. Small to medium scale of what a capital improvement project would be decommissioning of the Highland pump station, which is near the North interceptor up there off of. Um, and then some 7 part 7 pump station improvements on the West side of town, just to name a few. But then in the year, 10 to 20 is when we do see the need for capacity expansion within the collection system. The main one here is the East Interceptor, so that's a large-scale project that we would be building off of the North Interceptor that was recently completed, or somewhat recently. So coming down most likely a Hamby Road alignment to then serve the east side of town. And then that does allow the state to alleviate the core or the central interceptor from the flow that that does currently receive. Or even decommission the phase one extension or stubby of the Southeast Interceptor. So that would be what... Yeah, not yet 10 to 20 years and then also on the South end of town really around where the thumb is located. So really looking at some super infrastructure not or down peril or probably where the large scale improvements are going to be happening on the collection side.

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

This is the collections. Great question. So this is all meant to be the collections perspective. Got it. Thank you. And then this is where you brace yourself. So this is the WRF side of things. And so as you mentioned, so digester four shows up in that zero to five-year time period. But backing up half a step here, the key elements here that we want to look at are the capacity, the condition, but also the regulatory. So that is what governs what we have to treat the sewage to. We did just recently receive a new 10 year permit the water pollution control facility permit, which is what the. Issues us, and that says what you have to treat your F1 to. So that was a huge effort that the team did accomplish to get that new permit, which gives us the limits to then know what improvements we need to. And still, so that we can actually stay in here. It's so we also getting that 10 year permit allows us a runway to make some improvements. They typically do a 5 year permit, but we advocate for 10, so we can do this stuff for once we achieved it. And then also there is our repair replacement at the treatment plan on things wear out and do need to be replaced. This is where the opposite of the question side is, it gets heavy upfront and then it does bleed out as we get into that 10 to 20 years. So the initial investment here is 0 to 5 years. I just before hauled waste. Those are that's the project that you guys approved the source for the little bit exemptions for a couple of weeks ago. So we're working through that. Working on a owner's rep contract to get that project going and then we'll go through the and the general contractor. The secondary clarifier for is a project that we will be adding in the. 4th year, 5th year of the 5 year, and then the bulk of that spending will happen then into that 5 to 10 year timeframe. So, those are the 2 different really flow streams, the solids and then the liquids. So, the drastic improvements that just before is prioritized. Then we get into the five to 10 year, we're talking about adding another primary clarifier and another iteration basin. And then in 10 to 20 years, it's really another digester. So there are other improvements necessary, but those are just a snapshot of what we're looking at.

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

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

Yeah. Okay. So, as we are initiating that project, the funding package for where, where the dollars coming from, it's estimated it's in 115, 120Million dollars to deliver this project for just digester 4 and all waste. So, we have had meetings with to see whether the clean water state fund can support it. There are limitations there. So, exploring other opportunities, such as with, yeah, that's where we're getting to. So that's kind of where.

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

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

Ask a question about that as someone who's in the part of town that's on avion, just a reminder to folks that we're talking about people that pay city of bend water. Right and we don't get any revenue from avion. So, if we're in Southeast or some of these places that have been started to expand their population growth is happening, but we're not seeing the revenue. Right. It's an important distinction. I think.

Yeah. Yeah, so absolutely. So that's one of our major drivers. Next up, we have expenses. This is probably the area that we have most control over compared to customer growth or demand. From an expense standpoint, this is our operating and maintenance. This is looking at our personnel that operate the system, chemicals, electricity, the cost of water meters, all the equipment that goes into it. And then obviously, we have the capital improvement plan, which are big capital investments. big chunks of dollars being spent out of the funds. And then lastly, we have kind of the economics of the situation. We have inflation, construction cost inflation, CPI. These are a lot of the inflation indexes we use to help inform our assumptions. But another big one is kind of what's going on in the bond market, because a big part of our capital funding strategy is determining pay as you go versus debt funding. And so what our interest rates are in the bond market will heavily impact what we can afford as we move forward. So we take all those inputs and we have to make sure that what's coming out of the model fits within the constraints that we've set for ourselves or that various other parties have set for us. For instance, debt coverage ratio we have set in our fiscal policy. Basically, this is an evaluation or a measure of how well we can pay for our debt. comfortable with our revenues coming in, paying for our debt service. This is also required in our debt coverage, sorry, debt covenants. When we issue bonds, the agreements that we sign have debt coverage ratios required. Another requirement is in our fiscal policies. We have reserves and I have a couple of the reserves here in kind of that lighter blue. We have an operating reserve. That's about that's a 3 month requirement. 3 months of operating expenses. Great stabilization. This is a 1Million and a half in water and a 1Million in sewer. And this reserve is intended to kind of offset economic shocks. If there were any sort of recession or something, this could help alleviate any sudden spikes in rates. A capital reserve, this is for unexpected maintenance projects that might be needed and this is about 5M dollars in each of the in the water and sewer funds. We also have a debt service reserve that a lot of our debt holders require that we have a certain amount of money held aside to pay debt. Just as a, as a backup. So, those are some of the constraints that we have that. keep us within certain bounds in our modeling. So once we have all these different inputs, we then have these bottom four boxes are the levers that we can pull. So this is our iterative process where we're trying to balance the model and accomplish all those objectives that we talked about earlier. So, the 4 things debt funding again, deciding whether we can pay for things with cash or whether we need to leverage debt. Raising rates operating expenses, we can decrease expenses. We can delay projects programs, that sort of thing. And then obviously, in the, we can look at project scope and timing. We often work with engineers. Is this a project that we can stretch out an extra year trying to flatten any spikes? And so at a very high level, that's how the modeling works. We work with our consultant to do some QAQC each year, and they help a little bit with the balancing as well, just to make sure there's nothing unexpected. But ultimately, out of all of this, we come to our proposed rates. We'll go to the next one. And this is a really cool line graph that I think tells an interesting story. This is our proposed adopted rates for each of the funds. Over the last 10 years, I know it's a lot of very similar colored lines and I apologize. But just to set some context here. So, we, we have 3 separate models for the different funds, and we adopt the revenue increases separately, but we do manage them kind of an aggregate to accomplish those policy objectives. So you'll see, as you kind of go back in time and move forward. There's shifting and kind of what our priority is as a city and what we've needed to invest in. As you see, if you go back to FY17, there was a bigger investment in the sewer fund, which is that red line. And you see water is lower at 2%. That was at a time when the Southeast Interceptor was going in. There was a lot of expansion going on, some renovation or maintenance of different projects. And you see COVID happening in FY20. We adopted rates a month and a half, two months after everything shut down. And so affordability had come kind of to the forefront of what was being prioritized. And then you see us climbing back up and kind of stabilizing at that 3%, and then slowly climbing up as we've been feeling the impacts of construction inflation and just general inflation to our expenses. So all of that said, we didn't include future years. Councilor Riley, you asked about kind of future years and whether these master plans are incorporated here. So much is going to change between now and fall as we get those master plans, those facility plans. There's just a lot of unknowns in terms of what is prescribed in those plans and what can we realistically accomplish and we want to include in our financial models. That all being said, you see the steady climb. There's an upward pressure on rates. With these additional projects that we're hearing about, these additional plans, we do anticipate continued upward pressure on rates. We just didn't want to put any numbers out there to kind of anchor ourselves anywhere when we just don't know quite where those plans are going to land. But that is kind of the long and short of rate modeling. Happy to answer any questions. Inflation adjusted? Yeah, go for it.

Sorry. Are those inflation adjusted or nominal?

So this is just the actual percent. The percent that we increase.

When you factor in inflation, I would say we're there. slightly above inflation the last couple of years, but maybe slightly below. We had years of 8%, 9% inflation in 2022.

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

You can see that the circle line, the storm water line, you know, and 8% isn't as scary as it looks because that's a percent of a very small bill. And then the water funds are really good example. It dropped to 0 in coven and then we adopted the master plan. So we've generally been kind of following what the master plan. pointed us towards. So you see water in the triangle continuing to climb and increase. And if water generally stays at that level, Brittany can build everything she's been talking about. What's going to be difficult is the square, the sewer side, because you can see that rate is dropping down in the last couple years. It's been 2% or less than 2%. That continued rate will not fund what Jason's proposing that we need to do in the master plan. Yeah. Obviously, not looking for any guidance or direction now, but just showing that's where we sit today.

When you're designing the rate, are you required to only include what's in the master plan in terms of projected projects? Is it the capital costs that are going to really drive that rate?

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

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

Well, the WPCF is more about the quality and the treatment of the actual... Waste that comes into the system. It doesn't really master plan. I guess the master, the master plan. Yeah, I will outline this. This is the need in the system based on the housing goals based on density goals based on anticipated growth.

Because I guess my point is just, you know, if we have a $5 million reserve. That's great and we know we've a 120Million dollar project coming. We could have been building up for the different rate structure. We might have building a larger reserve and not have to have the same impact now on rates. So, I'm trying to understand what. You can legally consider in calculating the rates. Is there any limits on that or not?

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

Well, what I think you just said is really important to continue to state in these discussions around that. We try to look at what growth could pay for versus what is a city wide. You know, water quality necessary infrastructure, right? I think that's good to continue to show people that we're being careful about what we're asking repairs to support. Versus what new growth can help support.

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

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

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

The grant's a good example. Like the rates we have today in water can build what we need. if we get some federal or state support on this.

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

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

Good evening.

You were waiting back there.

Just in case. Good evening, Mayor and members of the City Council. I'm Jillian Ochner. I work in water services as a water policy analyst. I arrived at the City in January of 2014 when we were kicking off a major rate structure reform process for both sewer and water simultaneously. For those people who were at the table and watched this happen, it was a big lift. And I just want to be clear, so you have two parts of your rates, right? You have the rate increases that happen, and then you have the rate structure. That's how you collect the revenue. That's required to serve all the needs that you heard about today. Proportionality is specific to how you recover your cost in a way that is proportional to how people are imposing costs on the system. You heard that earlier. And that... intention is tied to we cost allocate every piece of our assets in our system based on how it serves our community. And some of those things are equally shared by everyone. And some of those things, like the amount of water we use and how people peak, as you reference with irrigation in the summertime, is allocated specifically on how much they use. And that's why we have a volume charge in our water. So for somebody living in multifamily who is directly paying their bill which i don't i'm looking at dana we have nobody in multi-family right now who's directly paying their utility bill that i know of in a big multi-family unit so that they don't experience a peaking charge the way a single family residential a unit does if if You are a single family that is that piece of if you use less water your bill will come down and that's tied to that affordability and that's why back in 2014 the City Council made the decision to actually increase the proportion of the bill that was recovered from that volume charge. It used to be proportionally the volume charge was slightly higher than the excuse me the base charge was slightly higher than the volume charge, and they flip-flopped that. So we recover a larger proportion of the revenue in our volume charge, and that allows some autonomy over people's bills based on how much water they use. Does that answer the question? MR.

It does. I didn't know about that history.

MS. Well, what's interesting is I think we still hear from people that we have a pretty high franchise fee, and I would be interested – I know this work is coming, and maybe someone can remind me the timeline on sort of A ratcheting up if you start to go over this many gallons in a private single residence now, it's more right? Like, you're a tier, right? Um, of once you are starting to really, really use water for your lawn or your irrigation or whatever, then then you're going to pay a little more. Um. And I think 1 of the things that. for people who are lower income and would like to keep, conserve and lower their bill, they don't see that much impact. It's because they're in maybe a smaller home or something and they just really can't impact their bill that much. So I know that discussion is coming. Maybe you can just remind us when we were thinking about that restructuring.

And while she's up here, she'll end up here, you've presented with the Human Rights and Equity Commission twice now, and you've had these conversations. I don't know if there's anything you wanted to share about that or all the way through doing that would be great.

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

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

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

or whoever, regarding the growth projections, what is your underlying assumption? Is that PSU population growth? Is that what that is? The only reason I ask is because you say it's driven by the growth plan. Our growth plan's old right now, and we're not gonna have a new one for five years, right? So what are we doing in the interim?

right now so we use psu in conjunction with kind of historical rates for homes so psu comes out every year right so we calibrate that every year and regarding homes that's more stale to the PSU. So the PSU, they're all kind of connected. So the PSU is sort of the base.

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

We haven't leveraged the rate stabilization reserve in any time that I can, I haven't ever seen it touched to this point.

Interesting. Okay. Okay. Thank you very much. Thank you, Council. Appreciate your time. Thanks for all the information.

Thanks, everybody.