City Council - workshop

We are live. We are live. Thank you so much. You have made it to Tuesday, September 8th. It's 6 p.m. Meeting is called to order. Roll call. I see the amazing Yara Taffy with my favorite glasses on, the red trims. We have Brandon. We have Megan. We have Angela. We have Eileen. We have Kelly. And we have Sir Peter with us virtually. Roll call is now done. We are on to item number three, Costco Development Agreement Executive Department.

Yeah, so I'm going to set a little...

It's going to be a lot of issues. It's going to be really a lot of issues.

So I'm going to tee off this item, and then Brandon's going to be doing the bulk of the presentation. But I just wanted to set a little bit of context here about what we're talking about tonight, which is really the discussion around the Costco Development Agreement. Most of you are aware that Costco has submitted land use applications. That's an executive process that's underway. For context, we'll be sure to share where that's at in the process, but that's a whole separate decision point than the development agreement, which is what we're talking about tonight. Both of these items are critical in order for Costco to move forward with their development. They need both land use approval and also the development agreement, which outlines a lot of the infrastructure obligations and commitments, both by the city and also the developer. And so that's what we'll be talking about and focused on tonight. Based on how this goes and our kind of the final steps of our negotiations, our anticipation is that this would come back for approval on October 20th is when this would come back to Council. So those are the dates that we're working towards. But with that, I'll kick it over to Brandon and we can get started. Okay.

I'll start off with, so I've been working on going with Costco on this for five years now. So this started back in 2021.

So I'm actually very well versed in the development agreement and the transportation infrastructure.

A lot of what you're going to see tonight is about permitting, which is where community development steps in. Brad's not here, but likely Alice is going to step in when I stumble, because I would stumble. Again, so we started working with Costco back in 2021, trying to see if there was a place that they could either move to or a way for them to expand their store on their existing site. That simply would not work. And so here we are today after five years of work, the purpose of what we're here for today, as Paul mentioned, is we're going to discuss the status of the project. And then also go over some of what would be part of a proposed development agreement if it's approved. And then, as Paul mentioned, it's anticipated that we would bring the development agreement forward here later this fall and right now it's looking like. Little bit of background so in July of 2026 and so I'm skipping the last five years, just because a lot of that was negotiation brainstorming. But since now that we're actually in the part where the development is it's been real, but now it's really real because they're in for looking at permits and stuff that they submitted for the cost of the land use applications in July of this year. That includes a complete project description. There's a huge or a lengthy application packet, and it has site plans. And then those are actually on our website for general public and all of you to view. Land use applications are administrative approvals. And then Costco is looking at developing two separate phases. They're looking at developing two separate phases of Outlook. Okay, excuse me. So there's the Costco facility. That's what we call it. That is the main warehouse, their fueling station, and a car wash that they're actually proposing to put in. Then they have one part of OutLots, which is six small commercial . And then they have a second phase of an OutLot, which is a large multi-family . I'm sure at some point this worked. Not now.

We'll go to the next slide.

No, you're fine. There we go. Okay, so a little bit hard to see, so hopefully if you've got your handouts, hopefully the picture's a little bit better. But this is the site plan at the moment that's been submitted. And as you can see, I'm going to shake. I've actually got some hypoglycemia, so I'll shake a little. But here is the actual Costco site. And for reference, this is I-5 right here, Interstate 5. And this is Tumwater Boulevard.

I mean, air industrial way.

So I came to the city 10 years ago and couldn't figure out what that road was. Like, what is this road? And so here's Tumwater Boulevard. Here's Interstate 5. They're looking at, these are all what we're calling outlops, which are smaller commercial paths. So this one and then these five here. They're proposing to be some form of commercial. We don't really know exactly what they are, but we know that the type that they're looking at is maybe some form of restaurant, banks, things like that. This is where the field facility would be. Here's their car wash, which would be amazing to see. I didn't, I guess I did do it. And then in the future, right now the idea is that this would be multi-thing. So this is part of the property that they're considering purchasing. And then the only other lot that I didn't mention is the largest, where the oldest timber is on the property. They're proposing that to be a tree tract, and that's down here in this corner. And as we bring it forward, you'll see that that's a component that's mentioned in the development.

Brandon, I can see Joan getting closer to our screen. So can you say that again and take some time to let Peter and Joan know where you're at on the screen, please?

So the last part, just the last part, So the last part that I mentioned is in this corner here, this is where the, through the tree report, they've determined that the oldest and most mature trees are on property.

And they can't see the laser.

Oh. They're virtual. Southeast. So bottom right. So the lockdown in the bottom right. That's where the oldest timber has been indicated. Ideally, you'd have a concentrated area of the best tree resources that exist. And so right now, that's the only lot that isn't proposed to be developed, and it's to be the tree trap.

Peter.

Yes, Brandon, would you take some questions before now or you want to wait?

As we go.

Okay, so I have two neighbors ask me, if one were going to this Costco from town, how would you get there? And from what I thought I knew from previous presentation is there is a roundabout that would take them over there. But that one of my neighbors said, no, that's going to be too much traffic. Since I don't know what I don't know, how would I get there from town?

So it depends on what part of town. Well, so the improvements that we'll talk about in a little bit, the roadway improvements, they are being designed to address additional traffic that would come from the proposed developments. It's part of what's required when they come in through FIFA. It's what's called concurrency. And so they are actually making the roadways to make it so that traffic can get through and meet our standards for what's called level of services. And right now, their proposal has three roundabouts that they would be constructing.

So what would be my best talking points to search our neighbors in the future?

Councilmember Gavi, I would say it's on the southwest corner of I-5 and Tumwater Boulevard. So depending on where you're coming from in Tumwater, you would have different directions. If you were coming from the east side, you would go down to Tumwater Boulevard and head west. And after you cross the freeway, it would be on your left on the southwest corner of I-5 and Tumwater Boulevard. So that's probably the best way, the most generic way that would be relevant for most people in the community. But to be honest, I receive that question all the time. People ask me about that.

And I will go down Little Rock and use that roundabout.

Yeah, my right hand really it really does depend on where you're coming from but most most of cost goes customers would be coming from interstate 5. So they would be using some water Boulevard in that small stretch between interstate 5 and the new tidy drive extension that's where they would be driving and Costco would essentially be rebuilding all of that infrastructure. Except for the interchange itself which the city is tackling that infrastructure is really about

primary focus of this development team is making sure that we have the commitments and obligations related to the core infrastructure. Thank you, guys.

Do you have another question? No, no. Thank you.

Great question, Peter.

So a little bit of background on land use approvals. Do you just want to take this?

Sure, I can talk through this. Thanks, everybody. My name's Alex. I'm a senior planner with the city. Great to be here. On August 12th, the city issued a notice of application. That's our first public notice for the application that goes through the public notice list, which is a list of different state agencies and any community members that have requested to be added to that. 300 properties within 300 feet of the property itself. So that notice gets out. There are a legal notice in the newspaper. And I believe we at least put one, if not two, public notice boards up on the property, depending on the different sides that you'd be looking at. So those are to notify the public of the application and ultimately afford a 14-day comment period for the community to write in and ask different questions or comment on the applications themselves as they're in. So we've gotten through that portion of the public comment period. And right now we're working through the SEPA determination. What we need to complete that SEPA determination is a finalized traffic study. And we're working back and forth with the county, WSDOT, and the applicant on different comments that Tumwater has and those different agencies have to make sure that the application is fully complete and all of the mitigation requirements from the traffic study are mitigated as a part of that SEPA determination. And that SEPA determination outlines the Regulatory improvements that are required as a part of the impacts of the development itself. So that's different than what the development agreement will be going over. The SEPA mitigation is really the transportation improvements that are being directly impacted by the development, and those are listed in the study, the traffic study, and then documented in the MDNS or the mitigated determination of non-significance, if that's the determination we go with. And that will end up, again, being distributed out to the same 300 feet, the newspaper, and will be posted on site. And any commenters that have commented to this point will also get that determination as well. So that will allow staff and the applicant to address any comments, if there are any that are come in from the SEPA determination. And that process has a 14-day comment period, six-day appeal period. And then once that lapses, we would go, as long as it is not appealed, it would go through to the land use approval phase. So a determination would be made with conditions on the land use approval, as long as everything meets the city's requirements and ordinances, it would again be noticed out with that determination. So that's how the process would unfold. We don't have an exact date on the notice or on the SEPA determination yet because we're still waiting on that traffic study to be completed and finalized with, I think the county has actually given us the okay at this point. We're working with WSDOT on those comments and then the city comments. that need to be addressed.

OK. So now just a little bit on the development agreement itself. The reason that this has been brought forward is the complexity of the project and, quite frankly, the scale of the project. When any development comes forward with an investment like this, and this is over $100 million of investment in the city for this project alone, But when they come forward with something like that, typically they're looking for assurance. In addition, and those assurances would be that rules aren't going to change as they go through because they're, again, they're spending well over $100 million. And then in addition, it provides an opportunity for the city to get some assurances on things like timing of infrastructure. So really, it's about creating known this is what's going to be required from both parties, or this is what each party expects out of this. And then the main reason that has been brought forward this time really is the infrastructure costs. I'll go over it in a couple of pages on what the actual costs are, but they're not small. So developing agreements, I talked a little bit about what they are. But again, they detail the obligations of both parties, especially when you get something this complicated, this large, it becomes really important. It does specify what the standards and conditions are that are going to govern the development. It addresses timing of construction of public improvements. And then it also provides assurances. I guess I talked about all this on the last slide. Development agreements are contracts so they are legally binding. And although the agreement to it. I will say that Brad wrote this so some of that I think as I was going through it, although the agreement to a development agreement is voluntary once approved it does bind both sides. And under state law the city has authority to enter into a development agreement with the property owner. And City Council must hold a public hearing prior to proving. So now we'll talk about a little bit of what is proposed to be included into the development agreement. First of all, there's scope. So it talks about what they're planning on building. And then it's going to have a little bit of information about schedule, timing, things like that. It is designating where the tree tract is that we talked about. And then just to clarify the large parcel for the large lot that was on the southern southern side of the development, it is not a component of this development agreement. Only the sales tax generating properties or lots north of that are included. But again, right now, the anticipation is that it would be multifamily. And what they've indicated at the moment is it's going to be around 600 multifamily units, I think. Yes. I'm term of the agreement right now is 10 years from approval. And then the development code would be invested to the city's existing development go code for the term of that. And then certain provisions are not that so stormwater codes as an example would not be vested because we we work with the state they kind of tell us what the minimums are and then we go through our own process of adopting our own stormwater regulations which are at a minimum as protective and stringent as states departments.

So after we get the traffic study, what is an anticipated time for this to come to fruition?

So we actually already have the draft traffic studies. We're working on final I think massaging is the right word, but we're in the final stages of reviews. It's been going back and forth for several years. We've just received final comments from Washington State Department of Transportation, Thurston County. We've completed our review and their traffic consultant is completing it. Once that's done, that would be the final component that they need that is critical for getting through SEPA. I think so if the development agreement, if we're working on that this fall, I would anticipate they have a fast track that they're going for. I think they want to try to be building this starting next spring, summer, because they want it open next fall if possible.

Okay, okay. So we said 10 years, you know, I didn't know.

When we met with Costco, their goal was to have the main store and the gas station, the fuel station and the car wash open by October of 2027. So that's. what they're working towards. But other than that, and so we'll continue to move both. But again, both these processes, the land use process, which is separate, and the development agreement process are key components. OK.

They won't have control over development of the outlocks, because they're going to sell those. So really, it's just going to be market demand. But yeah.

That's what the 10-year coverage.

It is. It is. It's so that they can, whoever comes in to buy there, they can actually tell them, this is what I'm selling you. Okay, so now talking, this is going to be so utility improvement. So component of the infrastructure. They are going to extend the water and sewer main. Some of it is directly in front of the site. Some of it is not, but they're going to extend it down Tumor Boulevard and then down the Tidy Drive extension to serve their site. And they also will be oversizing it to meet future city needs.

I have a question. Yeah. So what does it mean the city will reimburse Costco for the difference?

So because we can only require a development to construct what is needed to serve their development. However, when they come in, you know, being responsible as a city, if we have enough budget, we will actually tell them to oversize it in order to meet future needs because it's going to continue south. And so they oversize it now. We pay for the difference. And then when future customers come on board downstream, we actually lay cover so that they pay their fair share. But at least we're not tearing up the road again.

Thank you.

We talked about the tree protection easement. Now that that tract is going to serve all the lots within the development. SEPA threshold determination for the project will be incorporated into the development agreements. So And then traffic impact fees. Right now, their traffic impact fees, I want to say, are nearly $2 million just for the impact fees themselves for traffic. What we are doing, they are going to get a credit because they are removing a lot of trips from the system north of this site. Those same trips, the people that are coming from down here and going to Costco, they're not going to go up there now. They're just staying down here. waving my hands in the air like it means something, but I think you don't want to hear that. So they are getting a partial credit. It's not nearly as much as what the fees are, but it's a matter of crediting for some of the impacts that they've already mitigated.

With Costco being where it is currently, if a new business or something went in there, would they have to pay tax fees as well, or because the building's already built?

The only way that they would The only likely situation where they would pay impact fees, they generate more trips than Costco. That's right now. Yeah. Okay. So the likelihood is very low. But I'm not going to say it's impossible.

All right.

Thank you. And then, so here's the elephant in the room, the transportation improvements. So I'll go over a little bit about what's happening, but I'll tell you just up front, there's over $11 million in just in infrastructure improvements. that they have to build to develop here. That's a staggering number for any development. It's a big number for a city project. And the infrastructure that they're building is not just going to serve them. It's going to serve the community as a whole. So some of what they have to do is they have to dedicate and construct Tyee Drive, the extension of Tyee Drive. That's what we're calling it right now. But we never really know what the name is going to be until we get toward the end. If you think about where Tyee Drive comes down to Israel Road, that road essentially continues south, and eventually it's going to make its way all the way to Little Rock Road. But at some point, it already changes names to the south, so we'll figure out where the name change happens and what the name is as we go through it.

So we won't be punching the road all the way from Toyota through the roundabout? Not as part of this. Not yet.

No. We can't require that. That's actually owned by another property owner. They are going to be doing that road, that other development. But they're phased. They're going to take quite a bit longer to get all the way through. And part of it is the road near Israel Road actually straddles two completely separate property owners. One of them is ready to build. One of them isn't. And so there is a little bit, there's always a challenge there. We run into it when we want to build a road project and we don't So it will go through, but it's not part of this.

We did the thing where we did tidy drive for Toyota. We, that was when I first came on capital that we did. We took out a lot. I can't remember what we did.

So that was, that was a component of a development agreement. And what I will tell you is this development agreement, the structure of it is modeled the same. At least the, the infrastructure improvements can play. The same exact concept, actually. So they are going to do Tyee Drive. Tyee Drive by itself has two roundabouts. They're not going to punch it all the way through to Prime because they're not doing the multifamily road right now. But it would go to Prime Drive in the future. They're going to dedicate right away for the future extension of Tyee Drive. So the part that they're not building, they're actually going to dedicate it with this development agreement case that multifamily doesn't happen for a long time and the city needs the road to go through, we don't have to acquire right away. We have to build it. But otherwise, that future development will be building. They're going to dedicate land and construct the new roundabout at Tyene-Tomwater Boulevard, so the larger roundabout on Tomwater Boulevard. So that's the third roundabout they're constructing. And it's possible that there would be some form of a cost share between the property to the north, property to the south. We haven't really worked out exactly how it's all going to look. But realistically, there's going to be some cost share in some. And we're working through what that looks like.

And then just as a part of this, not that they would have a decision in the transportation part of this, but are we sharing this information with the inner city transit so they can plan ahead? the route.

So we have had communication with any inner city transit both going through the the transportation planning process and then they've actually been aware of this for a long time. What I will say is that we're going to engage them more here pretty soon and it's going to be part of our conversations when we come forward for you know this is the types of things that can happen if this development happens and one of them is. I can't guarantee it but it would be unlikely that inner city transit is not going to have some form of route coming down. especially considering there's going to be roundabouts and everything that they need to be able to navigate. And then between this Costco development, potential Costco development, and then the one to the north, between the two of them, there's almost 1,200 multifamily homes. So between almost 1,200 apartments and a lot of commercial, there's going to be a huge demand.

Thank you, Kelly, for mentioning that. Can I ask when you meet with them to bring up it again? It's something that Joan and I think every council member has talked about is the lack of the route going to Black Hills High School and them noting the infrastructure challenges. So if we're talking about this, what does that also look like? What does that infrastructure look like now to actually get service to Black Hills High School?

Yeah, we can have that conversation for sure. We do have one project that's been added to our transportation plan. I don't think that I have it in the tip yet because of the funding. But if we put it out at that Black Hills High School entrance, that would solve the problem.

Right. So can we try and bundle your conversations with them?

um and then the the other infrastructure component that that wouldn't be actually done by the development that we're actually taking on as a city is the cumwater boulevard interchange project it is it is so the city is designing and constructing it or at least we're administering design and construction however development it is one of those projects where development is paying their share so every development that comes in right now if they send a trip to that interchange They pay what's called a voluntary mitigation fee. And so we're collecting fees to build it. Right now, the proposal by Costco, their voluntary fee for that interchange is almost $3 million. So that's on top of the over $11 million in physical improvements they're doing, about $3 million in mitigation payments that they're doing, $1.8 million in impact fees for transportation that they're doing. They've got a massive infrastructure investment here. And but again, so we are taking that one on right now we're actually at about I want to say 75% design on the northbound roundabout and our goal is to be out to bid for that by the end of this year, which means we would be constructing it next year, starting to look like it would be near the same time as them. So we'll have signs up to say avoid this road if you can.

Before

Before I wrap up, because I'm guessing that this is where you have to finish, it is. OK. So just a couple of things that I wanted to talk about. I did mention some of the reasons why we would want to entertain entering into a development agreement. There is assurances. We do get guarantees on things like schedule. Everybody kind of knows what they're getting into. But some of the things that make it to where it's something that we should at least consider is, from a financial standpoint, It's a huge revenue-generating deal for the city. I can't necessarily get into specific dollar numbers because I have to be careful with certain protected information. But Costco, I will say, is one of the largest revenue-generating businesses in the city. Right now, obviously, they would be moving from their current location, so some of that revenue goes with them. But that old location would get backfilled with a new business. The other six commercial lots that they're putting in here, they're all going to be revenue-generating businesses, unless it's like a bank that's not going to generate revenue. Well, it still will because there's property taxes. Yeah, and jobs. Jobs are a huge one. Even during construction, just for constructing their development, there's probably going to be at least 300 construction jobs for a year on that project alone. Costco as an employer, I think they have about 300 employees at our facility here in Tumwater. And then if you think about all the other businesses that would be there, all the jobs, the houses that are going to be right there, they could walk to work, they could walk to shop. And then whoever goes into the old facility, we're probably talking, that would be a new 100, 250 jobs there. And then the part that gets hard to quantify is There are businesses that come up around all of these businesses to serve them, to give them materials, to give them products. And so it's a huge ripple effect. And then just from a, I guess, I would call it an environmental side. It kind of speaks towards what we're trying to do as a city to keep vehicles off the roadway and to keep development in a core so that they're not traveling far. This would probably be the first type of development definitely at this scale where there's potentially, you know, between the two developments, 1,200 housing units right up against places where they can go shopping and be able to walk. So I have a bunch more, but I've drawn one.

That's great. Thank you.

So we'll come forward with a schedule here in the future. We're going through, we'll get SEPA. Again, we're finishing up the transportation studies. Once that's done, we'll go through SEPA. Again, we'll come forward with a development agreement, ideally by October 15th.

I have a question, Brandon. Yeah. You're doing such a great job. I don't want you to leave yet. So what about with the Gopher? Any issues with the Gopher medications there?

That would be covered during the land use approval part of it, and this property has a fusion in it, if not.

Excellent. Thank you.

Are there any questions online?

Thank you, Brandon and Alan.

I think I hear Brandon proposing for a resolution, so I second that motion.

No actions will be taken at a work session.

Thanks, Peter. I forgot. I forgot.

Thank you, Peter. Great transition. You don't apologize for life.

I do not, Ruth, but we'll judge you in turn.

We're going to transition to item number four with Surfinance. Budget workshop number one. Thank you for the excitement. Thank you. Thank you. Thank you, Megan.

Yes, thank you. We have four scheduled. We have 18.

18. We have 99 more.

Please start counting. Actually, can I jump in, too?

We are finalizing documents. So you haven't received

anything yet but this week you will see both electronic and printed copies of a message from the mayor as well as the as well as the budget numbers the approved enhancements and then also the enhancements that were not approved so you'll receive all all of that electronically and we'll print everything although to save people we're not going to not approve so we'll get printed copies of the approved ones But you will get an electronic copy. And we'll have the printed copies by the end of this week in your mailbox.

The goal is to get them by the end of the week. It's a short week. It's Tuesday. So the goal is soon. Maybe you'll have an electronic version.

Thank you. We're doing our best. I can tell you that. Nisa and I both spent a weekend working on the budget. Oh, great.

Well, and not just the weekend. Nisa and Troy have been working on this since April, really, and put in a tremendous amount of work and hours. And so huge kudos to Nisa and Troy. Also, department directors have been heavily involved through the process. And so it's a team effort, but Troy and Nisa really deserve the tools.

Thanks.

And especially Nisa. OK, so as we start this presentation, I was asked to come up with a theme for this budget. I don't know if you have any finance people in your life, accountants, things like that. We're really good with numbers and math, but not very creative. So this was kind of a tall order for me. But I think it turned out OK. If it didn't, don't go too hard on me. So the theme I came up with was growing together to build a sustainable future. And that's kind of a long name for a theme, so we could shorten it to growing together. So we'll kind of, as part of the presentation, we'll go through that and talk about it. A couple reminders to start with. This is a biennial budget, so I see some numbers that look really big. It's because it's two years, not one year. There might be some one-year numbers sprinkled in too, but I tried to We've gone through a long process. We'll talk about that next. And we've got multiple people doing multiple things. So we're pulling this together. And as part of that, we're also going through and reconciling the numbers and checking each other's math and making sure we didn't miss things and getting those. So some of these numbers can change. And then, as we talked about the some of the bigger projects and things which are included in this budget. We just want you to know also the Council still has to approve these so just because we're talking about it tonight does not mean it's out of your hands or you know there's still approval steps for you along the way. Okay, so this started back in March, with our Council retreat we had our budget a budget update analysis back then. In April, directors started preparing their baseline budgets, basically maintaining current levels of service, and then also identifying other critical needs that we call budget enhancements. In May and June, we created kind of a budget committee, unofficial committee, but it was Paul and I and Nisa and then Carlos and Michelle. We wanted to include two extra directors on that committee just at One, it's a professional growth opportunity, and it also gives people a really good big picture view of the city instead of just their own department. And so each budget cycle will bring in two different directors to give other people those opportunities. So we met with the various department directors, talked about all of their requests, and then in June we were asked to submit 5% and 10% reduction scenarios. So all the directors went through that. The last couple months, the mayor and city administrator have been working really hard, making a lot of tough decisions, evaluating all those requests to try to come up with what we have today. And here we are already in September. I don't know how it's already here, but it is. And instead of reading those bottom couple, we'll go to this one. So coming up, one budget workshop tonight, three more in the coming weeks. We'll also have two public hearings related to the budget. We'll have a bond ordinance coming to you next week, the fee resolution that we do annually coming up in a couple months, the property tax ordinance, another public hearing with that, TMPD budget and TMPD ordinance because that's a separate legal entity, and then finally adoption either late November or early December. So it seems like a long ways away, but it's right around the corner. In these slides, I included the vision, mission, and values of the city council and of the city. We're not going to go through these. You all know what they are. If there's anyone watching online, these are also on our website. But I just wanted to point these out because everything in the budget starts with those documents, and everything is tied to those. And the budget theme is tied to those. So the part of the same theme about growing, when I think about growing, the first thing I think about is population, but the city, as we know, is also growing in diversity and in the need for services, and our economy is growing, as pointed out by B3 there. When we talk about together, and I pulled these all straight from the council document, Things like we want to be people-centered and have vibrant neighborhoods and inclusive social fabric and all these things. These are sprinkled throughout those documents. And then sustainable. A lot of times when we think about sustainability, we think about the environment, and that's certainly the case here. But also we want to have a sustainable city government and a sustainable budget. And then we'll take a quick break and come back to that again. So the budget approach, I think both from directors and from the mayor and city administrator, very thoughtful and balanced. And you'll see some of these words in the mayor's message when it comes up. Prudent and strategic and targeted. Of course, it starts with the priorities of council, and this budget kind of emphasizes public safety, essential services for the residents of our city, and overall quality of life. And we will get to a balanced budget by prudent use of resources and reserves, potential new revenue opportunities that we'll talk about, and a few strategic reductions. And the outcomes of the budget will be things like safe communities, strong infrastructure, quality of life for all, and a vibrant economy. And I picked these symbols because they're very much a part of what we do and who we are in Tumwater. The dog is a Belgian Malinois, which is the breed of our police canine unit. And so we use that to symbolize public safety generally, both fire and police. The beaver will represent our utilities and our streets and roads. That's kind of nature's, one of nature's engineers. Quality of life, I picked the salmon. That's kind of parks and recreation and safe open spaces. And then a vibrant economy, the pocket gopher, because we all know about that little guy.

And that's- Like Andrew already knew this, because I practiced it. Like what a smooth transition. So connected.

So connected. And so for this presentation and then the next three coming up, we'll throw these guys in when we're talking about certain things. So when we're talking about safety, public safety, we'll see the dog in there.

Thor. His name is Thor.

Thor. Okay. So we'll jump into some numbers now. These are a lot of the major revenues that we talk about all the time, property tax, sales tax, B&O. So these are the estimates for the 27-28 budget. And I say base revenues because these are not generally with a bunch added. It's based on current data we have and what we project going forward, but not what I would call new revenue. One possible exception to that is property tax I want to talk about for a minute because in that estimate, There's a couple things going on. One is that I found out late last year, after we had already adopted the budget and passed the property tax ordinance, that we have had some banked capacity for property tax. So we basically undercharged in the past for property tax and saved that for later. We can claim that. That's about $400,000 a year. Another interesting thing happened just a couple months ago.

We got a letter from the Thurston County Treasurer

And the large property owner that owns 310 Israel and many other commercial buildings in Tumwater, they challenged the valuation of their properties and won and got a tax refund going all the way back to 2023. And so we had to, that reduces our property tax now, and we had to pay $300,000 back to the county. So that hurts us this year pretty painfully. The bright side of that is that when we do our property tax ordinance here in a couple months, we can say, hey, you took this away. We want it back. And we can actually reclaim that amendment. So that is factored into the property tax. Everything else is just kind of growth and new things. That square right in the middle is It uses all the abbreviations. That's motor vehicle fuel tax, marijuana, and liquor. That's for those revenues that we get from the state. All right. This is general fund revenue graphically. Unfortunately, it rounds on me a little bit, but the orange is sales tax, and that's actually slightly bigger than property tax, which is the 22% right above it. That big 25% is all the miscellaneous revenue, not these big major categories, but it really adds up. Medic One's in there at 11%, B&O at seven. So we'll talk a little bit about potential new revenue. Now this is kind of ongoing negotiations and discussions. We've actually had a partnership with the Port of Olympia for a number of years on the HCP. where our staff and their staff work together to try to put together the HCP for this area. That we hope to continue. The board is very interested in partnering with us and may want to be partners on HCP property purchases. So that's something that these properties are going to be very expensive if we purchase them. And that's something that would help us potentially pay for those. The Conservation District, as we know, has expressed interest in partnering with us, and we have a grant from the Bowen Foundation for $1.4 million that can help us pay for these properties. We can also, if we, one of these certain properties, if the sale, if we do buy it and sale goes through, is a fully developed HCP already. And so that has credits already attached to it that we can sell to make money to help pay for it. A couple new others. In the past, I believe it was before we built Station T1, we charged fire impact fees. And then after building the new station, we stopped because we didn't need them anymore. So we're having a study done right now to look at reinstituting fire impact fees. That could potentially help us pay the debt service on the T2 remodel. And after that, start planning ahead for a future T3. We'll likely need a new fire station in the future. There's also a new public safety sales tax that is available to us. We do have to do some work around policies in the police department, but It's a councilmanic tax that we could pass, and that would go a long ways to helping us pay for police services, especially.

Just so you know, Paul and I, that is included to balance the budget, right? So just know that we are incorporating it in, and there's going to be more information coming because the county has done theirs. It didn't tell us until Troy was digging in. Our sales start now is 10.8. 9.8.

9.8.

9.8. That's like 10.8. I know. So 9.8. So just heads up that we're, I'm seeking clarification from the Association of Washington Cities.

Well, another jurisdiction who has already. Olympia. Olympia has already done it.

So they're at 10. Yeah. Yeah.

Yeah. So anyway, it's a, it was the, um, You know, to be determined, I don't know that I like the way it was written or rolled out, but it is the legislature trying to give counties and cities an additional revenue stream to pay for these quick rising costs of public safety. So all in all, if we, you know, did all these things had all these partnerships, the potential new revenue to help support this budget could be as high as $9.9 million. That would be a really big thing. Enhancement requests, we had, in the general fund alone, we had $25 million worth of enhancement requests from directors. Of those, most were not approved. The number looks kind of big here when we say approved is $13 million. We'll talk a little bit more about that.

I have a question. Yes. Enhancement requests are things that's needed to do their job.

Great question. No, I got it. What we call the base budget is basically the The levels of service and levels of staffing that we have today, we roll that into the next budget. And, you know, we have cost of living increases and the cost of health insurance goes up and things like that. But no new staff, no new things, no new computer programs, just the same level of service and expenses that we already have. The enhancement requests are for new things. You know, I need another person for something, so I submit a request to hire another person to do the job. A new program. Yeah, things like that.

Code enforcement's an example. We had a work session earlier this year about code enforcement and talked about investments, about making that a bigger priority for the city and putting more resources. So there's an enhancement request related to code enforcement. Okay. So that's an example where it's a higher level of service than what we're currently operating.

Thanks, George.

Yeah. And again, this $13 million number looks big. Like, wow, we approved half of the request. And I guess we kind of did, but kind of not. A lot of that, a big portion of that is HCP-related things. And we'll get into that. And the HCP actually brings in an additional $10 million worth of revenues. Okay, so some of the approved, I'm not going to go over all of the enhancement requests that weren't approved because we would be here all night. But we'll go through some of the key ones that I think would be of most interest to you. In police, great timing with our dog and our budget team. We need to start planning for a canine replacement. Thor is going to need to retire here in the near future. And so we'll start planning ahead for that. They're quite custom. And if you have any questions on these, thankfully we have Carlos here because I do not work in the police department. We are transitioning to a new regional SWAT model, which will cost the city more to pay our share of that. We've got overtime for patrol tactics training. We have a new community resource officer approved for 2028. Some money for RV towing and some technology research and development. Another new staff, a community engagement specialist starting in 2028. So a total for the police department of all approved enhancements, $718,000 over the next two years. Over in the fire department, a bunch of, a lot of staffing things, a paramedic lieutenant, That would look to be a new position for new firefighters over two years, two in 2027, two in 20...

It's focused on training. That's a paramedic training lieutenant. Oh, okay. Just to clarify, too.

And that's their salary?

For two years. Two years salary and benefits over two years. Okay. Let's see. Also, there's added costs associated. Anytime you have a new employee, you've got to do a computer, gear... equipment and so this it's this full startup cost so it's that it's it's everything that takes to hire them plus their salary and benefits one more question does that include like their training and all of that when they start yeah and they they are the paramedic training so as you know with medic one we had a significant increase of new paramedic firefighters and so Because we have so many new staff, this is a gap we have in our current level of service that we want to make sure that they're trained up. And I don't know if the chief is online right now or not, but he is online. So if there are more questions, we can bring him on.

Yeah, second bullet, two new firefighters in 27 and two new in 2028. It's hoped that those extra positions will help reduce overtime costs. Overtime has been pretty high the last couple of years. A lot of people, either someone gets injured or someone has a baby and they take 12 weeks off. And now we've got to pay overtime to cover those shifts.

So I hope there's a big cost associated with it, but we're hoping it'll lower the overtime number too. And beyond lowering the overtime numbers, there's also when we are short-staffed, you know, firefighters can voluntarily sign up for overtime shifts, but if we don't have the minimum coverage, we have to do what's called a mandatory shift, which means they're then required to take on a shift that they either may not be available for, it's going to have impacts to their family, or it's too many shifts back to back to back, which means, you know, they're not going out and they're kind of the healthy state that we want them to be in.

You saw that on one of your red lots, right? They were on a mandated.

Yeah, yeah. Just how many of them Usually when I did, because I did a read along with each shift and when, you know, one of the first questions is how many people here are part of the shift and how many are working overtime. And then with each read along, I want to say there was at least two or three. And then usually in those, there was talk of, because they were short staffed this year, there was talk about somebody needing to be mandatory on the weekend coming up or something else. And so those are the things that, really have an impact on how the firefighters are able to deliver the services that we need them to deliver. And so this, by adding this firefighter complement and this enhancement, we are, we're not only reducing the overtime budget, but we're also providing firefighters that are rejuvenated. We're lessening impacts to families. And yeah, so anyways, I just want to add some of that additional context. Thank you, Paul.

Let's see. Some new specialty paid for field training officers, assistant chief, reclass, another reclass.

Yeah, and I'll just – those three in a batch just because they're all similar related. Rather than creating new positions, they're really how do we use some of the leadership and some of the staff that we have in place and veteran staff. And so these are some of those adjustments that help us do that with existing staffing by adding this to their job descriptions and changing some of the focus.

All right, then on the non-staffing side of things, SCBA is self-contained breathing apparatus. Those air bottles that they carry on their backs, those have a shelf life and have to be replaced after a certain amount of time. They are not inexpensive. I learned through the budget process that our firefighters wear ballistic vests. I didn't know that before. And those also have a shelf life and need to be replaced. So this is not all of the ballistic dust replacements, but it's starting to phase them in. Stagger gets them each budget. Wellness program for the first responders, a new software, and a total of about $1.6 million in the fire department.

Troy or Paul, can I add something?

Yes, please.

I just, you know, I know you'll probably talk about revenue at some point, but just pointing out in particular for the paramedic day position, the FTO and the MSO reclass that Medic One covers about 80% of that cost under our contract.

Thank you, Brian.

Definitely good context to have. Chief, can you talk, there was a question also about first due. I can try to answer it, but you'd probably do a better job. So can you speak to that as well? Sure.

Yeah, absolutely. We're trying to consolidate all of our platforms for our reporting, our tracking of equipment, pre-fire incident planning onto a common platform. So it will be offset. That cost will be offset by some of the programs that we're not going to be renewing. But it's an idea to consolidate several software platforms into one platform. In particular, for the pre-incident fire planning, it's the same platform that a number of our partners use, so we'll be able to share data across jurisdictions.

Thank you. Thank you, Chief.

I don't know if they were under the agency, right? But they have a different software.

Yeah, for them, it's not financial software.

Yeah, it's administrative kind of software. When I did my ride along, they were doing an orientation on first due and equipment and the trucks and the inspections that are happening and when that, you know, so everything's getting digitized and implementing technology into their operations.

Okay. Moving on to community development with quite a bit with the Habitat Conservation Plan. So this is in addition to purchasing property for the HCP. So by purchasing property, we've got some staffing, we've got a whole bunch of activities, professional service and things related to the HCP that comes at a cost of about $10.7 million. add in those other things, but then we also generate revenue from that that almost completely offsets. So down at the bottom, we've got total revenue and total expense and only about a $200,000 difference. And if you have further questions about that, Brad is at a conference, I understand, and is not here to answer questions, but we could certainly get back to him on that. Okay, the 310 Israel building, if we were to move forward with that purchase, we've got purchase price and remodel.

Yes. I'm catching up on the last slide. Did I see that that was roughly a wash, close to a wash? Yes. Okay, I want to make sure it wasn't misunderstanding like one of them was 22 minus 11 equals 11. It's really almost a wash.

It's really almost a wash, yeah. Okay, so included in this budget is the 310 Israel. Again, the council will have to take action on that in the near future to finalize that. You have the annual debt payment and operating costs in there.

I should say that's the general fund portion of the annual debt payment.

Yes, general fund portion.

Just in case you see a different number, when we move into that, there's a portion that would be paid by the general fund and then utilities there and there would pay for it.

Code enforcement. As we mentioned earlier, code enforcement is included in there. A couple new positions and all the things to get them going at a cost of about $600,000. For a summary, and again, these numbers are likely to change, but We've got the beginning fund balance, total revenue at $123 million. That is with those revenue enhancements we talked about, total expenses, which would leave us using about $5.4 million worth of reserves. So that's really close to the same amount we had for this current budget. And as we've talked about before, or at least we did the last budget and finance committee, we haven't used those reserves yet. And so that puts us in a good position going into this budget. And then it'll kind of depend on the economy and staffing and all kinds of things, whether we actually use any of those reserves or not. I did update the fiscal cliff. Caveat, I did this really fast right before the presentation. I didn't think I was going to have time. But with these investments and the increased revenues that come with them, it kicks that fiscal cliff out quite a bit, somewhere past 2030. And we'll refine that as numbers change. For budget balancing, we're kind of balancing this with a mix of new revenues with some reductions and use of some fund balance. Of that fund balance, we've got some one-time expenditures of just over a million. We've got a plan to move away from using fund balance as the HCP and this other economic development grows and gets better. It's The plan is to use some of the fund balance to make the debt service payments on those the first year. The second year, or second biennium and third biennium, we will wean off of that to get down to where we're not using reserves to pay for that.

Future budget workshops coming up.

The next one will be, this one focused on the general fund. The next will focus on the utilities and golf. After that, we'll talk about the ER and R funds and the capital funds, and then fourth one will cover anything that is missing all the other funds, if needed.

That's also optional for you also. It kind of depends on how you're feeling about it.

So, any questions?

When are we having the bond discussion?

There will be at your next meeting on next Tuesday on the 15th is consideration of the bond authorization ordinance. And that sets the debt financing process in motion. And then in October, we'll come back to you with decisions on B10 Israel Road, one of the HCP property acquisitions. The T2 remodel, there's a briefing, I believe, coming to Public Health and Safety this month. And then when that project's ready to go out to bid, that will come forward. And then the other property acquisition is probably, I would say, later this year or first thing next year.

My question is just a process.

So this summer when you and the mayor were discussing this, what was your main challenge?

Because we need so much and we need more staff. So what was the main challenge for you?

Yeah, I would say The challenge is really holding the line. I think Tumwater's made the best with what they have for a long time. And I don't think, and I think as you can see with the $25 million of enhancements requests, there's a lot of legitimate needs. These weren't just like, you know, big wishes and aspirational things. These are legitimate things that all of the departments need and use to deliver services to the community. Um, and so, you know, when the mayor and I did our first cut, we went through the $25 million of enhancements and we said, you know, this one, we could probably live without, and then let's fund this one and this one we can live without. And we got through that full list and we were feeling pretty good about it. And then we looked at the total and it was still 21 million. So we had, so that, that demonstrated to me that the things that the department directors were asking for were things that, that are warranted and needed. And so not being able to accommodate those requests was, it's hard. And then on top of that, then in order to get it to balance, we also had to ask them to submit five and 10% reductions, which we did that to go through the exercise, but not with the intent to cut anybody by 10%, but really to see what those scenarios look like. And then when we went to the balance, or when we went to ask department directors to help, the direction was, okay, how can we cut back as much as possible without eliminating people in positions and without cutting programs and services to the community. And so the department directors really got creative and we went through line by line each department's budget and, you know, maybe we can shave a little bit here and shave a little bit there. And I was really proud. They were able to come up with over $2.4 million worth of reductions across the city and every single department director participated and was able to identify some savings. So, It's hard to ask of those things because I know not only are we not able to provide their enhancements, but we're also asking them to reduce some of their base budget of what they have. And so that was the hardest part for me. But at the end of the day, we have to have a balance.

Thank you.

So for me, is those who are on council last biennium budget, I do not feel comfortable passing a budget that has salaries coming out of a fund balance and fund balance is not sustainable, does not fit well with me. And because that revenue did not come in, we were put in a more difficult situation, right? So the deficit started with a 12, then it was 11. So it's all of these because something didn't pan out that we were hoping for, right? So that's what... frankly pissed me off is like WTF, now I'm here. Like how do we put all this together knowing that all these requests, I would love to say yes to all of them. So it was really people over product. I'm not gonna present you a budget that is not sustainable, but we gotta have a game plan, right? So that's why we are proposing that sales tax revenue, right? That's tax, right? Cause that's what it works. But it comes down to all of you saying, What about this? What about this? What about this? Right. And we need your help with that. And so we met six times, six iterations of different things. We have gone as far as we possibly can without cutting people. I'm not going to do that. If that's what needs to be done, then you're going to be part of that decision because we have gone as far as we can go without cutting people. So that's the reality. And I'm not going to keep using ends on balance for salaries. That's not fair to our staff. It's not fair to our community. And it's not right in my book.

Thank you, Mayor. Thank you for the hard work and staff, you know, for putting this together.

And I appreciate it.

And you, Sir Finance, your presentation was exceptional. I know. I love it. It's so good. I know.

That was so good.

Thank you.

Thank you. So more to come, right? It's going to get electronically. I've got to finalize our letter that we're on. Are we at four pages? Right, six, four pages. They're working on some great graphics.

I thought they were pretty great. They're really great.

One, we are on to the Mayor's City Administrator's Report. I have heard from a council member that they had an agenda question. On Friday, Kelly Adams had sent out the staff report for the home energy score. And my understanding is that that is on our September 16th agenda. But the Equity Commission does not meet until the 17th? September 15th. No, I think it's. September 15th, sorry.

No, I think the equity, or I think that scoring, I believe Kelly's online, so jump in and correct me if I'm wrong. I believe that staff report is for the equity commission meeting that they're having. And then it would come back to council in October.

Does that make sense when they're meeting the 17th and we're meeting the 15th? Are we really talking?

No, it's not. Kelly's jumping off. Kelly's got her hand up. Okay.

Kelly, say it for ourselves.

Thank you so much. Hi. So that staff report is for the special equity commission meeting on the 17th of September. We wanted to send out a preliminary draft for them to start reviewing because we did collect 70 questions. And so it's a pretty lengthy report. And so we're going to be publishing that with their packet this week for their meeting on the 17th. And it's a little confusing because they have two meetings on that week. The first is with the region, with the other equity groups in the region. And then they're having a special meeting where they will be remote. We will, of course, have a place at City Hall for folks to come and watch. But yeah, that's for the 17th. And then we would come back to council in November. Okay.

I'm wondering if we're thinking of an older version of I think it was an older version. Okay. So we see this updates weekly, right? Sometimes daily. I think it was an older version because it's not on my version that's in my notebook right now.

Okay.

Okay.

Perfect.

So, but good question.

Yeah.

I just wanted to make sure that Kelly is available. So November. Okay. Anything else? Meeting adjourned at 7-11. 7-11. Let's go there.