Government Performance and Finance Committee - Regular Meeting

I'd

like to call to order the government reports and finance committee meeting of 11/04/2025. Clerk, will you

please hold the call?

Vice chair Bushnell. Present. Deputy mayor Daniels, absent. Council member Rambaugh? Here. And chair

Heintz? Here.

Alright. Next, we have public comments. Is there anybody online or in person?

There is no.

Alright. Then we'll just skip on reading that part. Next up, we have briefing items. First briefing items, Tacoma Water system development charge update. I'm a call with Dana Larson, division manager Andrew Zorumba, principal data analyst, Tacoma Water. Come on down. Good morning.

Good morning. Good

Thank morning. You, committee member, Rochelle, members of the committee. I was looking for chair Heintz.

Yeah. He's offline. He'll he'll be out in a

few minutes.

Okay. So I'm Dana Larson. I manage the section for Tacoma Water customer and financial services. And I'm here with Andrew Zurumo today, and we also have our superintendent, Carrie Bouchard Juarez, in attendance to discuss revisions to Tacoma Water System Development Charge, also known as the FCC. So with that, I'm gonna hand it over to Andrew, our subject matter expert.

And and thank you members of the GPFC for the opportunity to present in

front of you all today.

As Dana said, my name is Andrew the finance stewardship group within Takoma Water. And today, we're gonna talk about our SDCs. So next slide, please. The top of

the slide here is really

just the administrative background where where these rates and charges lie within Tacoma Municipal Code. But I'd like to start more with the background here and the system development charge, what it is and how we utilize it. So this is the charge that we assess for a new connection to our water system and it is due at the time of the meter purchase. First formally adopted them in 1997 and the purpose of this is to fund growth and infrastructure within our service territory. The idea here is as our system grows we have infrastructure investments made to make to serve that growth and we want to collect it from those that are in a sense causing us to take off those costs.

To be clear with how this charge is assessed, it is not assessed each time there is a move in or move out into onto an account. It is just the establishment of that connection to our system, and then any move in move out beyond that does not incur this charge. Next slide, please. The last time we updated these charges, were struck by public utility board and city council in 2019 with an effective date of 2020. We this year, we took on an assessment with a consultant to review the infrastructure that we have built into our system since the last update, our new capital improvement plan since that update as well.

We wanted to ensure the methodology accounted for the costs that have been incurred by the payors to accommodate growth. And we just really wanna make sure and what the purpose of this charge is to assess an equitable charge to those that are joining the system and to not have the cost of system expansion fall just on existing ratepayers. So the results of this study, which we'll get to in a moment, reflect the capital investments that have been made in our system. The additional thing that's happened is that we have over one year now of full advanced metering data that really allows us to look at how each customer class uses our water and equitably assess infrastructure costs to them based on how they use that, how they use our system. In the past it's been based on billing data, which is often bimonthly, and it's really hard to get an idea of average and peak usage on on data that that covers that much time.

So we were really excited to be able

to use

this use the state that we have access to to assess our costs. So the next slide is just a wanted to give a high level overview of the methodology and how we do assess the costs. The idea is we take our existing and planned infrastructure. We bucketize it into different system functions as you see here on the left side. We identify the ones that are eligible for this type of charge.

You can see we remove distribution, meters and services, and hydrants because those charges or sorry. Those infrastructure is often funded through different fees and charges. For example, we have a monthly hydrant fee that's built into the the fixed charge for every customer, and we don't want to assess hybrid fees through our monthly charge and then also included in the pool of allocable costs for system development charge. We don't wanna double collect on this. And then meters are purchased individually as they're installed in the system, so we don't want to collect them through the system development charge as well.

So we take the what we call the allocable costs and split them into what different utility functions do they serve. Some percentage of our assets are are sized to serve average day demand. The remainder is oversized in order to serve peak day demand, and then there is also a component that is meant to charge meant to allow for buyer flows which are higher often than or can be higher. So once we reach those percentages sort of in the middle of this chart is we have dollars associated with these different utility functions and then we divide it by the appropriate denominator here. So average day use, we use our system for a meal.

Peak day use, we look at how much physical capacity do we have in our system in terms of gallons. And what that allows us to do is get to a unit cost and allows us to say what does it cost the utility to serve one gallon of average day demand over the course of the year in terms of the infrastructure cost. How much does it cost to oversize our system to have a peak day or a peak component to our to our system? And then additionally, fire suppression component as well. So we take these numbers here on the far right side and look at each customer class individually say, pay residential class, what is your average day demand?

What is your peak day demand? And what is your what is our responsibility to be able to serve that virus suppression activities? And that gets us to what we have on the next slide,

which is the

results of the system development chart. So what you'll see here is down the left side is our meter sizes, and across the top are the different customer classes, the ones that have system development chart. And you'll see example given here that for a five eight inch meter, that is a new connection to our system that is at the residential class, we would charge a system development charge of $2,007.55 dollars. We do have in the appendix if you want to follow the the previous numbers, the numbers from the previous slide and then the residential class specific demand on how these numbers are calculating. You'll see the same for a commercial customer in the appendix.

Another thing we wanna highlight here is as it stands in our current in the current code, for a multifamily connection, we currently assess 60% of the five eighth inch residential SDC multiplied by the number of units that are gonna be served off of that multifamily connection. The idea there is we want to acknowledge that a multifamily unit has a lower individual load on the system than a single family home, and that's largely due to summer peaking because irrigation demand for a multifamily home is often through a separate irrigation meter. What the advanced metering data has allowed us to really look at and say, how much is a single family or sorry, excuse me, a multifamily unit. How much of that is is it as a percentage of a single family home with much more precision? And we found that a multifamily unit consumes about 44% of a five eighth inch residential meter.

So it allows us to lower the factor that we assess to to those types of connections.

So it'll still be based

on the five base meter. It'll still be based on the number of units, but it'll be 44% of the recommended charge. These the rates that you see here, again, are the pure results of the study. What we like to do with the utility is we really believe in gradualism as it relates to rate changes. We want to build into increases over time, have go from where we are now to medium jump.

And because because the what we are showing here is to something we significantly higher than what's currently in the code, we have a recommendation that we want to, on the next slide, phase into the results of this study over a five year period. Beginning next year, we have a a planned effective date of February 1 just based on the timing of what we can get in front of you all for first and second readings. But beyond that, we would phase in on the first of each year. At the top, you see the highlight just so you can get an idea of when we intend to have these rates effective. And for each class, you'll see we phase in in equal dollars each year until we reach the end of our phase in period.

This works pretty nicely because 2030 would be a great time to look at our system development charges again. We will have built new infrastructure that we want to incorporate. We will have new capital improvement plan that we want to build into our methodology. This isn't a type of rate that you update every two years on your budget and rates because things tend to move slowly and then, you know, just given the workload between getting budget and rates and then adding this on top would be, you know, be difficult to manage every year. But this seems like a good a good mile marker or milestone for when we need to take a look at these rates again. It is possible for system development charges to decrease over time. That's what happened from our previous update. Then actually we had an update in 2019 that was effective 2020. The prior update to that was 2004. So it's a very large gap between those two periods.

And between those two times, the system development charge did go down. And to give a sense of scale, by the time we are at the if approved, the the twenty twenty seven, twenty twenty eight time period here, we will the system development charge will be approximately what it was between 2004 and 2020. So there's a significant drop last time, and by the time we are four or five years into this phase in period, it

will be equal to what it was back then.

As I have to do when we talk about rates on the next slide, have a comparison of where we are with our peer regional utilities. You can see at the bottom of this chart here is where we currently are for eight five eights inch residential meter at $809 for the system development charge. And then we're where we are proposing to be by the end of our phase in period in 2030. The other utilities listed here, these are other current rates. I suspect some of these may some of these utilities may be looking at their rates in, you know, between now and 2030 and have updates of their own.

But until, you know, until something is written in code, we don't like to put it as a comparison because they have to go through their processes and things can change. As I like to say when we do these rate comparisons, it's not this isn't a value judgment that we are better or worse in terms of how we're allocating our costs. Different utilities face different challenges. We are a surface water utility that, at the moment, has ample supply, and the cost to access additional supply is different than a utility that may be primarily groundwater drilling well and now there's key best consideration that they have to include in their costs. So to say that a utility here is more expensive doesn't say anything about utility management.

This is just the cost that they face to add a new connection to their system. So the next slide, just sort of summary of our recommendation. We're asking that the GPC assist with the full council. We are what I don't have here on here is a timeline. We intend to go in of the public utility board that you can make tomorrow night before public hearing followed by a formal vote at the subsequent meeting before it would come to the council for first and second meeting. With that, I'll take any questions you may have.

Alright. Thank you. Questions in your lab.

Thank

you very much, chair. I just I'm curious. Thank you so much for this presentation. It's sort of really, like, highlighting something I didn't know anything about. I guess, like, one question I have is that when people come into the system, say, in 1980 and build something, they're paying a lot less

Mhmm.

For that infrastructure than the person today. How do we equal that out?

Yeah. It's a great question. What I would say is the somebody who joined the system in 1988 I guess we didn't have a system development charge in 1988. Yeah.

For what we

did. The the the

We In did 1997.

Yeah. Yeah. Let's start there.

Okay. The idea would be that they paid what their fair share of Equitable costs were at the time that they joined the system. So the infrastructure we had at the time and that we were planning to build at the time, we the charge that would have been assessed would have been, this is what it costs to replace your load on the system. So although the cost may be different in time, that was the fair share cost at the time.

I guess my question is wear and tear is a real thing. So what happens with that cost?

Yeah. That's a good question. So as we as our infrastructure turns over and we decide, you know, once something is retired out of our system, it comes out of our plant as something that we as something that we sort of assess costs on. And then the new the replacement goes on our capital improvement plan. It it is true that that to rebuild something now from back then will be more expensive.

I suppose all all I could say is that that now represents the equitable cost today. And as as cost increase, the idea Sorry.

I didn't mean to interrupt you. I'm Carrie Richards.

I'm the Tacoma Water superintendent.

I think one way to look at it is to say that rates pay for operations and maintenance. Right? So the ongoing performance of and maintenance of the system is is a rate payer expense. We have this onetime sort of buy in fee, right, for new connections. Right? And so we we assess that onetime fee as a as a portion of of the value of our system.

Yeah. Okay. I I that makes sense to me. That makes sense. Okay? And then the other question is, how long does it actually take to get one of the to get a meter installed? Because I've heard people talk about having to wait a long time. Like, the M Master Builders Association who I don't talk to anymore, but they said that it always took like, that is one of their biggest issues is the water issue. And I'm just wondering if you could talk a little bit about that. You might be the person perfect person for the call.

Yes. So we don't have a

backlog right now. So it is really a matter of weeks, maybe six weeks right now. What they might be referring to is the process for getting a meter approved. That might be what it is. And so there's some engineering that they that they go through. Right? And then

they they submit something, and then you guys look at it and say, no. We don't like that. We're gonna we want you to tweak it a little bit. Is that

Well, we try not to we we try to work with them so that there's not a lot of back and forth. We're we're certainly trying to get it done as quickly as we can. Okay. That must be the part.

And then do have a standard level of service that we follow and try to adhere to. And I believe last time we checked, we were over 90% as far as the plans coming across the engineer's desk. It's not meeting those timelines. So what's the timeline? I believe it's fifteen weeks from start to It's a little bit more than a fifteen or less than that.

That's helpful. And then my just my last question is, do you pay for they have to pay this fee at the time of picking up the permit. Is that right?

So when they purchase the when they actually purchase the meter so we don't issue permits, but we sell meters. Okay. So when they sell when when we sell them the meter is

when they pick up the meter. Okay. Alright. And that has to happen like, you can't go ahead and build a house and not have water. Like, you get your permit for your to build first. So they start building, and then they might not get your thing until

we would issue what's called a certificate of water availability Okay. To support the meter purchase as well

as the dwelling. Alright. They may purchase the meter early so they have construction water. Okay. Or they may wait until later. It just depends on if they've got other access to water for their building. Okay. That's really interesting. Thank you so much for all your information. Thank you.

K. Thank you, mister.

Thank you, chair. Great presentation. I don't have any questions. I think I think it's really fortuitous that the water utility had done the SDC in 1997.

I think it set has set us up for success in the long term.

So I'm glad to see

these updates, and I really appreciate the additional data and information we're receiving from

the AMI infrastructure. I think it's gonna be vital. And when I was in the utility board, was really happy to help see them pull out. So thank you, chair.

Thank you. K. I have

a few questions. Put the slide like I said, my question.

So my limited understanding of system on the charts is. Is. Right? So you can't make people pay to fix the inefficiencies system now. So they're paying for expansion of the system in capacity.

Yeah. So the the the methodology for calculating SCC is defined in the RCW. Right? So there's a little bit of flexibility in there in about what we can include or can't include, and then we also have the ability to do the ramp up like we're proposing here. But it is that methodology is defined in the RCW, and that's what we're following. So it's basically a value it's valuing your system and then assigning an equitable charge to that. And we are allowed to include ten years of our plan to the IP is as part of the value of the system.

Okay. That's that's because I

the question okay. This I saw this earlier. So that's that's the question. You know, we traffic and activity conversation always revolves around, like, we can't make you pay. Like, your new trips didn't break. Our infrastructure is already broken, so we can't make you pay to fix it. So similar methodology around this, right, where you're adding new single family housing to the system. The system are an adequate survey area. Those charges can't be

used to fix the accuracies, and the rate payer should be addressed otherwise or can be.

So the law is different from the PACT versus SDC. Oh. So there's a different portion of the law that governs it. Check. I'll take

a look at it. Just to kinda

that may be a follow-up

question.

Still I mean, I still think we can answer the question. So your question is, can we charge them to fix deficiencies?

Yeah. I mean, I think

that would that's kind of the where I would think. Because, like, if I'm building a building a new single family housing with them. Right? Right. That's what this always comes up. Right? Mhmm. And there's some kind of you know, the the pipe survey, this entire region is underserved. Sir, it's undersized. And then I'm just the person who tips it over at the end. My fees can pay to fix that part, but I there there has to a policy that. Right?

Well, you're not gonna be charged anymore than anybody else. Right? So Okay. Some utilities would require the developer to actually upgrade that line.

Gotcha.

They would say, you're paid. Sorry. But timing is such that you're the one that puts us over the limit, so you gotta replace that line. We don't do that, but we do use the system development fees that we charge. That that very well may go to upgrading that line. But that that last unlucky person is not gonna pay any more than anyone has.

Like the last thing. Okay. Yeah. That makes it last that makes perfect sense. So what's driving the need? So if we go to the rate sheet, I just I have to ask the question. It looks like almost everything's tripling in the next five years. Like, every system that will charge across the board is tripling. At least going by three times. Like, if we go to the chart for the next one. Like, if I look at the five eights meter residential is going up 800 to 2,700. So that's more than three times the next five years. The irrigation on the bottom, the two inches is going up 8,000, 58,000. I mean, so every every number I look up there is going up about three times the next five years. So what's driving the need to raise system charges by that amount?

Now I can certainly we've undervalued force, which what it sounds like, but is there a big cost that we're assuming that as we add new people on are gonna require major upgrades to the system?

I can answer one of those really easily. And so with the irrigation one, irrigation was not previously its own separate rate class. It was bundled into commercial. Gotcha. And I I get it with the AMI unit. We can see that the load that an average commercial customer puts on the system versus average irrigation customer is very, very different. Most of the irrigation customers are things like, parts of coma. A lot of it is, homeowners associations and irrigation for complexes and things like that. So we wanted this to reflect that cost. The the the very specific details about the increases, we do have a report from the consultant who will put some of this together.

I don't there's a section that's like, here here are the the the most impactful things. I don't have those off the top of my head, but I would really be happy to provide those Yeah. I this meeting.

Probably a further conversation. Just looking at the numbers, wow. Like Sure. When we're trying to drive more house development, all I'm gonna hear from people building houses is saying you're tripling our cost of your water system. And I just want to really add on why we're doing that. What's driving that cost? And I I really appreciate using AMI to adjust for the multi family. That's a great use

of technology to balance that out.

But I probably have a couple

more questions just around

that specifically.

I can jump in

with some numbers from the study as well. So the updated SDC charges, they include somewhere around 300,000,000 in capital costs that are allocable to existing and future users. So we applied that most significant projects driving that pipe pipeline number one pressurization program. We had PFAS treatment in the South Tacoma wells, and and so there's a number of projects Yeah. That drive that large number that's included.

So it makes sense. Right?

So similar to how in fact, I know it's different. How they work is we have to identify capital projects of which people would need. So I I imagine people also gotta be part of this conversation. The new people coming on board have to start pairing some of the costs associated with

the what's in process or

I mean, don't expect PFAS treatment to be an expense that is sort of outsized compared to our normal CIP spending. Right? It's not like building a new filtration plant up in the watershed or something like that. These are gonna be smaller, more incremental investments, but but they will be part of our capital expenditures over the next ten years. Right. Okay.

I mean, I think that I mean, I'm happy

to find the chat further, but just just initial look of that is, like and just and I recognize let me go to the next slide. Let me go to the next slide. Slide. Looking at

our peers. It does put us

in the mid space. I don't ever like to more expensive to Seattle anything. Mhmm. But and you're just from Seattle, so I bet you can probably speak to me. Are they gonna be raising that rate at some point?

They already have.

Already have. Okay.

The council's approved it, but it's not in the code yet, which is why it's not reflected here. Yeah. However, theirs is now about 8,000 per per and they only sell three quarter inch meters. Yes. So they're three quarter inches equivalent to r 5 eights.

Okay.

So they're and you can call that sort of an equivalent residential unit. So their theirs is around 7,000 for water. They are also charging a wastewater and solid waste SDC, which brings is bringing it up to about 13 k. Solid waste Per SDC. Per unit. And so ours is still, you know, well well below that. Yeah.

Okay. I mean, there's not any idea. Just

for those crazy. Okay. That's that's good to know. I mean, I

do look at, like, some of the really expensive ones are in more rural areas, which I would imagine developing system building house probably have more cost associated with urban center, like Seattle, Tacoma. My last question. Do we is there a difference between our the Cisco charges people pay inside the city of Tacoma versus our outside the city of Tacoma, or is it all

the same? So we used to have separate rates. We used to have the 20% outside city differential. As part of the the review the methodology and of the RCW, we felt it was appropriate to pull back from that and just have a unified rate across all of

our service centers.

Okay. That's the yes. That'll be a follow-up. Okay.

The reason for that is that there's not a strong basis to so the SDCs need to be a reflection of our actual cost to serve a customer class. Right? And it doesn't actually there there is no sort of geographic dividing line where those costs change. And so we would need we would need to be able to justify it as an actual cost difference in order to charge people Yeah. In different areas something different.

On the STC.

On the STC. Yes. We definitely charge people different rates for different services out there.

Yeah. No. It it that's just unique to the way the state law is written on calculating SCCs. Yeah.

No way.

I mean, I think there's a philosophical argument to make about, like, we want growth Okay. I think those are all my questions. I probably might have some more later just before this gets all the way to the council just to kinda better understand the what's driving this

why and we're landing here in

the next five years. We'll just

do something that I would care.

So that's why I'd probably like to see more information. That's a robot.

Oh, I just had one more question based on something that you said. I just wanted to know what's the different size? Why are they different size pipes? Like, who use utilizes what size pipe?

Yeah. So it's based on the size of the meter that they're purchasing, and the meter size is basically just the capacity of flow that's required. Right? So a standard single family home requires about a five eight five eights against meter. That's the smallest meter that we sell, and that's what the vast majority of our connections are. A two inch meter might serve like a multifamily facility. Okay. But, you know, a large a really large meter would be like a four inch.

Right? Of course, yes. I

will say I've seen irrigation meters as high as six inches. That's that's for very, very large. I think it's a Holly Homeowners Association. It's a six inch irrigation meter. So I would say a golf course could be probably between four and six. That would be for Okay. Significant usage.

Thank you.

My only other question is, like, probably, we'll answer here. But, you know, we also have so think about so we have, like, WestRock as an example. So that's way open for any use right now. So the next if a paper mill showed up, would they have to pay a system charge to accommodate for that one? The system's already built to accommodate all of that. But I guess that's my question. Right? If a new user comes in and it's already built, do they pay a system development charge, or do they just is it built and they

just access the system? That's it.

It depends on if they are purchasing a meter. If they if you buy a property that has water service already and you're just reusing the existing meter, you don't pay anything. Yeah.

Makes sense.

Yeah. I that's the in my mind, that's there's a there's both a

a growth forever, like, in building capacity. Mhmm. But there's

also parts of our system that's capacity

is much lower than it was. Yeah.

That's right. The vast majority of people moving into Tacoma are or selling their home in Tacoma are not paying a system development charge because they're just freezing their existing. Okay.

And if you upsize the meter,

I believe that we charge the the difference.

There's a credit. Right? So let's say you need to go from a five eights to a one and a half inch. You're gonna get you're all we're only charging you the difference between that smaller meter charge and the bigger one.

So for downsides,

get a credit towards future construction costs.

And so but most of our kind of mid scale multifamily is gonna fit in a five inch meter still. Or or we so I guess that's a question I have. So are we seeing with a lot of people in the same family house, maybe it's torn down, plex, are they gonna be the person you need to accommodate that in most cases? Yeah.

They would need a two inch domestic and fire combination.

Well, it depends on the type of housing. So some some people developing a six plex or a four plex like to have individual meters Mhmm. Right, rather than a a larger meter. Right? So they may purchase six different five eights inch meters. Gosh. Right? Because it it's a little you know, buyers tend to like that better. If you purchase

a larger meter, you have to have a

homeowner's association or some kind of function to divide that bill up. Yeah. Yeah.

If you're a condo, like, town halls, you're gonna want the individual meters to sink some power.

So, of course, that's expensive. It's more expensive to buy six five eights inch meters than it is to buy maybe a one inch or one and a half. So they they pencil all that out, figure out how it might impact their sale price, and we work with them on on all of that and kind of give it we sell it to them the way they

want it. People don't have that choice of power. Right? They don't they're not allowed to buy you can't have a meter that serves all six units at a power. You have to buy

individual meters. Correct? That's correct. So it's interesting have the flexibility on

the water side than on the water

side. Good

question. It's interesting.

Something for later. Anyways

I I did get a little bit of inside information. The the West there was a contract with the WestRock site that the SEC allowance does not stay with the parcel for whatever reason why that contract was done. Oh, it's so big. I think due to its size. Gotcha. So that that one specifically, there may

and would be in

the system based on their anticipated usage. So anything above a two inch meter is based on estimated usage, and they pay the average day and peak day.

And that's perfect.

Well, those are all my questions. Well, for this one, I'll find out some I think my follow-up conversation later. First of thank you for being here.

Sure. Nice to meet you. Yeah. Thank you.

For the first two fifth of evening.

Yes. Yes.

How long have you been in the room with now? About five months. Okay. Yes. Well, it's great to meet you in person. So with that, I'll entertain the motion.

I move to form the proposed amendments to Cohen municipal code chapter 12.1

to the Polka City Council for consideration. Second. Alright. So we move to second. All those

in favor signify by saying aye. Aye. All opposed?

Motion adopted. And this is before the board tomorrow for the first time for the first time. Okay.

Thank you. Thank you. So it could change.

We've already had a presentation.

Okay. A

lot of conversation questions. Questions. Any questions at all?

No. There were several.

If not, she did dissimilar from the sorts of other guidelines. Good. Alright. We'll now

move on to our second brief item, which is the amendments to home of this code 12 dot zero nine, small quantity generated dangerous slash hazardous waste pilot project. I'd like to call on Shane Penn for environmental services. Good morning. Good morning. Okay. Go ahead and take it out. Take take it away.

Thank you, chair Hines and members of the committee. My name is Shane Pettit. I'm an assistant division manager with the environmental services department, and my role is focused on the operations and maintenance of the Tacoma Recovery and Transfer Center.

And my name is Alex Reynolds. I'm a senior business services analyst on the rates and budget team at environmental services, and I support solid waste.

And I did wanna note, two other additional team members in the back. Lisa Warner is the supervisor of our recycle center and household hazardous waste facility, and Tony Stockman is our lead environmental systems technician responsible for leading our HHW operations. And we're here today to discuss a pilot program that the city is working to implement focused on providing

services to small quantity generators.

As you know the city operates a household hazardous waste facility for residents to bring in specific types of hazardous materials at no additional charge, but per our operating permit and the municipal code only residents can bring in hazardous materials to our site. Small quantity generators or SQGs cannot use our facility, and SQGs do not have adequate alternatives to environmentally dispose of their hazardous materials in a responsible in a financially viable manner. The city is working to address this service gap with a pilot program to provide services to small quantity generators, and therefore we're here today to propose an update to the Tacoma Municipal Code that allows solid waste management to receive and charge for commercial hazardous materials as well as some select items that residents currently cannot bring to the HHW household hazardous waste facility. On our next slide we'll be using the phrase SQGs a lot. So what is an SQG?

As the name implies, a small quantity generator SQG is a commercial business that produces a small or little amount or quantity of hazardous material. The technical definition for it would be that it's businesses that produce two twenty pounds or less per month of hazardous materials.

There are many types of hazardous waste.

You can see a list up on there.

They include solvents, oil, fertilizers, batteries, and any other material types. And if these materials are not stored properly and disposed of in an environmentally friendly manner they can be both a health and a safety risk. In addition to SQGs on our next slide we have materials that can be brought to the HHW facility that residents don't have to pay for but there's also materials that we don't accept either because of the challenging restrictions associated with those materials and due to the prohibitive cost for handling those material types. For residents you can see some

of the examples of materials we

don't accept such as marine flares and ammunition. If they don't get disposed of into the proper stream at the end of the garbage stream it can be both a health and a safety risk and using ammunition as an example that is a material type that we will find on the floor in our main receiving building at the recovery transfer center that

could been thrown into the garbage.

So that's a this is another area that we're looking at as well in addition to SQGs. On our next slide we'll provide some background information for you the service gap for SQGs is a relatively recent occurrence. Previously private vendors provided affordable quarterly events to take hazardous materials from SQGs, but starting a few years ago the vendors no longer offered these events due to a lack of profitability. And the HHW facility only accepts materials from residents for regulatory restrictions, the municipal code, and funding as well. The funding for the HHW facility in Tacoma comes largely from the residential collection garbage rates and as well an interlocal agreement with Pierce County that's focused on residents, not commercial businesses.

This leaves SQGs with the only current alternative contracting directly with a private vendor, and this is a bit of an oversimplification, but private vendors, they have a flat rate that is relatively the same regardless of the amount of material. So in other words, if you have 55 gallons and can fill up a 55 gallon drum of material, it can be relatively the same cost as having just a few ounces inside that drum. This leaves SPGs that produce a little amount of material with the option of either paying that large cost or storing materials for an extremely long amount of time that increases the chance of

not following proper storage procedures.

The health department has, looked into this issue as well. It's an item identified in our region's solid and hazardous materials management plan, And as part of that, last year, they conducted a survey of businesses to better understand the service delivery issues for small businesses. And the items cited in that survey included challenges with having a convenient location to dispose of hazardous materials, difficulty accessing clear information about the requirements, as well, having an affordable option to to be able to do so. And they also indicated that they'd appreciate government support in finding these ways to manage these materials. And just as a note, as a further example of how this is challenging is that even the departments within the city of Tacoma, this can be an issue of how do you dispose of your your materials.

And so if solid waste management was able to receive these materials from other departments and and charge for them, then our departments in the city will increase our efficiencies and allow us to continue and further meet environmental, stewardship leaders. Because of the shared interest with the health department in closing the service gap for SQGs, we have a pilot program that we're implementing as part of the 2526 biannual budget. Lisa and Tony are involved in the day to day steps for setting this program up, which includes working with the health department and the source control section environmental services to reach a selection of commercial entities through all areas of the city. We're also working with the health department on our operating permit and other changes we need to make. Part of those changes include coming before you to discuss the to allow us to be able to receive materials from SPPs and charge for them, and as well discuss those unique material types from residents that would be a part of subsequent phases of our our pilot.

And with that, I'll now hand it over to Alex to discuss the municipal code changes. Thank you.

So we are proposing two co revisions. The first of these adds language which grants the ES director authority to implement hazardous waste pilot projects, and that authority extends the ability to establish rates for hazardous material disposal, to adjust those rates, but also to determine what materials will or will not be accepted and how we accept those materials. Next slide. So we are also inserting language in the to common municipal code in the sectional disposal rates, which sets the criteria for establishing rates as well as adjusting those rates periodically. So those criteria include that the rates must reflect the cost of service and, clarifies what factors may be included in that calculation while also allowing flexibility to change rates based on, changing regulatory requirements, the costs we face for disposal as a utility, as well as the types of materials that we receive.

So those changes can be made up to four times a year with

a notice made publicly available for thirty days prior to their effective date.

So next steps beyond being at the committee review today is to get these revisions in front of the full council for consideration in hopes of having an effective date of January 1. At that point, we will launch what is effectively a pilot to the pilot where we conduct targeted outreach to a handful of SQGs of various types throughout the city in order to identify what materials they have for disposal and for a period to dispose of those materials free of charge while we work through operational challenges and while we gather information on the cost of providing that service. So we can then use that information to set rates and publish those by the February year in preparation for launching the full pilot at the '2. So at that point, we would begin accepting and charging for materials from SQGs with, as Shane mentioned, the residential component of this program to happen in subsequent phase. Next slide.

So in conclusion, we recommend that GPFC forward these coderivisions to the full council for consideration and approval. Thank you, and we are happy to hear your questions.

Perfect. Yes. We're fine.

Knows I have questions. I guess one of my questions is and thank you very much, Sharon. Thank you for this. So, basically, there's been businesses running out there that have nowhere to dispose of these items. So, like, a question for me, is that, like, auto repair shops? Is that one of those? Or

Yeah. We're looking at a variety of MetroTox auto shops. That is one that will potentially look at some of the materials.

Like, a

place that does painting the car painting.

Yeah. Okay.

We're gonna be looking we we haven't identified specific business yet, but Lisa and Tony are working with other departments to figure out which ones we can handle while taking considering our operation, our own operational constraints.

Right.

Because we're currently set

up where we see many residential materials.

So I'm just thinking about our workers and our workers' safety. Mhmm. So that's my number one thing. It's like, how do we make it safe for our workers? So I'm gonna be curious about that. That's, like, the number one thing.

Yeah.

Secondly, the fact that there are people out there operating, and I have no idea what they're doing with their items. That's the other thing. And, I guess, is the enforcement through is this another one of those things where enforcement is somebody has to complain, or is enforcement we people are going out yearly to inspect? Is that the health department and the fire department, or who's doing that inspection?

Yeah that's a

that's a good question councilor Aruba. Right now there isn't there's the main method of communication is through education the health department has funding where they're providing the service also source control has elements where they'll interact, and we've

had our own programs in

the past as well. We see this as a good opportunity for a strong education because in addition to saying, hey, here's your options, which is

what we currently do.

We'll we'll get those phone calls that you're talking about of a a business that's reached out to another department in the city, it gets referred to us. And Yeah. Right now, we have to walk them through that challenging landscape. With this, we'd be able to provide not just information, but very specifically, and now we're gonna walk you through your material types, how we're gonna handle them appropriately, bringing them here, what that's gonna cost you, and being a more of a one stop shop for them rather than getting handed to multiple areas. In terms of what you brought up of how businesses might be handling materials, For example in that survey there were businesses that said they didn't have hazardous materials but when they check what they have they checked off hazardous materials so it's a challenging subject when you're, like most of us are laypeople related to neurotypes and so that's something that I think this program will be able to help navigate as well as providing some clear information and those respondents even noted, in many cases that having clear accessible information is a challenge for them.

K. Two more questions. One of them is what's the fee gonna be like? I mean, because now I can see this is gonna be an impact on small business even though I think it's necessary. And then the other one is if this is the Tacoma Pierce County health department that's asking us to do it, it has the County part in it. What is Pierce County doing about this? So

Yeah. Other good questions. For the the first part of what the the fee and the rate will will look at, as Alex noted, that's part of the the next phase of our pilot is honing that in. What it will do, though, is be at a more affordable rate. We can say that then your option with that kind of bulk system that I mentioned with private vendors.

If you have a small quantity now, and, again, it's an oversimplification, but you're gonna be paying for your share of that 55 gallon drum rather than the the full amount. Also, we're not requiring compelling businesses to utilize our services. That's not what this is intended to do. What it is is that we're recognizing that as a city that there is a gap in service that the private market is not meeting for our businesses, and that's one of the functions where we're stepping in as a government to to help provide that service. The health department is interested in it and asking for it, but it's something that we're we want to do too, and that and that's actually the main driver is recognizing that service gap within our community.

At this time, we aren't we are only going to look at Tacoma businesses for this because that's what we're starting with. We are taking it under consideration of expanding in the future beyond the single loans. But if it were to do so, those customers would be a part of paying for the services and having that cost recovery of providing that. That's what currently happens. We accept materials from residents in Pierce County outside of the city, but the Pierce County funds us through a tender local agreement to pay for those services that ends up being mutually beneficial for both the county and the city of Tacoma.

Okay. So I'd love to get more more information.

Absolutely. Thank you.

K. Mister Robaugh, nice to hear you enough. Thank you, chair. Thank you for the presentation. I think this is definitely needed. I I hear

a lot from folks. I think a lot of it is to do with commercial waste actually just not making it to where it needs to go. What constitutes small quantity generation is a different class ifications? Or take take oil, for example. I know that there's, a, you know, repair shop that has large quantities of oil. Is that something that a commercial entity goes and picks up for them, or is that something at what point is it, like, tripped over into from small quantity to, like, large?

Yeah. The so the businesses that produce less than 220 pounds per month of hazardous materials are small quantity generators. After that, you go into different generator levels. I believe it's also there's categories of a very or extremely hazardous material, and that has a much lower threshold of only I think it's 2.2 pounds per per month. And it's also part of why I brought some of our experts here. If you want more details and data on specific classifications of materials, then I've got my lifeline here of Telugu

and Lisa.

Would would you be interested in more than that?

Well, I I thought I would was thinking about oil and, like, maybe there's an opportunity for,

you know, a fee for service type of situation where, okay, maybe they don't come and drop it off, but you guys have truck that goes and sucks it out or picks it up for

a location. I don't know

if there's any commercial operators doing that. Maybe they have I don't know what their threshold is. If they they're going out to the small quantity folks or if they're only targeting the large folks because it might be more economical.

Yeah. I and and other thing, I think for the private businesses, those are models that are offered. And and then, again, I don't know that if a business is willing to pay, the service will be provided just in the case of some material types. If it's a low amount, then therefore, it

might be cost prohibitive for you as

a business to utilize that private vendor because there's still gonna be charges for coming out for providing the service. And that is the current model that exists for private businesses is that direct service model with the vendor. Got it.

And then separate to that, I noticed that was there's ammunition. I've mentioned this as

a potential hazardous material to be accepted.

My question is, are you is there gonna be

a differentiation between live ammunition as opposed to brass because spent cases are significantly different classification than live ammunition? I I know a lot about this because I I have ammunition certificates in handling classifications. I know all about the handling of it. So I'm just curious about that.

Yeah. The so and as we noted too, the the residential program is gonna be a subsequent phase, so there's a lot of details that we haven't dived fully into. We do we do sometimes come across ammunition. Yep. And

It's gonna it's gonna end up in the garbage at some point. It's good. So Yeah. And we still have to figure out a way

to handle it. Anytime we've had, it has significant challenges because there are a lot of regulations that come with handling ammunition. And so there's some of the things that, councilor Morimba, you mentioned the safety component, which is our clear and number one focus as well with the inherent items that comes with this these type of materials. And so we'll be thoroughly before we're stepping up that program and looking into those details and making sure that we're meeting both the regulatory requirements and the safety needs that are that we

need to.

Yeah. There there's a lot to go into in there because, you know, obviously, sped ammunition

is different than live aviation. And then you have, like, all the subcategories in aviation, what at what level are you willing to take it. But there are clear classifications also, which is helpful.

You know, brass specifically is

is something that is worth money.

And I so I don't know

if that's something that can be collected that maybe goes back into somewhere in the program or something like that if we're able to get enough quantities and then it adds up very quickly.

Yeah. No. It's an interesting point. There are materials. Like, we're handling our processing. If there's an opportunity

with that, we we try to take advantage of

Yeah. So I just wanted

to highlight that as an opportunity for some cost recovery there.

That's oh my god. I think

this is really good that we're we're working on this. I think the availability of disposal. I think most people wanna do the right thing and dispose things properly. But so I think this is a great opportunity to do that.

Do we have a idea sorry. They can. Do we have

an idea of how much the product's gonna cost?

That's part of what we're going to. We did, we have a current budget of approximately $200,000, for the the full biennium, but that's what we'll

be going through too. We get,

we have our contracting, in place that we're working on and expanding. The other component will go will be figuring out our own operational cost that will be necessary as a result. Okay.

I I think this is again,

I agree. And we want people to, you know, come out of the

shadows and, you know, actually close the. Mhmm.

I also wanna kinda know the full cost because I think one of the challenges that brought up is it is free to just throw up your dumpster. Right?

And so if we're gonna

say, like, you don't throw up your dumpster because it causes issues, do it this way. It's cost. And so my question later is how do we go

with enforcement? Because I think

at some level, you're gonna have to do enforcement because I'm there's gonna

be a cost at some point in time,

and we're gonna choose not to pay that and just throw it in the dumpster. So, yeah, I think there's an unfortunate conversation. That's not as far as pilot, I think this is very

exciting and I'm excited to see what we'll do. Yeah.

One more thing, counsel.

Two more questions, counsel. No. I

really appreciate that you want this to be something that is optional, that they can opt in. But I see at some point this is not optional. Like, I see this as required to run a business in our city that you actually have to use our disposal. Only because it's easy to tell that if you're an auto repair place and you have this many employees, we know you're gonna have this kind of business. And, I mean, if we do it that way, it would support the whole system. So I appreciate the pilot. Mhmm. And I appreciate the conversation with the health department, and I appreciate the next steps for how this becomes something that's compliant based. And that's just it has to be because we have commenced what they need to stay clean. We've done a lot of work to keep it clean in the Boss Waterway.

I just don't wanna see it get polluted. And like council member Bushnell mentioned, because he lives on one edge of the city, I live on the other one. And we do get a lot of illegal dumping, and it is usually construction type stuff. People who don't wanna, like, get rid of things the way they're supposed to, oils and things. So Mhmm. Appreciate this conversation. I'm actually kinda scared. So No.

I I think it's very,

very exciting, and and I think to

your point, filling it in the system. Right? Because there are private there are private options for this on a certain scale, but we have a certain. So Yeah. I think it looks good. Alright. I'll entertain the motions.

I move forward to proposed amendments to code chapter 12. Council for consideration.

Absolutely. Yeah. Alright.

Thank you.

Thank you. K. And with that, let me

not say I keep going to all the.

Up, solid third presentation is solid waste permit and tax update. I'm very excited about it. Like so I'd like to call the therapist and John Henderson from Paramount Services, Indiana Dillard's finance.

Yeah.

There's a lot of great people in trash.

Because we I love trash. Wait. Where's your shirt? I love trash.

No. I this is

like, got a Disneyland for me. Anyways alright.

Alright. Good morning, chair and committee members. I'm Chris Griffith, the division manager for Solid Waste. And we spent a lot of time with you last year Yes. On these topics. We missed you.

I missed you all. Yeah. I know.

It's good to have you back with an update. So just kind of a little bit overview on our first slide In 2024, solid waste and tax license work together on a tiered recycling gas production for solid waste businesses with the goal to divert more waste from our regional and build incentivized recycling. And those changes that we worked on last year went into effect 01/01/2025. So on the next slide, we just have a little bit of a recap of the code changes we made for the special permits. So we've defined the recycling rate, and we added a requirement for annual recycling reports that were tied to the incentive in the tax deduction in title six.

We had a lot of discussion on alternative daily cover and determined that that would be reported as 50% recycling until 2027. Implemented a permanent reporting fee of a $150. And the first time of applying, we're able to do an estimated recycling rate in the case that they didn't have all the data that's required for the reporting. And then we allow for amendments to the recycling report to be submitted out to November 1 if there was any changes in their operations to change the recycling rate. And then language around Solvay's ability to audit and inspect to be able to verify the reporting and certify those recycling needs.

The next slide, we have just sort of a summary of the tax code related changes. So we established the five recycling tiers and the recycling rate that's certified each year is then applied to the tax filings subsequent calendar year. And this also applies to the solid waste of the the city. So next slide, we have just sort of the status of the permit process. So last year in the initial round of permits, we issued 58 permits.

We had 46 permits issued this year.

So we're looking at kind of what's the

reasoning behind a little bit of drop in number of permits. There were some some classes of businesses were determined to no no longer need a permit under this code. Primarily, those were environmental remediation type of businesses that were generating some waste in the process of work they were doing. Some of those businesses that were issued permits last year are no longer operating in Tacoma, and then there's a handful of businesses that we're gonna follow-up with to determine if they're still operating and if the. And the next slide is a summary of kind of where those committees fall in the different recycling tiers.

So 2025, you can see we have 11 at the top recycling tier and have a range with most of them either in the top of the box. So you're doing a lot of recycling or or not a lot of recycling. We have 10 permittees in 2025 that are that are not taxed, but they still require the special permit. So that's one category. And the generally, the metal recyclers and manufacturing utilities like Caraustar that processes cardboard and the new cardboard products are are doing the highest level of recycling.

And we have some categories of that are just. So that's kind of a overview of where the business is involved. Next slide. So with the implementation of the new code, we've done a lot of work on just how does this process work. So we've established a process for the applications and administration of those permits through a smart sheet that automates a lot of that process.

The reports are certified in the fall and published then for tax and license to adjust to the following year tax deductions. And we're working on additional processes to be able to identify those businesses maybe that we need to follow-up with. They don't have

a permit yet. They are doing business in Tacoma. And

the next slide is just a summary of what we're seeing in the recycling report data so far in 2025. So we had almost 400,000 tons of recycling reported, which is 62% recycling rate of the total that was reported. Just a note that the data reports are are really voluntary. They're required if you want the tax deduction. But if you're not doing recycling, then there's not an incentive to supply a report. So we're not capturing all of the data around

businesses that are more common garbage.

So the the numbers will skew towards recycling. And what we're also seeing is that most of the permittees are able to submit their recycling survey that's already required by ecology. So that was one of our desires, but we didn't necessarily wanna create a new body of work with it. And next slide, I'll turn it over to Danielle to talk about this.

Thank you. So just to just to overview of the current revenues and what it looks like. A reminder in 2024, we exempted recyclers completely from paying any solid waste tax while we worked with the industry and figured out Tacoma's recycling goals. So in 2025, once that went to the new code went into effect, the new tier deduction was estimated to generate about 1,100,000.0 total, 975,000 from private collars, 125,000 from city solid waste management. So far this year, we received two quarters worth of tax and eight or eight months of tax depending if they report monthly or quarterly.

So I annualized the revenues based on what we've had so far. If you look at the annualized revenues, we are a little short of what we estimated initially, but we are still working with two or three fairly larger businesses to determine their correct accurate reporting and tax liability. So once we get that worked out, hopefully, in the next three to five months, I feel like we'll be closer to our what our original estimate look like. And, additionally, solid waste management is they mentioned is still working on their audit program to verify the recycling reporting. It's accurate. So I think we'll be pretty close to what we estimated, actually.

So in the next slide, just kind of some next steps that we're looking at. So we're continuing to work on our process for identifying those businesses that are not complying either by not getting a permit or potentially through inaccurate reporting. So that's something we can continue to work on on what that enforcement will look like. And part of that process is better communication with tax and license and solid waste, identifying those new businesses when they get a business license or enforcing businesses coming across our scales that we don't recognize that maybe they need a business license. So trying to use those points to identify opportunities for enforcement.

And then we'll be looking at the quality of the reporting data and potentially updating the requirements around

the reporting and the current fees and the there.

And then the one other note for next steps is the the 50% recycling rate for the alternative daily cover is through next year. So we'll probably come back this time next year to look at it. We we want to just let that sunset or

So

that's what we have for you in terms of an update. Great.

Well, first of I'm so excited that we got to put this in place. Did I have my hand up? No.

But I

just No. I just I I just I am concerned because that seems kinda low. Like like, obviously, I think we're doing a good job, like, trying to get people to be voluntary. But, again, it's like that enforcement. Like, we I love our city.

We just don't like to go out and, like, make people do things, and it's, like, consistent in every single part of our city. So I'm looking I mean, I think hiring someone to do that is worth the money because you'll make the money. But I just like, that's, again, on the other side of the people with the disposable, like, you know, with the products here and then there's this. Trying to get people to do a good thing. I I think that they should be doing that and not I I just wanna see I wanna see the I'm looking forward to more data as we get going, but I am definitely the person who's, like, enforce this. This is a good thing. So thank you.

God. Recycling value. Right?

Well, I think it's important. And I you know, I wanna see us you know, it's just like with our private with with our households, you know, the the thing we're doing where we're going. And people think it's hilarious, but you're gonna check on people's recycling. We are because we want our recycling to be clean because when it's contaminated, we can't use it. So, hey. I'm the person who washes my plastic, so I get it.

We appreciate it. Alright. Vice versa, do have any questions? No questions. Just I think,

obviously, recycling is extremely important. I think with the emergence of, like, artificial intelligence, a way to monitor things, that might help with enforcement tools. Obviously, I think we wanna encourage voluntary compliance and education as much as possible. And and, again, I think most people wanna do the right thing. And so I think educating folks about it is quite important. And, yeah, that's that's my.

Being modest about his recycling, like,

his family connections here. Yeah.

My my dad is a hall of famer of the recycling. So Congratulations.

Yeah. Alright. It's my dad's stuff. Yeah.

I It's all about a growing up. Yes.

I don't have any questions. Presentation. Thank you for

the follow-up. I'll be curious if Danielle, we I don't know she come back yet. Maybe report out the

end of year and kind of where it lands in on

revenues to see. And then probably a year or two when we come back to everybody to see if I wanna talk about do the tiers still make sense? Go from four to three? Because it looks like we're

getting it's kinda like you said, you

got two ends, and maybe there's, like, middle one, and, you know, But I did see more people creeping in to some higher and see, like, they were

kinda holding up, which is what we wanna see.

Yeah. Otherwise, think it sounds good? So thank you very much.

And we'll actually look this up and see. Thank you.

Alright. So with that, we move on to the topics for upcoming meetings, and I'd like to continue to show

up, executive liaison and office for upcoming meetings.

Thank you, chair. So our November 18 has three briefing items on it. It has a TMC tax code update based on the recent changes at the state with what they count as sale tax for service type things at b and o. So we need to update our TMC code to get in alignment with the state as well. So Danielle will be back on the eighteenth to talk about those changes.

We have a telecommunications franchise agreement with Jeff Leaders and then a monthly budget update for me. On December 2, we have on there a TPU board site and discussion. Yeah. So I'm thinking we might cancel that one for the end of today's study session. And we might move the monthly budget update as well, but the clerk has potentially an item on there. So we're gonna have to work on that December 2 date. So

Alright. Are there any other items of interest?

Seeing no, I just made a final motion.

Move to adjourn. Second.

All in

favor, state by saying aye.

Aye. All

opposed. Alright.

Go ahead, Sandra. Thank you.

Okay, John.

Can you