City Council - Regular Meeting

Good evening, and welcome to the North Bend City Council meeting for 02/03/2026. Will the clerk please look call roll?

Mayor pro tem Eric Errol Tremolata?

Here.

Council member Brendan Elwood? Council member Mark Jocelyn?

Present.

Council member Heather Cullen? Here. Council member Rob McFarland?

Here.

Council member Christina Rustic? Present. Council member Susan Torgerson? Present. All are present with the exception of council member Elwood who is excused, your honor.

Thank you very much. Would you be kind enough to lead us in the flag salute? Okay. Well, I love seeing a crowded house, so welcome, everybody. And good evening. And, mayor pro tem Trimolata, we'll get right to it. Will you make the motion to approve tonight's agenda?

Motion to approve the 02/03/2026 city council agenda as written.

Second.

Thank you very much. Motion made by mister Tremlada and seconded by mister Joslin. All in favor?

Mayor. Pardon me? Before we get there.

Oh, yeah.

I would like to remove item two payroll to come after the item currently number nine, I believe, on the agenda salary schedule purely as a procedural step that we should look at payroll for January after we approve the schedule.

Thank you very much. We will do that right now. We're just, approving the agenda, and then that's

Stand where we needed to pull it.

We are pulling it. So that is just fine. Okay. We can do that. So it's gonna be down towards the bottom at nine. Okay. Okay. Thank you very much. We're gonna move on to our Need the vote.

Accept it. Mayor, we

need the vote to solidify the agenda moving nine number two down past nine.

Okay. That is correct. We're moving two down past nine. Can we take a vote on that? Let's, all all in favor. So with that? Aye. Any opposed? Aye. Motion passes unanimously. Thank you very much. And we'll go forward from there. So, let's see. Moving on to consent, there are seven items on our consent agenda. But before we go any further, counsel, this is a time when you can pull off any consent agenda item for debate. Anyone interested?

Mayor, this point of order, we did that.

Sweeping them by. Okay. So let's move on to audience participation. If there's any Mayor.

Stop. Oh.

Very Mayor. Okay. Let's adopt the consent agenda as amended.

Yes. I move approval of the consent agenda as amended.

You very much. Do I have a second?

Second. K.

Thank you. All in favor?

Aye.

Aye. Motion does, does go forward and is approved. Thank you very much. Now can we go on to audience participation? If there's anyone wishing to speak on an item on the agenda or not on the agenda tonight, please come to the podium at this time. Please state your name, and please spell your name. Or the clerk, if you don't mind, your last name.

I have my shoulder hat

on to speak for the record.

I am Jen Kirk, and I am from Snoqualmie representing RECLAIM today. Was there any other information you needed? That's good? Yeah. Mayor and council members, thank you for the time, attention, and care you continue to give to human services in our community, especially in the midst of financial uncertainty.

I don't take lightly the balancing act you face. Weighing limited resources while trying to meet growing needs is no small task, and your efforts don't go unnoticed. I'm here as the executive director of RECLAIM but also as part of a network of human service providers who work closely together in the Snoqualmie Valley. Something that may be difficult to understand from the outside is just how connected our work really is. We meet often, we collaborate frequently, we share ideas, and we step into support whenever needed.

This collaboration is not accidental. It's what allows a relatively small network of nonprofits to meet very big needs. We deeply trust and support one another. Because of that, funding decisions don't just impact one organization at a time. They impact the ecosystem of care that families and individuals rely on.

When one provider is weakened or excluded, the strain shows up everywhere else. Continued investment across agencies helps keep that safety net intact and functional for this community we all serve. That being said, I want to thank you for your commitment to funding the majority of our human service providers rather than only a select few. Your approach reflects a real understanding of how our network of care works in the Valley. I'm grateful for the thoughtfulness in supporting agencies, including RECLAIM, that are responding to the current nationwide funding crisis while also recognizing the importance of sustaining the broader provider community.

My hope is that none of my colleagues are overlooked or left behind in the process, because it truly takes all of us working together to meet the needs we see every day. I also wanted to speak specifically about CarePoint Clinic. CarePoint is an extraordinary asset and a quiet pillar in our community. Misty Messer and her team have been providing high quality, free medical and dental care in North Bend residents and beyond since 2016. Their mobile medical services are especially meaningful for neighbors living in poverty, people who may lack transportation, stable schedules, or the ability to navigate traditional healthcare systems.

Meeting people where they are removes real barriers and often means the difference between early care and a full blown medical crisis. That kind of access protects not only individual health, but family stability and community well-being. I urge your Human Services Committee and this council to approve CarePoint's application for funding in your next budget cycle. At the end of the day, we all share the same goal, a community where people are healthy, stable, and able to contribute and thrive. Human service funding is one of the many ways we collectively build that reality.

Thank you for your partnership, for your past and current support, and for prioritizing how vital the entire network of care is for this valley. I gratefully appreciate being able to work alongside of all of you. Thank you. Thank you very much, Jen.

Good evening, mayor, madam mayor, council members, steam staff. I'm Terry Potmeyer. Do you need me to spell that, Susie? No. Thank you.

I'm here tonight in my capacity as a board member for the Snoqualmie Valley Food Bank, and we are here to express our sincere gratitude for the city's recent award of funding for the food bank for 2026. The city is a very important partner for us. And with this renewed financial support, you continue to demonstrate your leadership and commitment to achieving our shared mission, which is to end food insecurity in our community. So thank you. As you know, making sure that everyone fed is fed in our community is a mission that we share not only with you, the city, but also with the entire community.

We cannot and do not do our work alone. So with that in mind, I would also like to take the opportunity with Jen to thank you for the funding that you have allocated to the other human service organizations in North Bend. These organizations working together, we have a safety net of support for the most vulnerable members of our city. In fact, each month, as clients visit the food bank to receive food, they also have the chance to meet with many of these same partners to access additional resources, resources that they need to achieve long term stability. So thank you for funding their important work as well.

Looking ahead, like Jen, I hope that in 2027, our city can together find a way to include funding for CarePoint in the human service grant award program. This key partner brings mobile health care to clients at the food bank, which is a critical resource and support for those who often have no access to any kind of health care. Recognizing with you the challenging financial constraints that confront the city, I live in hope that we can find a creative way to also support CarePoint's work in the future. Thank you for your support of human services, the food bank, and the entire community. I'm so curious.

Copy. Doing a lot of the package.

Welcome.

Good evening, mayor Miller, members of the city council and staff. My name is Linda Grez, g r e z, and I'm speaking on behalf of Snoqualmie Valley Indivisibles, a local group with 1,100 members, many of whom are behind me tonight from North Bend and the Valley. I live just outside city limits. First, thank you for your public service. We genuinely value the strong, respectful relationships in our community and appreciate the way you approach public safety and community trust.

You your work as public citizens to protect our community has never been more important. Unfortunately, troops of unsupervised and unaccountable DHS, ICE, and Border Patrol agents are increasingly being weaponized in communities around the country. They are often acting illegally, unethically, and without accountability. Court rulings this week describe cruel and inhumane acts, including tear gassing peaceful demonstrators using young children as bait, arresting and detaining US citizens without cause, invading homes without warrants, and arresting people at court hearings. This is escalating.

Untrained agents are endangering the public by violating their own public safety guidelines and executing people in the street. Military style weapons and brutal tactics are used to frighten people into acquiescence so agents can meet their daily arrest quotas for personal financial bonuses. Our country's heritage of the rule of law and due process is under siege. Escalating tensions mean ill trained agents will act recklessly, which could cause riots and excuses for occupying military troops. This is not the American way, and we must all resist being complicit.

Our community is fearful about reckless and unaccountable agents. People are afraid to send children to school and attend lawful court hearings. Many live in fear of being snatched without a trace or simply executed. We request that city the city proactively evaluate its policies in dialogue with residents and act to safeguard our community. Policies requiring agents wear identification badges and body cams and banning face masks are our first steps.

City law enforcement can protect the rule of law by documenting what is happening. City law enforcement should perform investigations of injuries and street homicides. The city should prevent the seizure of city owned properties for immigration enforcement operations without court orders. Ban the use of tear gas on nonviolent demonstrators. Our legislator is considering some bills to help which may or may not pass, and we already have some guidance around local noncooperation with immigration enforcement. But this is a fluid situation, and on a daily basis, we confront what was once unimaginable. The risks are increasing, and your obligation as public servants is to act decisively to protect and strengthen our community by protecting our people by all means possible. Thank you again for your service.

Good evening. I'm Jess Ream. I live in town. Last name is r e a m. All of you are here in these seats because your neighbors, your friends, and your community thought you were the right choice to keep North Bend healthy and safe. Like others here, I watch what's happening in Minnesota, but it's happening everywhere now in varying degrees. Every city and town will get their turn with this. I have people say, I can't believe this is happening, but we know better. This administration told us exactly what they were going to do. We just didn't believe them.

If we had taken them seriously, if we had believed them then, we would have had more time to prepare and be proactive. I agree with many specifically policy ideas suggested, but I wanna you to prepare like this will happen here in North. Hear them when they threaten to detain our friends and family, when they threaten our elections, and when they threaten to turn back the clock on human and constitutional rights. You're here because we believed in you, and now we need you to believe them and act. Thank you.

Thank you. Anyone else wish to speak today? Anybody? Oh, hi, Deb. Come on up.

This is always so awkward. After such powerful talks, here I am to talk about something lighter. So Deb Landers, 14615 438th Avenue Southeast in North Bend, here to represent North Bend Art and Industry. And I just wanted to share a little bit about our growth and a little bit about just our first month in 2026. So we started off with our annual planning meeting which was in Downtown Seattle, a local not local, an international consulting company loaned us the Top Floor of their building.

So we had 360 degree panoramic view of Seattle. It was amazing, and we got some great work done on how we're gonna move forward in 2026 and beyond. We followed that up with the Tuesday Muse Day. It's our second one. The first one, we had about 25 people come.

This one was about 60 people, so as all of our events, they grow dramatically each and every time we hold them. At this event, we had three local artists and 60 people coming to mingle with the artists, view their amazing work and that work is on our, one of our walls at the center, for another two months. So if you have time, come and see what we're doing at the Center for Creativity and view their amazing work. We followed that up with what do we follow it up with? Something else.

Something else big. It's gone from my head. And then we finished up January with a CPR first aid training for all of our board members and our key volunteers, And we're gonna continue that with anyone that's actually supporting work and classes at the center and supporting those studios at the center. This month on February 1, we kicked off the Curious Creators and that's for six to 10 year olds. It's free access art programming activities for, that that group of kids on Sunday afternoons from two to four.

There was four activities. They were super cute and super cool. On our first one we had 24 people and again we're expecting that to grow too. This really just highlights that yes, creativity is exciting and people want to partake but it's much more than just creativity. It is about community, people coming together and connecting, and that is that is our core mission for the Center for Creativity. So as always, we appreciate your support, and I wanted to give you a list of our February happenings, and that's all I have. Thank you, Deb.

Anybody else wish to speak tonight? Anybody online, Phil?

Not at this time, your honor.

That's okay. Thank you very much. We're gonna move on to announcements, presentations, and appointments, and we have a presentation tonight at King County sheriff's office ILA. Mister Cha, would you like to let council know and inform us all tonight?

Thank you, mayor. Thank you. Give me a second. Let me share my screen. I'll go ahead and start, mayor.

For the record, Martin Shaw, finance director. This is agenda item number eight on your agenda council. This item was heard before the public health and safety committee earlier today as well as the finance and administration committee. The purpose of the presentation is to review with you the proposed King County Sheriff's Office interlocal agreement for policing services, provide to you highlights of the agreement, as well as go over the staffing plan. For council as opposed to listing public, the King County Sheriff's Office, ILA, the council provided the mayor the authority to negotiate and execute an agreement with the sheriff's office under a b twenty five zero forty four as well as a b twenty five zero fifty.

There's no specific action needed from council tonight. As you've already provided authority for the mayor to enter into this agreement. However, staff wanted to provide this update, in a public setting for you council as well as for the, listening public. Throughout this process, city staff has provided regular updates to city council as you recall in our weekly updates to you. The interlocal agreement that we have before you, and the copy is attached in your packets, is identical to the one that was included in the county's RFP to the city back in mid twenty twenty five, and it is the same copy as is for all other contracted cities.

Under this contract, we will be operating under what's called a flex model from April 1 to December 31. The first three months of 2026, we as you recall, we will continue to receive policing services through us to save Suquamy. And then starting in joint January 20 joint 01/01/2027, we would convert to what's called a city services model or a dedicated model where we will have two patrol officers in the city at all times except for the hours between midnight and 05:59AM where we have only one officer. I won't go over the details here, council, but the flex model here is defined as services within the city, and patrol staff are would be expected to also respond to calls for service outside of the city if needed. As I mentioned earlier, once the city transitions into the city department model, we'll have dedicated officers within the city of to provide services.

The level of service to the city is defined under the ILA section 3.1, and the substantive portion of this is shown in exhibit b. And this is shown to you on the next slide here. This is, what the county calls their cost book. And rather than going through the, details of this with you, I just wanna highlight several areas for you council. The first area yeah.

Let me turn on my pointer here. The first area here are the types of services that are being provided or purchased by the city. This includes a police chief, precinct commanders, patrol officers, as well as specialty service units, such as hostage negotiation teams, major crimes investigation, major accident responses. The second section here summarizes the onetime costs that is required of the city to help onboard the city in terms of hiring new staff for for service to the city. This cost is 1,200,000.0 amortized over sixty months.

And then in terms of the FTEs at full service, we will be receiving the equivalent of about 10.6 FTEs on a regular basis. Under the flex model contract, the FTE equivalent is equal to about 8.2 FTEs. And the first year cost is just under $2,500,000. In terms of staffing, this chart here was developed in conjunction with city chief hall. And what it shows is over the twenty four hours of a day, the number of officers within the city.

And as you can see, we have two shifts. Then we have a power shift, and and the power shift is when the sheriff's office includes an additional shift to provide services to the city during the peak times of the of the day. And then there's a swing shift as the first two shifts exit. And then there's a graveyard shift, which, again, as I mentioned earlier, provides services between the hours of midnight and 6AM. We've highlighted for you here several hours in orange, and this represents those hours of the twenty four hour day where we would have more than two officers on duty within the city.

As you can see, within this, there's about seven hours or eight eight hours of twenty four hours days that we will have more than two hour two officers within the city. In terms of the estimated cost for services, again, 2026 is a transition year where we will receive services under, again, what's called the flex model. And then starting in 2027 forward, we'll be receiving services under the city department model. And as I mentioned to you at our last meeting, the costs starting 2027 is expected to increase. And under their estimates, here, King County has provided us an estimate of between 46% cost escalation growth, which means by the year 2031, our cost would range somewhere between 5.4 to $5,900,000.

Some highlights for you council as well as the listing public in terms of key sections of the interlocal agreement. The county always provides an estimate of the cost for the following year, and our annual growth in cost is capped at the consumer price index for urban wage workers. The county will also provide monthly reports on overtime usage, salary, specialty pay, as well as employee benefits. There is an annual reconciliation process for the previous year, and that's completed in March. And then there is also a provision for overtime billing for discretionary events.

So for example, the city needed to have an officer present at one of our local festivals, and that would be in addition to the patrol officers within the city. The city of North Bend would pay for those costs directly. Other sections to highlight with an ILA, uses of the city's facility by unincorporated King County. So for example, our dedicated officers from the county would occupy space in the City Hall annex. If that annex is also used by unincorporated King County staff, the county will reimburse us for the unincorporated officers' use of our facilities.

City costs are not will not be affected by actions or decisions as a result of another city, another contracted city. As I mentioned earlier, the city will reimburse county for start up costs for salary and benefits. The county also engages in multiyear business planning, which is great for financial planning, And the contract also provides for a termination process. And specifically under this provision here, if the city were to decide to form its own police department, for example, or to contract with another agency, there is a process for notifying the county as well as the eighteen month wind down process for the county and then allowing North Bend time to wind up to the next provider. But the city also has a seat on their oversight committee.

This is a a committee that is comprised of the city managers and executives from each of the contract cities. City administrator Emery as well as myself sit on this committee. And one of the key topics of discussion within this group is a update to the interlocal agreement that covers all contract cities. We would expect we're expecting that this body of work will be complete sometime by mid twenty twenty six, and then the draft ILA would or updated ILA will be shared with contracted cities for review after that. In terms of other transition matters, the county has been working very closely with the Soquamy Police Department on handing off services.

This has been going very smoothly and positively. The county's the county staff will also have a presence at the outlet mall. They will occupy the same space that the Soquamy Police Department currently occupies. And the county is working directly with Simon Properties on any improvements that they need at that space, and the county is expected to provide their own furniture for that space. The lease agreement for the outlet mall will be transitioned from from Suquamy to the city of North Bend.

And once we have that transition finalized, we will bring that before you council for review and approval. The last item is on the City Hall annex. There is an item on your agenda tonight to authorize a tenant improvements to the annex, and those improvements are to support the county sheriff's office occupancy of that annex. There is no lease agreement for that facility. The the county will be occupying it occupying the space on behalf of the city.

The Washington State Department of Fish and Wildlife does occupy a corner of that building for which they're currently paying a lease for the for use of that space. I mean, that concludes my presentation, mayor. If you have any, questions, I can certainly answer them now.

Thank you for that excellent presentation, mister Cha. Counsel, do you have any questions for mister Cha?

Mister Cha, could you just clarify for the public where the City Annex City Hall Annex is? Because I don't know that everybody's clear on that.

Sure. It is in downtown. It is across the street from the Bank of America building. Building the library. I saw that. Oh, sorry. It's across the street from the King County Library.

Sorry. Yes.

I am I've been directionally challenged all day today.

I was gonna say something, but you stole my thunder there, actually. Any other questions, miss Torgerson?

In the public safety meeting today, King County spoke to us, and one of the things they mentioned and I could just mention it. Was going ask you to mention it, but I

could just say it.

It'd be easier. One of the things that was kind of interesting they said is that there will be twice a month, I believe, we'll have, like, double the shift. So, like, for example, on the chart where it says on some days, we'll have eight officers because they're overlapping schedules. We'll have we'll and we'll have four officers. We'll have eight officers, like, twice a month. So we'll have a lot of coverage in our town. I think that's pretty exciting. So I want to share that.

Thank you very much, miss Rustic.

And I'd just like to build on Martin, thank you for the presentation. And it was obvious in today's public health and safety meeting when you shared the presentation, the working together relationship with the King County Sheriff's Office and our Snoqualmie Police Department has been outstanding. And I I look forward to them continuing to work together as we have many of similar issues with the city of Snoqualmie. So thank you.

Excellent. Anybody else from council? Mister Jas?

Yeah. Given, the public in attendance this evening, I wanna take this moment to acknowledge you, mayor, the mayor of Snoqualmie, and the police chief for their strong letter that came out earlier affirming that the local police, and I've there's a question here for you, Martin, Do not interrogate folks about immigration status. If you need the help of the police department, if you're in an abusive relationship, if you, you know, if you need help, you should feel able to reach out to the local law enforcement providers to seek assistance with the understanding and assurance that you will not be questioned about your immigration status. Can you do you know that that's also the policy of the King County Sheriff's Office?

I believe it is.

Thank you.

Thank you. Anybody else?

I I was gonna just say, I think I recall, and maybe staff can

Council Member Torres, can you move your mic closer

to you?

Thank you.

I think I recall whoop. Great. I think that I recall we're having an update from King County sheriff in April regarding that.

We are. I will just say for the public and, council member Jocelyn's question, we adhere to state of Washington law, which is keep Washington working. That's what the local law enforcement adhere to. So the King County, sheriff's policy is almost identical to the Snoqualmie policy because that's that's our state law. Yeah.

Did I catch everybody? Mhmm. Well, thank you again, sir. Let's move on to our main agenda. There is a change to tonight's agenda. We're gonna move item number nine to the bottom of the agenda and to accommodate an executive meeting or session. Excuse me. Let's begin with number 10. Okay. That's public hearing ordinance amending taxes, rates, and fees. Schedule regard r RE water utility rates. Mister Cha, once again, I'm gonna look to you.

Thank you, mayor. Again, for the record, Martin Cha, finance director. The staff report that I have here is for agenda items numbers ten and eleven for the water rates increase ordinance as well as for the sewer rates increase ordinance. After my remarks here, council, I'll turn it over to Sergei Terasov, consultant with FCS Group, where he will provide a brief presentation on the study results as well. The purpose of of of these two ordinances to share the results of a rate study for, again, for both the water and sewer utilities.

The purpose of the study is to ensure the long term financial sufficiency of the of both utilities. Self sufficiency is an expectation and is required under state laws for utilities. The both utilities in terms of the the financial plan and the support of city services is to maintain a quality drinking water as well as city services city sewer services to the city as well as to maintain current debt service coverage requirements, as well as meet as well as the city's positive double a minus credit rating for the utilities. This item was advertised for public hearing on January 23 and was also reviewed by the council transportation and public works committee on November 12 and the finance administration committee on January 13. Tonight's action is for first reading and opening up for public hearing, mayor.

And this item would return for city council second reading and adoption on February 17. Before I turn it over to Sergei, I do wanna call your attention to a to an email that is in your packets on page pages one forty five and one forty six. This this email documents several questions that we received from account from a community member. And the reason why I'd like to share this with council is I believe that many other community members may have similar questions about the need for a utility rate increase and what it supports. Elaine and I worked on the responses here.

We feel that it provides a very clear explanation of the business case for the rate increases, and I would encourage you to review this and and refer to this in your conversations with community members. K. So with this, I'm going to switch my screen and bring up Sergei's presentation. Right now, see Sergei on the line. So, So, Sergei, please please go ahead.

Thank you, Martin. Can you hear me okay? Yes. Alright. Well, greeting, mayor.

Good evening, council, and thank you for taking the time to meet with me this afternoon to discuss the water and sewer rates. Now before we dive into the presentation itself, just a quick overview of our discussion. We're gonna start out with a brief background just to provide you with a high level reminder of the rates themselves in the prior the the past time the studies were updated for these utilities. Then we'll get into the process of updating rates, just the methodology used in the rate setting world, and then dive right into the update starting with the key assumptions that went into the update and then leading us into the discussion of the findings and recommendations. Feel free to ask questions as we go along.

Now as a quick reminder, the last comprehensive study performed for the water and sewer utilities was around 2021. At that point in time, we did identify that a deficiency was present for both utilities, and we were not quite able to fund our ongoing obligations related to operating cost, capital, and any associated debt service. So in order for us to resolve that deficiency, we did propose and, eventually, the council at that time adopted a five year strategy that helped address some of those needs. Now coming out of the pandemic, we were looking at slightly reduced increases about 2.4% inflationary or below levels. After that, we're trying to do a bit of a catch up for the water utility.

That's why you see the rates, increasing about five and a half percent. And the original adoption went all the way through, I believe, 2026 for the water utility. Now an item to note is that the study was done around 2021. It was finalized in '21 and 2020. We did see some historic levels of inflation, following that period that did not make it into that study just because it was just nobody could have foreseen those inflationary pressures.

So the study that we're updating this time around, which started in 2025, tries to catch up and account for that level historical level of inflation and all the updated financial and capital and growth informations that the city has experienced since that time. Now in addition to the water and sewer rates, we did perform the stronger rates. Those, results were presented, in September. So today, we're simply strictly focusing on the water and sewer utilities. Now a quick reminder in the background as well is that unlike general funds or streets, our, enterprise funds or or utilities are enterprise funds, which basically means they have to operate sort of like a business where they're self sufficient.

They're funding themselves through specific utility rates on a a monthly ongoing basis. We're not we should not be relying on external sources such as a general fund or any kind of subsidies or contributions from anywhere else. These are pretty much self sufficient utilities that need to set rates, on par to meet their ongoing obligations. Now in terms of the process themselves, for this type of study, what we refer to as revenue requirement, we go through one analytical step that looks at the overall picture of each utility. Here, the key item to remember with the revenue requirement is it's, simply put a comparison of our revenues at current levels to our ongoing obligations.

We need to make sure that we not only cover our ongoing debt service capital operating, but also our indirect costs related to financial policies. So our utilities are healthy and operating financially stably, not just today, but also into the future. Now looking at some of the key assumptions that were utilized to develop the analysis, the the first item to note is that we're trying to keep the level of service we provide to our customers at baseline. We're not we're we're again, the study will not be changing any kind of level of service or reducing service to our customers. We're maintaining the service we are providing.

Currently, there is a city tax of 6% on water and sewer revenues. We're not proposing any adjustments to that tax level. Again, that is maintained at the current level of 6%. The plan for capital identified in this discussion for that forecast period of twenty six to thirty, We're not anticipating any new debt service. Any funding will happen through ongoing rates or, onetime revenue sources such as the growth related sources from general facility charges, but no new debt is being incorporated into the analysis.

There are a couple items to note for the water utility. We, are relying on the refund transfers, about $3,000,000, to help us pay for a couple of main water main replacement projects on North Northwest 8th and Northwest 14th. Again, this is a onetime, source that is eligible to help fund those projects. In addition, we are assuming that we're going to need one additional staff for maintenance purposes starting in 2026. And then lastly, we do have mitigation water purchase costs, which are starting at about 300,000 in 2026.

We are forecasting to the for those to decline to about $10,000 per year by 2028. And the will be maintained at current levels. Now to forecast our, cost and revenues into the future, we are looking at a starting period of '25 since the study commenced last year. In order for us to forecast the end of the year, we still have to utilize '20 five numbers, but our focus period really is for 2026 through 2030, so that five year forecasted period. Revenues were based on historical actuals aligned with budgetary information.

We are using that data to forecast our revenues into the future, applying growth rate of about two percent for the water utility and two and a half percent for the sewer utility. The basis for our expenses was tied to the budget. We did spend quite a bit of time with your staff reviewing each line item line item expense to make sure we're not carrying any onetime costs into the future, but also making sure that we're not deficient in any way. And if there's any needs that need to be met programmatically, or in in any other way beyond inflationary level of adjustments, we are making those forecasted, edits to our our analysis as well. Overall, we're applying inflationary factors ranging from 3% to 6% depending on the type of expense we're forecasting.

But in general, our recurring expenses are escalating at about 3.6% per year or so for each utility. Now in terms of debt service, we do have several bond the bonds and loans outstanding for our utilities. On the water utility, our debt service is currently, $208,000 per year. Good news there is two of our loans that we have are being repaid within the next year or so. So our debt service drops down to about $64,000 per year with one public works loan remaining, starting in 2027 and thereafter.

Our sewer debt was structured initially when we did take out the the the bond to pay for a treatment plant in a way that it did ramp up after a couple years. So within our forecast period, we are ramping up to the full annual payment going from $1,300,000 per year to about $1,700,000. And then lastly, the onetime revenues coming from new development or upsizing redevelopment through the general facility charges. Again, these are onetime fees unlike the fees that we're discussing. These fees and revenues can be used to pay for capital related costs.

That could be capital directly funding projects, or that could be capital associated with the actual annual debt service. The city's historical practice has been, to utilize these funds to help offset our annual debt, payments, so that is what we're forecasting as well. We're using GFCs to pay for debt service first, and then if there's any annual amounts left over, we use that amount to pay and offset our capital plan. So now let's get into each utility, specifically starting with the water utility. The primary dry cost driver for our water utility is the capital improvement program, and we are forecasting a need for about $11,000,000 of projects, to be completed within our forecast period, and this includes our estimated inflation into the year towards the year of construction.

If you look at the table, in the chart to the right, you'll see the shape of the capital. You can see some of the projects that are a little bit front loaded, and then we have a couple of larger projects in the back end, and then we have a small break in the middle. The table to the left provides you with a summary of some of the key and major projects per predominantly related to water main replacements that we have identified in our six year total plan. Now in terms of funding sources, we are anticipating a $1,000,000 grant to help us offset some of these costs. We have the $3,000,000, which we talked about coming from the refund to help us pay for some of the capital, and the rest is coming from either general facility charges on an annual basis as well as the cash reserves we have accumulated and an ongoing rate funded capital through the use of rates.

Now when we put everything together on this slide, we get the revenue requirement. Here, the bars represent expenses made up of cash operating expenses in the dark green portion of the bar. The blue color showing you the existing debt service. As you can see in '27, it does drop down, and the the share go goes a lot smaller than the prior years. And then lastly, we have the yellow color, which represents net capital.

And when I say net capital, this is the total cost, net of any kind of external sources like grants, general facility charges, as well as the retransfer. So once we subtract subtract those, we can see that predominantly the need for capital funding is in the tail end of the forecast. In the front end, we do have enough resources and cash reserve reserves and so on saved up to help offset those costs. Now the big item to note here is that when we compare our obligations to the solid black line, which represents revenues under current levels, we can see that our revenues are not sufficient to even meet our operating costs. So overall, we're not able to recover our operations, our capital plan, or the debt service under the current forecast, and the growth is not able to keep up, with the increase in inflationary costs.

So in summary for the water utility, we are still, lagging behind. We're not quite able to keep up with our cost pressures from both operations and the capital side, and we are actually forecasting the need to utilize reserves in '25, but also potentially in '26 and, maybe slightly in '27 even with the rate strategy that we're proposing. So our recommendation, to help us resolve this deficiency is an average increase, for the system of about six and a half percent. Now for a typical customer utilizing about, a typical single family home customer, I should say, using about 20 cubic meters of water consumption with a five eight inch meter, they could experience approximately $4.56 increase per month per year adjustment in 2026. Now we we do have an adopted increase of five and a half percent.

The proposal is fairly close. Again, it's about 1% higher than the prior authorized increase for 2026. A big reason for that is, again, the catch up that we have to do due to that inflationary rate, rate pressures that we have experienced over the last five years that were not anticipated. And then the last slide from the water utility is really a monthly bill comparison. I always wanna caution using these type of comparisons that these are slightly apples and oranges in a sense that every utility is designed differently.

Every utility has different source, the age of the system, as well as we're comparing your current rates with the proposed rates for '26. When we are performing the survey, some of the utilities are going through similar rate process that, we're discussing today, so their rates were not published in full for twenty six year period. We're comparing a little bit '25 a mix of '25 rates for yours, 26 rates. So, again, it's always a a little bit hard to do a direct apples to apples comparison, but the question does get asked. So we wanted to provide this, information.

Well, we're gonna take a look at similar information for the Missouri utility as well. So here, again, our capital plan is a bit larger. We have about $41,000,000 of projects identified for our forecast period. A significant portion of those projects is related to the searing of, Silver Creek, level of costs, which is about $23,000,000 alone, but a significant portion of it will be funded through external sources. So, again, if we look at our grant proceeds funding down below, our total grant proceeds for, an external funding sources are about $25,000,000.

We also have the Meadowbrook, serial ID of about $8,000,000 with some rounding there. That, again, is being externally funded. So our net projects are a bit lower than the entire $41,000,000 that we have identified. We also have several lift station and system projects identified. The big peak of that 2028 cost you're seeing in the chart is really tied to that, assuring of Silver Creek that we discussed.

So that that drives that project need upfront, which has a portion of the cost offset. Now looking at the next slide where we look at the revenue requirements, here, we do see a slightly better forecast or a bit better forecast when we compare our expenses, again, summarized in the solid bar the the bars made up of cash operating expenses in the green, the debt service in the blue, and net capital requirements in the yellow. When we compare the these bars to our solid black line, we can see that at this utility, our line is set sufficiently enough to cover our operating costs and debt service, and we're able, we're actually able to fund a portion of the capital plan, net of contributions, on an annual basis. So our rates are sufficient to keep up with operations. The item that we really are falling slightly behind on is being able to support the capital improvement program.

So in summary for this utility, we're actually doing pretty well, compared, relatively speaking to the as we were looking for the water utility. The main driver here is the capital needs that we have to address for this utility. The positive news for from a rate perspective, we're able to keep, the adjustments, relatively close to inflation. So our forecast is about two and a half percent to 3% per year for this utility, which translates about $3.34 in 2026 for a typical single single family home using about 1,500 cubic meters on a winter monthly average basis. Similar comparison here.

Again, slightly apples and oranges because some a lot of the utilities in this list have regional, treatment versus the utility has a brand new treatment plant with a lot of debt that has accumulated to be able to fund that debt. But, again, that information gets asked, so we wanted to provide it as well. And, lastly, before we kind of put together the combined summary and next steps discussion, we wanted to provide you with a combined bill that your customers may experience for a typical single family home for all three utilities, including the storm water and the flood rates. So here we have the average water bill with 20 cubic meters of consumption, the average sewer, bill, which gets billed on winter average, which is a little bit less at about 15 cubic meters, and then the fixed bill for the storm water flood services. All together, Currently, their customers are paying approximately $221 with some rounding there.

With the proposal, that would go up by about $12.90 to $233.84. Now forecasting out of in within the next five years, our annual adjustments range from about 6% down to about 5% per year over that time horizon. And, again, the combined bill comparison for the neighboring utilities as well. So that brings us to the end of the presentation. Really, what we're looking for is direction and feedback from you regarding the overall rate strategy that we presented for each utility.

The six and a half percents, are about a percent larger than the prior study identified just due to the inflationary pressures that we're seeing, and then the two and a half to three percents for the senior utility. At this time, we're not proposing any structural changes to your rates. We simply would be applying the increases on across the board basis, meaning that any fee, any classes, rates, specific rate would simply be adjusted proportionally by the percentage if selected or approved by by council. Now in terms of the process next steps, the notice for public hearing was published on the January 23. We're here today on the third to do the first reading and have open, public comment.

The preliminary schedule right now is to have the second reading on the seventeenth with the closure of the public comment, and then the goal is to have any adoption of new rates or implementation to be approximately April 1. So with that, we can also turn it off over for questions.

Thank you, Sergei. Counsel, do you have any questions for mister Cha or Sergei? It look like Heather, you do.

I do. So you were comparing city of North Bend to other cities, but we have two water services in North Bend. We have city of North Bend water, and we have Salal. And so did you do a comparison to the other local water service?

We did not incorporate Salal just because they're a little bit different and unique in terms of the private association versus public utilities of similar size and nature. So, we can definitely look into it and provide you with those water rates. Here, we wanted to look at combined utility systems that have all three services as well.

Thank you. Miss Torgerson?

Yeah. So I see Redmond barely I see it. I think it says one thirty two. I was reading that they they also pay for King County, so there's the rate is a little bit I thought it would be higher than that. So because King County is, like, 7.5%, and then Redmond is, like, 4%. So does that number include the King County information? Or I don't know.

I just thought it would be higher.

It should, the it may not include the twenty sixth rate adjustment. They're also going through that process because if the if the city has not, publicly published their twenty sixth rates, we were not able to list them on this comparison. So whatever their rates were listed, which I believe were $25 there on this chart. That's why I mentioned that some of these are a little bit of apples and oranges because unless a municipality publishes the rate, we can only go by what they're showing the rates are.

Okay. And I had one other question.

Okay.

Mhmm. When you guys are doing your analysis, do you when you're forecasting, do you look at potential developments we're gonna have and how that might be able to help reduce cost because there'll be more payers into the system, or is that just not something you guys put as the calculation?

Yeah. So we incorporate growth assumptions, into the forecast. We're averaging the the new developments at about 2% for the water utility and approximately two and a half percent for the sewer utility, which translates to anywhere from 80 new homes or so for the sewer utility. These are just average numbers on an annual basis. Again, we we did not have kind of a specific number of develop if he if there's a new development in the pipeline and it might have a 100 units one year and then 20 units one another year, we're just doing kind of an average growth that has been identified for, this city's utilities.

Okay.

So we're we're trying to account for development paying for growth in the forecast as well as providing you with new ongoing monthly revenues on top of that.

Thank you. Anybody else from council oh, I'm sorry. Go

ahead. Oh, it's okay.

Oh, it's better. Excuse me. Alright.

This is more a an ask for Martin for the water rates as we look at them over time in your model for long term planning. Could we create a second model to see the impact both negative or positive of what it would look like to have one water system in North Bend and how that spreads out the potential increases or decreases on the capital exposure? I think we probably pick a date in the future when that makes sense, but I'll leave that up to you to see how it shakes out.

Sure. We can certainly take a look at that. What you're suggesting is the single water system, North Bend and Salau combined.

Yes.

Yes. Thank you. Yes. Well, let us brainstorm that and, speak with FCS about about what a merger like that looks like.

Thanks.

Thank you. Anybody else from council?

Miss Rustic? You, mayor. My question was sort of along the same lines, but not as specific as council member Tremolana's. So I saw on slide six that, there's a reduction in mitigation water for, river mitigation, which is a positive in the sense of the overall cost. So my question is, what other things could we be looking at to reduce the increase in, in the percentages that we are proposing here?

So like you just spoke to, our facilities capital facilities charge with water is also gonna drop off now that we have mitigate the slough mitigation hooked up the Enertie hooked up. So our our our payment to SPU is gonna drop. Our facility charge is gonna drop and almost zero out as long as it'll zero out over here over the next three or four years. Within the water rate itself, we also added a one maintenance worker, which and I'll have Martin or Sergei correct me if I'm wrong here. When I say it was about a 1% increase with adding that one maintenance person to the rate here. So those would those would be the major things there.

And, councilwoman Rustic, just so you're aware, when we first embarked on this study, the rate increase was actually much more than this. It was nearly double digits. What we've done was we've worked very closely with Public Works as well as FCS to try to bring that rate down. And how we did that was we took a very close look at the capital improvement program for the water utility and pushed many projects out towards the latter half of rate study period so that it doesn't burden the first half of the of the study period. And as Tom mentioned, the maintenance staff person, the new person here starting 2026, if we were to eliminate that, we could shave a percent off of the water utility.

The the need the business case for the maintenance staff is to catch up on deferred maintenance for the water utility. We both Tom and I have spoken with maintenance staff, Mark Pray, about the needs of the water utility, and one of his concerns is the level of deferred maintenance that would continue if we didn't have additional help.

Let's see. Mister McFarlane or mister Johnson, do you have any

thank you.

Thank you, mayor. Tom, I believe I know what you're referencing when you're talking about the decrease in mitigation water, for the benefit of the public, I wanna make sure that that they understand why that number's dropping.

Yeah. So just in here in two August of two thousand twenty five, we completed the Salal Intertai project. So now we will be taking mitigation water from Salal's Wells instead of payment, from Hobo Springs, which is SBU water, so we won't be paying SBU nearly as much as we did, in the past. We'll be using Salal as our main source of mitigation. And then also with the mitigation the facilities charge, as we're using less SPU money, that s p that SPU that facility's charge is calculated annually.

It's based on the annual growth of water of water volume delivered. So if we're not exceeding the the max amount we've already done, we're gonna be paying zero for that facility charge moving forward every year. And it's a three year rolling average on that facility charge. So by 2028, we should be paying basically zero for that facility charge.

Thank you.

Thank Mister Giles more. With oh, one more?

Two more questions.

One more. You can go ahead. Thanks.

Tom, I think this is also for you. In Sergei's presentation, noted a dip in waterline replacement projects. I believe that was the years '27 and '8. I'm not '26 through '28. Felt like a slowdown to me for projects identified in the leakage study and my why the dip?

I think as Martin kinda indicated earlier, it was trying to trying to spread this cost out a little bit and balance out this rate. So we did some we did our projects on 14th Street and 8th Street along with the sewer ULED project this past summer. That was a heavy cost up front. So we're trying to balance that out in the middle, and then we have some heavier AC water main replacement projects in '28, '29, or 2930. We're just trying to kinda balance that rate out through the study.

So the water loss is seen as less costly than the replacement in a in a time period. Correct. Yeah. Okay. And one final question, if I may.

And this is not necessarily for today, but I think it was well, I'm not sure which council member brought it up. But GFCs, think we we here at least understand that the rate at which those come in directly impacts water rates for existing customers. I believe Sergei said it went with a flat 2%. Not tonight because I doubt you've got it at your hand, but I would like to see more information around the planning, the assumptions behind the 2%. How many actual GFCs were being planned residential, commercial that built into this study and look at the past studies for similar projections and what our actuals were.

Driving at if we exceed plan that probably means we can slow down rate increases and the reverse would be true, I'm assuming. Is that correct?

To answer to your last question, councilman, to a certain extent, yes. Because GFCs are used to pay for capital improvements primarily as well as debt service. But rates are primarily used pay for operations, auto operate operating expenses.

But the more users, the more we spread it around. Correct. Thank you. That's all, your honor.

One more? Yeah. Absolutely.

And this is maybe just contextual, Tom, that you can provide where we stand today on water reserves looking forward into the summer, how water's going. We haven't had snow yet. My groundhog friend tells me we've got six more weeks of winter, so fingers crossed it's coming. But just to provide some context, while we're talking about rate increases, where do how do we look right now for this year and thoughts? Well, obviously, as

you indicated, the snowpack's very low, which is, concerning moving into the summer. The good thing is we do have a new mitigation source with Solao, that is, I will say, much more stable than the SPU source, which is directly affected by the masonry pool level up there. So when we don't have snowpack and that masonry pool level drops, there's less slippage through the hillside, which feeds Hobo Springs, which feeds our mitigation system. But now that we have Salal, that definitely makes me feel much better. I think we have up to a 100 acre feet a year that we can use for mitigation purposes with our Salal agreement. So with that, that makes me feel real good moving into the into the far future here.

Thank you. Excellent presentation once again, and great questions. Thank you, counsel. Let's see. We're gonna now open to the public hearing. Is there anyone present tonight who wishes to speak to item number 10? Anybody online, Phil?

Not at this time, your honor.

K. Thank you very much. I'm gonna look to miss Rustic for making the motion,

please. Yes. Thank you.

I'm gonna make the motion. No? To

to I believe that's a PPW.

It wasn't added TPW, or was it rustic? I That's my Right.

Was that Elizabeth. I'm I could have misread that, Stephanie. It's my apologies. Oh, is it? Go with either. Remember colon? Not e. Okay. It's I I believe it's f and a.

Yeah.

We're rolling with it, and thank you for your, your eyes on it, Amber. You're awesome. Okay.

A motion to approve a b 26 dash o one three, an ordinance amending the taxes, rates, and fees schedule regarding water utility rates as a first reading and continuing the public hearing until the February. Thank you. Do we have a second?

Second.

Thank you. Motion made by miss Rustic and second by mister McFarlane. Would you like to speak to your motion, miss Rustic?

I will just say that with, two more weeks available for the public to share their feedback, we'd love to hear from you. Very nice. Mister McFarland, do you

have anything you'd like to add? Thank you, sir. Anybody on council wish to say anything else? No? Okay. I'll go forward then. Motion to approve a B26Dash013, an ordinance amending the taxes, rates, and fees scheduled regarding water utility rates as a first reading and continuing the public hearing until the 02/17/2026 city council meeting. All in favor?

Aye. Any

opposed? Motion passes unanimously. Thank you one and all. Moving right along to item number 11, another public hearing, Ordinance amending taxes, rates, and fees scheduled regarding sewer utility rates. Mister Cha, I'm looking back to you, and thank you for reporting back.

Yes. Thank you, mayor. Again, Martin Cha, finance director. This item increased the rates, per consistent with the presentation that we just received from Serge two and a half pre percent per year for the twenty sixth through 2031 planning period. Again, the rate increases are needed to ensure that the is financially self sufficient and has sufficient resources to pay for its operations and capital programs.

Thank you. I I don't know if council has any more further questions, but I guess you could, ask him at this point. Okay. I will now open up the public hearing. Anybody would love to speak about this item. Please come forward or online. Probably not.

Not at this time, your honor.

Okay. Thank you. And I think this came through miss Rustic again.

Thank you, mayor. Motion to approve a v two six dash o one four, an ordinance amending the taxes, rates, and fee schedule regarding sewer utility rates as a first reading and continuing the public hearing until the 02/17/2026 city council meeting. Can I get a second?

Second.

Thank you, mister McFarlane. Motion by miss Rustic. Again, made by mister McFarlane. Either of you, miss Rustic, like to speak to? No additional comment. Any additional? Thank you, sir. Okay. I'll move forward then. Motion to approve a B26Dash10014. Excuse me. An ordinance amending the taxes, rates, and fees schedule regarding sewer utility rates as of first reading and continuing the public hearing until 02/17/2026 council meeting. All in favor? Aye. Any opposed? Thank you again. Motion does pass unanimously. Moving right along to item number 12, motion authorizing contract with GNO for stormwater management plan update. Mister Moore, I know you've been waiting all night. Take it away.

Thank you, mayor and council. This agenda bill is for authorizing a contract with GNO to update the city's stormwater management plan. The city's most recent stormwater management plan was prepared in 2013 by Grant Osborne and is and much has changed since then. In staff's opinion, updating the current stormwater management plan is the most important task moving forward with the stormwater utility. This will become a guide for city staff for everything stormwater related for years to come and will serve as a building block for some of the pending stormwater requirements the city shall have to