Ready to get started with our city council work session.

I think everyone is here except Councilor Francis is excused today.

So we'll just go ahead and dive right into our presentation.

Okay.

Good evening, Mayor.

I'm Sarah Hudson, Senior Policy Analyst and City Manager's Office, acting in capacity for Ress Grayson, Chief Operations Officer, and please back on Monday.

And I'm joined by my colleagues in the community development department.

So we have Ben Barry, private development city engineer, policy community development department director, and Renee Brook planning manager.

So I'm here to talk to you about development infrastructure requirements.

So we we shared very lengthy memo.

So we will kind of do a light touch at the front end of this presentation with the idea that we'll leave a lot of time for questions and answers and discussion.

But we do want to provide some grounding and context just to make sure we're all on the same page.

So in terms of the purpose of this discussion, we really want to dive into how infrastructure requirements affect in fill housing development specifically.

And we'll talk a little bit more about what that is, and then I'll went into in-depth as well.

There's just some unique policy considerations because in field is offered very differently than green field development.

We do want to provide context on recent changes, including at the state level that really influence the conversation that's happening on the ground, including highlighting some key challenges and trade-offs that we're encountering on a daily basis, so where council guidance will be really really helpful.

And we do have approaches that are currently underway that we're doing this year, some kind of administrative actions.

So we'll kind of outline that in more detail today, so council gets a sense of the things that we're already moving forward to address some of these challenges.

But then there's some more, you know, media policy and funding considerations, some concepts that we put forward where we'd really like to get council guidance on, you know, do we want to advance these things and what priority, just so we know how to develop board plans accordingly.

So what we're really looking for tonight is some of that guidance on some of the trade-offs that we're encountering and direction on kind of those uh longer term policy approaches.

So here are some key value questions really at the heart of this discussion, and the memo had a lot more at length, but a lot of them really kind of boil down to what's on this slide, and a little later we'll have some more specific questions that drill down a little bit deeper that are a little bit easier to provide guidance on.

But just for council to be chewing on as we kind of go through the presentation.

So some things that we're really thinking about at the heart of this discussion should infrastructure requirements be tied to project type or project impact.

So for example, um three units all on their own separate lots through a middle housing land division or a triplex.

You're talking about three units, but they have different kind of requirements associated with them.

But is the impact mostly the same?

You know, what are the considerations there?

Um, in general, should every new dwelling be required to contribute to the multimodal network?

That's more or less how we operate today.

So that's kind of like a broader question about how we think about this.

Um, when is existing infrastructure and right way considered sufficient even if it does not meet current standards?

Um, and kind of just balancing the need for getting housing on the ground right now, but also protecting the opportunity for future development later.

So that's a kind of a key trade-off that we think about.

And um, when should infrastructure costs be shared more broadly.

So we'll have we'll get to kind of dive into that more in a little bit, but kind of that roles and responsibilities, what's the responsibility of private development versus the city?

So just quickly the agenda that we'll go through today.

Again, we're gonna try to, you know, we endeavor to move through this pretty quickly just because of the the read-ahead materials, but we will kind of talk about infill development, how infrastructure requirements work today, some of that context.

Um we won't dive into the case study highlights, but we do have a few options here in case it would be helpful to ground some of the discussion to kind of look at a particular example, and then we'll get into that discussion in just a bit.

Sure, whose idea was the picture?

Who's in the picture?

It's a good one.

Um in terms of why we're having this conversation now.

So uh, first and foremost, alignment with council goals.

So really, we've done a lot of work.

There's been a lot of success in terms of infill housing, housing in general.

We've really tackled a lot of that lower hanging fruit.

Now, a lot of the things that we're dealing with are kind of more structural in nature.

So really kind of taking that one that next step of looking at how do we continue to move forward council goals?

Changes in state policy and development patterns.

So with changes from the state, we're just seeing that more density is allowed in existing neighborhoods that previously only considered lower density development.

So a lot of times that infrastructure is not adequate to support that density.

So there's just, you know, again, that that tension exists there.

Sometimes we're just seeing limited outcomes.

So I think it's helpful not to think of it as an either or do we want the housing or the infrastructure?

We want all of the above.

But in some cases, we're not getting either because requirements just serve to be an obstacle to move that forward.

And again, kind of clarifying those roles and responsibilities, that ongoing question of what should be funded by development versus the city and maybe some previous to be thinking about.

So here are the council goals that are really kind of at the heart of what we're talking about.

We want to accelerate complete neighborhoods, remove barriers to infill and build housing.

At the same time, we want to enhance safety accessibility and travel options and align our systems with a growing city.

So this discussion is really sits at kind of the nexus of those, and we want to talk about where we're not really being able to advance that because of some of those obstacles.

Thanks, Sarah.

We're going to share slides as we go through this presentation.

I'm up next.

So I'm going to get into a little bit more of the details about what we're talking about and what is infill development.

So there's a description of what infill development is on the slide, and it's it's uh development that occurs in areas that are already developed and served by existing and often aging infrastructure.

I did look into the development, but we actually do have a definition of infill development, um, a broader definition of infill development is that says it means development of vacant bypass lands located in areas in an area that is already developed.

Um so pretty pretty clear what infill is.

It's usually on small on a smaller scale.

The key characteristics are that that it occurs within built-in built out neighborhoods.

They're smaller in scale, usually about an acre in size, um, or smaller, constrained by surrounding development.

Um, and this this is an important point that Sarah just brought up.

It's reliant upon older uh infrastructure.

And and you'll you'll hear this theme throughout this presentation.

We're seeing today the permit staff or seeing today developments that we didn't see five, six, seven years ago.

Uh House Bill 2001 was passed by the legislature in 2019, and that um allowed significantly more density within the existing neighborhoods than was anticipated when those neighborhoods were built.

Um for transportation system, it's not that big of a deal because a lot of traffic can fit on a road.

However, for sewer and water, those pipes that are buried under the ground, there can be um deficiencies in providing those, not only in just the size of those pipes, but also in the age of those pipes.

Some of them have been in the ground for close to a hundred years in the older parts of town.

Um it introduces higher densities than historically planned, and then the because of that, and and because of the scale of what we're seeing for these these infill developments, which can be an existing single-family dwelling turned into a duplex or a triplex.

You're adding one or two or maybe three units.

So spreading the cost of upgrading the the older infrastructure and extending that infrastructure on a per unit basis can be uh challenging, and and that's where we're talking about things where we don't end up we don't get the infrastructure or the housing because it's it's out of balance for what we're expecting um the developer to extend uh the next slide.

I'm gonna contrast the infill development with greenfield development.

Um we don't have a definition for greenfield development.

We use that term quite a bit, but but essentially what it means is larger scale developments on previously undeveloped land.

Classic example of these are our expansion areas where you're seeing these master plans come in for areas that were agricultural, they're rural, we annex them, we're we're extending brand new infrastructure into those areas.

Um other areas, and and this is where it gets a little bit interesting where you think about um what I just talked about for infill development.

Think about um the timber yards.

That was actually an industrial site for a while.

However, and it's being redeveloped with a significant number of dwelling units turning into residential.

We would consider that to be more greenfield just because of the scale of it, because all of that new infrastructure that's going to be built in there, it's not really looking into um, it's not extending or hooking into the older infrastructure.

It's large enough to almost be considered greenfield, even though it's sort of an infill development.

So it's it's as you'll see the complexity of the votes are very site dependent.

But in general, greenfield happens on undeveloped land.

Um infrastructure is built to current standards, larger in scale.

The constraints are low because there is an ability to install standards, uh, install infrastructure that meets current standards.

Um importantly, the cost dynamics are different than in fill because there are usually many more units than then and the cost of that on a per unit basis can be spread out.

Um makes financial sense and performance tend to work out a little bit tend to work out better than the infill.

Um in the bad context, most of the existing infrastructure was built under the the older standards, which we just talked about, which makes the infill development tricky.

And the major reason behind that is because our development code, as as many development codes from cities around the state, were written for greenfield development.

That's the way we anticipate most development to happen.

And so when we get in fill, we're trying to apply standards that work very well for a master plan area on a very small scale.

And we're going to talk about some details of that that we see on a on a day-to-day basis.

And I'll say here that I'll go into it a little bit later.

Um every single one of these infill projects is different.

It brings me for completely different set of factors and challenges.

So it's difficult to apply some of the genetic greenfield to the infill infill development.

So next slide.

So how infill requirements work today.

Um, you've you've probably heard the term two and through before.

We actually don't use the term.

Term two and through isn't in the development code, they're more of it like the concept is is expressed in the regulations.

But the idea is that um infrastructure when it when a development happens, that the uh develop the development extends infrastructure not only to serve the development itself, so we're like where a pipe would come and serve the development, but also extends that that infrastructure through the frontage of the site so that the next property along the road or along the along the utility corridor can pick up the that infrastructure and and apply and use it for their development.

So if there's a development on a street, it it brings infrastructure to serve all oil across its development or across its frontage and ends it so that the next development comes in and does the same thing, they extend it so that that third development along the way can just pick it up and take it across their front edge.

So in theory, it's it's a good way for each development to basically extend their part so that the city grows in an orderly fashion.

Where that works best are in large greenfield developments where infrastructure already meets uh city standards and or projects are large enough to absorb the infrastructure costs.

Where that concept um becomes challenging is on these smaller scale infill projects because the costs are higher relative to the project size, um, and then the infrastructure infrastructure upgrades uh maybe disproportionate to the impacts just because of the number of units, and because it may be there may be um additional infrastructure upgrades beyond just that two and through just because of the age or capacity of an infrastructure.

I'm going to now turn it over to Renee to talk about how the permitting works.

Thanks.

Um this information was provided in much more detail in the memo, so I'm just gonna just kind of highlight what we're trying to point out with this slide.

It's the infrastructure requirements by development type with your standard subdivision on the left, which um has the most comprehensive requirements.

And this could be in fill, but it's more like more likely going to be greenfield or somewhere where they're bringing um complete um infrastructure to the site, including extending streets not only to the property but throughout the subdivision, right-of-way dedication for those streets, full street furniture groups, utility extensions, um, underground, overhead utilities if they're in the area.

Um so where this presentation is primarily focused is in the middle and the and the box on the right, which is Little Housing Land Divisions and Metal Housing.

Um, so middle housing is anything duplex, triplex, quadplex, cottage development, townhouse.

Um currently those are renewed just through building permit review.

There's no formal land use application.

Um, and so the infrastructure requirements for those are not nearly as significant as the standard subdivision.

There might be street furniture improvements if the lot is and up the street in front of the lot is entirely unimproved.

Um, rather than requiring right-of-way dedication if it's at the lots on the street that's under size for its classification.

So we reserve that area in front of the property.

Should the city want to come in and acquire the right-of-way to enhance the street corridor and widen the corridor.

So there are special setbacks that are applied.

Sidewalk might be required if it meets a certain criteria.

Then in the middle, we have middle housing land division, and that that line is getting more blurred between middle housing land division and middle housing.

In fact, they're actually merging more as state law continues to change and limits what cities can require from middle housing land divisions.

So you'll see the requirement for improvements is pretty similar to just the housing itself, which really gets at the heart of what Sarah mentioned and what we highlight in the memo is we have historically triggered infrastructure requirements based on the application type.

Is this a land division or are you just going through building permit?

But really, should we instead be focusing more on the number of units, regardless if they're on their own lot or they're all clustered on one lot and it's uh you know rental property management situation.

Um the next slide is um again, we've covered a lot of this already in our presentation, but with recent state policy changes, um, expanding intensity, number of units that could be on a lot where we typically plan for or only assumed there might be one unit and maybe an ADU.

Um, also with the state's um continued um requirements that we can only adopt clear and objective standards and procedures for housing projects, is limiting our ability to be creative and flexible in these situations.

So the intent is good that everybody knows what to expect, clear and objective.

It should be numerical and understood by anybody who reads it.

But when we're applying these in unique or difficult to develop sites, we don't have that ability to use discretion or apply subjective standards.

Um so that's again why we're asking council for some direction where we do have those mechanisms.

We do have applications that applicants can apply for variances or waivers.

Um we're wanting this check-in with council to see if we're on the right track when we're uh allowing relief to those standards on a case-by-case basis.

So that's good.

Just saying, trying to see how many are there.

Okay, um, well, I'm gonna talk a little bit about the what we're experiencing from or seeing from the applicant's perspective and what we're experiencing from a staff perspective because of this.

Um the applicants, obviously, it's gonna be cost and delays.

Um, the impacts to the construction.

Um, there's what's proportionality concerns, and that gets back to the per unit, like if you're able to spread cost over multiple units, um, it's it's more proportionate than if you try to focus those those costs on a relatively small number.

Inconsistent outcomes because infill development, we're trying to make so many exceptions.

We it's difficult when we come into like a pre-op situation to be able to advise based on this greenfield code, we're trying to apply to an infield infield development.

Uh, and again, the unclear requirements we've talked about because each site is so unique.

From the SAS staff's perspective, um, we're seeing these complex involving rules every legislative session.

We're getting um new types of uh of permitting requirements that we're we're we're putting into our local processes.

Every project is unique.

Um, as Renee just said, we have limited flexibility because of the clear and objective standards.

Um we would like to be able to be more nimble and make case-by-case uh decisions, but that's very it's a little bit challenging because of the uh legal framework that we're operating under.

Um it's a it's a time-intensive process uh trying to put in full development, four or five units or three or four units on a smaller lot, um, is much more difficult than putting four units on four lots you know in a traditional subdivision where there's plenty of room to put all of the utilities in the storm water, etc.

So there's a lot more time per unit spent on on trying to solve all the issues that arise.

Um, threshold uncertainty is um Renee just talked about for a regular subdivision.

We know what that is, but when it comes in as middle housing, the same number of units.

We have different thresholds for what gets triggered, and then balancing competing priorities, and that's the should we prioritize the housing or should we prioritize the infrastructure we want to do both, but sometimes they're um self-defeating.

Uh, and this leads to some core tensions.

This is the near-term development versus the long-term system needs that I just talked about, the flexibility and predictability, clear and objective standards.

And then the project impacts versus the system performance.

And where these show up, and I'm gonna use these five bullet points are going to show up later on during the discussion section.

But where they show up is in primarily in right-able dedication because we have insufficient rights of way throughout the city.

Sidewalks, whether or not to require sidewalks or to replace existing sidewalks because they don't meet current standards, frontage improvements.

That's the two and through that I talked about a little bit.

Utility extensions and upgrades again, the two and through.

And then the site constraints.

We do have other um uh uh constraints within the the existing environment that affect infill development, um, and so that does uh affect where we get into like a waiver or a variance and and how we apply those criteria.

Um I'm gonna turn it over to Ben to talk about where we see these in some specific examples.

Um as Sarah said, we're gonna try to stay at a high level with these and not dive in because there's a lot of details to spend a lot of time on working to set up policy levels.

Go ahead, Ben.

Yeah, thank you.

Um I think really the most important thing on this slide is just understanding that you could have the same scale of development, a triplex, duplex, quadplex, or in this case a cottage cluster on Marshall, and your requirements for what you need to do just depend on what someone did 60 years ago, 40 years ago when the standards were different and we thought about infrastructure and long-term maintenance in different ways.

So if you don't have water main in front of your site, you have the two and through requirement, you have to extend that water main.

Same thing with sewer.

A lot of the example projects we have are next to gravel roads, and that triggers sometimes depending on the scale of the development would trigger paving, curbs, as soon as you're concentrating stormwater by putting in hard surfaces instead of having gravel, you can have erosion concerns, and so then you're talking stormwater infrastructure, which can also vary depending on what part of town you're in.

If you're in Aubrey Butte, you're on a like lava cone, there's not really anywhere for that water to go.

If you're in other parts of Bend, it might be easier to get the water into the ground, and you can have smaller stormwater infrastructure.

So depending on where you want to put your quadplex in town and exactly what's going on next door, the price tag for that development could vary drastically.

So we can move on to the next slide.

Um we have four projects here.

Um that actually have fairly similar requirements across them for sort of different reasons.

Eighth and Quimby and Fifth and Franklin both are missing substantial sections of paved roadway in front of them.

So those would need to be paved curbs, sidewalks installed.

Uh 8th equipment actually has sidewalk on part of the development that doesn't meet our current road cross section.

Um all of them have some sort of utility extension, and then um quick point about costs on these when we get infrastructure permits, part of our uh warrantying process and close out is that we get cost information from the contractor in order to scale the warranty and the bonds that uh we might receive from a development.

Great way for us to check unit costs over time.

So we have a spreadsheet where we track this information.

I tried to pick a consistent number that was more or less in the median of our costs for particular types of construction, and then did some very rough cost estimating.

So these are order of magnitude, like very rough planning cost estimates.

Um they could be off by a little bit, but the idea is to give you a sense of scale across all of the 10 or so developments in the memo, and then the three here.

Um we can just skip over these and come back to them potentially later if you have questions.

Can I ask a question about it?

When it says um modified uncertain under fifth and franklin, yes.

Um, can you explain like how the when when they're modifying what that really means, how it works, how does it play out for you?

And so I was not around for the fifth and franklin permitting process, but my understanding is the original idea was that it was going to be a six-unit development, and the costs were too high for the developer to want to continue with that project, and they turned it into a safe stay area.

So when we say modified, they they decided that they wanted to do something productive with the land in the short term while they figured out whether or not they wanted to proceed with a six-unit development or something else that might scale more proportionately to the cost of the infrastructure.

Is that something that you see often that they say, okay, well then we're gonna do X because we can't afford this?

Perhaps they might take a different route, and I think Collin mentioned this when we do get pre-op requests and meet with applicants, sometimes we'll get uh a few different concepts for us to provide feedback on because applicants looking for the best route to go.

Um and then oftentimes the feedback we provide in the app what might point them one direction or the other, sometimes um they might downscale it and just to try to um minimize the infrastructure improvements that are required.

Okay, thank you.

Steve go back to that slide the money slide right there on any one of these.

Uh if in your professional judgment, I'm asking the those of you here.

If there's one thing that you could have, because you say limited flexibility, my hands are tied.

If there's one thing that you could have done to relieve these developers of the of the requirement, what do you think would have made it go in each one of these if you would?

Does this get in what we're gonna talk about as far as like short-term options?

Sarah, it could potentially with short-term, we're gonna discuss sidewalk fee and lie, um, right of way dedication.

So, I mean, we could get into lesser transportation standards.

There's if we skip forward to eighth and quimby, um, try not to get too far into the weeds on this, but if you look at the left image, um in red, there's the sewer main and a manhole, and then you can see off of that manhole.

I mean, everything about this is very out of standard, but off of that manhole, we have two four-inch sewer services going to the last houses on the block.

Okay.

Um typically we would have that sewer main extended through the frontage, and we would have it lateral going perpendicular to those houses to serve them.

When we end up with these diagonal lines, it creates larger utility conflicts, and when you have things like water and sewer crossing them, you want to minimize the um the amount of time that joints in those lines are near each other because it pretend uh creates a potential cross-contamination issue.

Um in this situation, there are sewer lines on the alley to the north of Quimby.

There's a sewer line on the next street to the south of Quimby that would serve all of the developments in that area.

Um the four flex here at Quimbyan 8th, likely we could consider something like reusing the existing diagonal lateral, putting several houses on it instead of requiring the sewer main extension.

But this is a very it's it's discretionary, it's case by case.

We would be thinking about if there was a vacant lot next to this that wasn't owned by that property owner, we would probably recommend a two and through extension so that we wouldn't be putting the entire cost of a longer sewer extension through someone else's frontage, and then that property's frontage on the other owner.

In this situation, there's not really anything else that could develop, even if one of these existing houses decided to demo and put a quadplex, triplex, whatever on that property, they would be able to get sewer from somewhere else.

So it you end up in a situation where a four-inch line is a little bit smaller than we like to see for combined development, but if it was something that made the difference to the um applicant in this situation, we would we would consider it.

But you weren't able to do that because the current code doesn't allow it.

Because this one is moving forward, right?

So what actually happened?

Yeah, so for example, here, and I'm not sure what the distribution is.

Permit, yes, with the for illustrative purposes only.

This is a very good example of where the two and through requirements.

We all stop and start scratching our heads and going, how how do we equitably apply these here to this one case where it's got factors like the other properties or by potentially other other means?

But that if if those didn't exist, what would what would we do here?

Um, if there were those diagonals, yeah, but something did happen here.

So I guess what I'm trying to understand is I thought it's isn't there some flexibility to allow the form of a waiver or something like this short because we do not have um did not proceed to sorry I'm reading the long side.

My bad discretionary process.

So we the the discretionary processes that we have are variances and waivers and public improvement standards, which are land use decisions.

They have costs associated with them for planning and engineering fees and time and minimum time requirements for notification.

So some of the and some risk they can be appealed.

Yeah, and because they can be appealed by a neighbor.

Whereas like some of the examples that Renee gave for the middle housing, um we're seeing those housing types being approved just through building permits.

So if we're able to approve something for a building permit, but we have to then do a land use decision so they don't have to do two and through.

It it extends the permitting timelines, it extends the permitting cost.

So I just want to make sure it was hard for me to see those those green lines are the diagonals.

Yeah, yeah.

And that's giving me the he BG because that's bad.

Yeah.

That's not how you should do it.

They shouldn't connect to a mantle, which shouldn't be diagonal.

But that is what's there.

And so what do we do with it that can be safe?

Um that's that's the tension that we're talking about here.

Okay.

Since we're on the two and through.

Oh, sorry.

Well, I okay, I just want to check in that from what's coming.

That are we gonna go each of those five.

Each of the five solutions.

So one of them is the two and through that we're gonna talk about, right?

Okay, and just to follow up on this one, I mean, it was a pre-application meeting.

It's staff are generally reticent to start promising that we're going to make a certain decision on a waiver or deviation.

We would want a little bit more of a developed set of plans from the applicant to start moving along through those discretionary types of decisions.

So in this case, we were able to talk about 8th Street, which is an arterial, it should be a hundred foot wide right of way.

It has a substandard sidewalk on it, and when I say substandard, I mean it should be a multi-use pathway, eight or ten feet wide.

Right now, I think it's four or five feet.

Essentially around our minimum for any street to remain existing, or even our local street standards have a six-foot-wide sidewalk.

Um the right-of-way width is doesn't meet the current standard.

I talked to our transportation mobility department about how eighth street works, and we did say we would likely support a waiver to leave 8th Street at its current right-of-way width.

But I I think all of the um infrastructure requirements that we discussed with the applicant uh made them at least nervous enough about the potential for their development uh to work.

So okay.

I think uh can I ask a different variation of that question?

Sure.

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

But so just very quickly wanted to say thank you for this memo because um Carrie Bell, Ben Barry, Renee Brooks, Sarah Hudson, and Colin Stevens.

I noticed that's an alphabetical order.

I don't know who the main author was, but uh really great job, very informative and well written.

So thank you for that.

My question is is um on page 10 that says infrastructure requirement categories presenting the most difficulty, and the thing that to me was most striking about the case studies is huge variability in terms of estimated infrastructure costs.

It doesn't seem like it's correlated to which which projects actually move forward.

I was trying to get a sense of like well, the kind of the why, which which is which of these categories is the bigger barrier, and I think the answer is going to be we can't say because it completely depends on the context.

You know, all of almost all of them had sidewalk issues, but a couple of really big ones might be make or break if it's something like sewage infrastructure.

So can we put a sense of like which of these categories represents the biggest dollar amounts?

Like could we rank them?

So we say we really need to focus on right of way, or like which of these is in terms of magnitude, how do we relate them to each other?

Um I mean full road paving is a big one.

It's it's a little hard to answer that because I think some of it depends on, I guess, like how relatively deficient we think the thing is, like it expanding a five foot to a six-foot sidewalk maybe feels worse than a four-foot to a ten-foot sidewalk.

Or if we have an older sewer main and there's a risk of that failing, that maybe seems like a more reasonable infrastructure investment, but uh to more directly answer your question.

Full road paving, water main extensions, sewer main extensions, those are expensive.

Underground work is generally gonna be more expensive.

Underground is hard, and admin is expensive.

Variable too, because the rock hardness changes depending on what part of town you're in.

So that's that's another way to think of that being sort of unfair as sometimes you're just gonna end up hammering or I mean you can't blast an infill development as well because there are houses next to it might damage someone's existing home.

Right.

Um hammering can take a really long time.

I had a job a few years ago where a contractor spent, I think two months hammering out a drywall rock gallery.

So that's really big equipment with someone in it the entire time, and then you're excavating.

Yeah, that's very context.

No, that's good.

Okay.

Neighbors love that too.

Oh, yeah, absolutely, yeah.

That's unique up to the state.

That is sort of a unique thing with Bend.

Yeah, a lot of folks that come here from the valley.

We talk about why are you so obsessed about water and sewer infrastructure being so expensive?

Well, it's because of our geology.

It's so different here.

So some of these things, you know, when the state talks about policy and infrastructure requirements, it's a little bit of a different ball game here in Bend.

Um that sometimes folks just don't because they don't see it.

You know, they're not carrying opening up the hood to see what's underneath the surface.

So yeah, and and just like another like infield versus green field kind of comparison.

I've heard from some developers that at the green field scale, you can run essentially a rock crushing operation so you can you know, clear the site you can blast, which is cheaper, and then you can run all of that rock for rock crushing machine and then build your roads with it.

Um instead of what you do in the valley where you excavate and then you contract to the quarry, you bring in rock to the site.

Like you just do all of that work on the site.

And if you have a big enough space, essentially is the same as the cost of bringing in rock from a quarry.

If you're hammering the remove rock from a trench, like it's it's just the infield infill becomes much more expensive.

Yeah.

Yeah.

So um back to the council discussion, and here are the five categories that appeared on an earlier slide on the on the left hand side.

Um, it doesn't say two and through, but one of them, the front edge improvements we can just kind of consider.

Basically two and through so this is list lists those things that I talked about earlier.

Um, and then we have some administrative approaches to addressing those, and then the further to the right that you get, the more sort of far out there it is as far as policy or future.

Um so things that we are um considering andor working on is from an administrative perspective, is what's called a do not widen list, and it's to expand expand that.

Um right now we have uh a list within the development code for roads that we do not want to widen, even though they may show on our transportation system plan, it's a collector or an interior street.

We recognize that because of the built environment, we do not want to widen them, and so when a development comes in, we do not require them to go through some form of waiver to not have to dedicate and prove that right away.

An example is like 14th Street, really older part of town between White Newport and Galveston.

Um 60 foot right-away, it's supposed to be a we're never gonna have an input right-of-way through there, so we put it on the list.

There are other roads in town that should be on that list.

And so we're um actively working on that, and um that so that's something we're working on.

The sidewalk discussion, um, this is something that we're we would like some input on, but we're also somewhat working on.

And and the biggest, I guess the the two biggest things that we we grapple with are where there is no sidewalk, um, and there's the infill development that comes in and we say, well, the code says you're supposed to put a sidewalk in.

So you need to build a sidewalk even though there's no sidewalk on either side, so it really never gets used.

Or there's an existing sidewalk there, but it's four feet wide and it was built in 1973, and it should be pulled out because it's either failing a couple panels or failing, or it's just doesn't meet our six-foot minimum standard right now.

Um, what should we do?

Should we do it or should we replace that with a more modern sidewalk?

Stormwater disposal options.

Um we'll talk about that on our next slides, but this is the drainage intensity that's anything we've heard about.

We um for many years have had this stormwater sort of um regulation that you keep stormwater on your property, that's how you treat it.

But with infill development, our water lots are getting a lot smaller.

So we're looking for other options to do that because we there's not enough room on these lots, and that would be to be able to share uh or to mix the public and the private stormwater and dispose of it within uh the public rights of the way.

Um we also, if you move it a little bit to the right, this is where we're gonna need some direction.

Um so for waivers and deviations, um the this is where somebody would perhaps not or do a waiver to widen the uh the right-of-way or to install a sidewalk.

I think if we can get more direction from council, we can put those into the development code or a criteria so that um we we are not guessing whether or not we're making the right decision when we're asked to make a waiver order deviation or variance.

As we move further to the right under policy, um, and this is where we're gonna need some help on on refining those infrastructure thresholds, and this is the intensity of the use.

So as Renee pointed out earlier, it it was a lot easier when the for a permitting perspective before that the House Bill 2001 when we knew that a four-lot subdivision would have four single family dwellings on it now.

Now we we're not entirely certain if we're gonna get you know four single family duplexes or triplexes on there.

So it's it we're not 100% certain about what that intensity is.

But the the other thing is somebody could build that same intensity through a middle housing and not trigger any of those.

And so what it would require a code amendment, but we'd like to be able to remove the application type as the trigger and and and focus more on the intensity of that development and make that consistent across the board.

So it's not that somebody comes out of a pre-op and says, Well, I'm not gonna do a land division anymore, I'm just gonna do middle housing, a middle housing, because the land division was going to trigger all of these improvements, even though I'm getting the same number of units.

Um a limited discretionary path for qualifying info projects.

This one is uh an interesting concept where because of the clear and objective standards that we have to deal with in those examples that um that Ben showed you are are examples of how complex and different and unique each one of these infill developments can be.

However, the the standards that we apply, even if we adopt new standards that anticipate um infill development rather than greenfield, still have to be clear and objective.

And it's virtually impossible to anticipate all of the variations that that could be so that we could create a clear and objective path that everything would fit into.

So this concept would be to have a voluntary process where a developer could say, hey, I recognize that this doesn't fit into the clear and objective box.

Rather than putting you know a variety of variances and and and waivers all together and stacking them, let's just go into a full-on discretionary process for this where we work with city staff with our design team, and we we just figure out a way to make it work.

We have to fold it into a land use decision, but we could do it.

I mean, with agreement with the developer, relative relatively simpler than trying to do it with uh by stacking variances and waivers together.

So I think that would be a procedural path that staff would recommend that we investigate legislative advocacy.

Um we just had our first conversation with them in anticipation of the 2027 session.

I don't have any great ideas to throw under the table right now.

That should be in the funding side.

Yeah, maybe on the funding side because honestly, that that really is other things like prevailing wage.

There's we could um work to use public funds with private some partnerships that maybe um there's a uh a lot of discussion that we can have over the course of the next six months of the year after that.

What question on the limited discretionary path that's allowed under current law?

We don't need any I think the keyword was voluntary, you know.

Yeah, yeah, yeah, yeah.

I understand we'd amend the code to create that option for somebody that wanted to choose it.

And I will say that involved if we were to go down that route that suggests a lot of staff time, a lot of collaboration.

I mean, there are gonna be fees associated with that that we'd have to figure out, and but yeah, that's a path we could create.

And there'd be some definitions of what it takes to qualify for that path for projects of certain types, yeah, right.

That we'd have to figure out intensities of use or make discretionary the default.

Yeah.

We're not allowed to do that anymore.

That's the law.

Yeah.

Okay.

Uh and then and then going under the funding category, uh, the fee and Lulov program.

Um we actually have a fee and LUF sidewalk program in for um village.

Uh it has been in place for over five years now.

Um, where uh it was recognized that there's a lot of larger properties that do land divisions, and it doesn't make much sense to put a sidewalk that doesn't really lead to anything out there.

So they pay a proportionate whatever calculated cost of what roughly what it would cost them to install a sidewalk that goes into a dedicated fund to put sidewalks or pedestrian facilities in Wood River Village.

Um the funds did um help build a sidewalk that goes from the park within Wood River Village up to McClellan along the hill there.

So there's already some actual physical infrastructure that was put in the ground.

So we're we are collecting it there.

Uh so the idea here would be to um expand that to a more of a citywide program, but that's um a project.

Um, but but it I think it would be very helpful for info development.

I want to give a little anecdote on because I was thinking of Wood River Village a couple years ago because triplexes things are being built in that neighborhood without the infrastructure with it, getting complaints.

Look at all these new homes coming into my neighborhood with cars with people walking, but we don't have a sidewalk, and now we have more traffic.

So that's one of those trade-offs, right?

Then you have the the housing come first and we come back for the sidewalk, but for the neighbors already in the neighborhood, maybe they wanted the sidewalk first, right?

So it's that's that's what we have to think about as far as when does the infrastructure come in?

Um, right.

And it was just interesting because I remember them coming into council, I watched that meeting in that neighborhood, a bunch of them saying, hey, we don't want, you know, we don't want to have to have this be a requirement, and we like how our neighborhood is, but then several years later the impact of that kind of showed up, which was interesting.

So and then the the last um underfunding is deploying of city funds, and this is fairly wide open.

Um, and this would just be to help with the uh extension of infrastructure.

Um, you know, there's a variety of different ways, general fund, um utility rates.

I mean, we've we've got the septic to steward, could there be something to replicate that for for other areas where there's like a revolving fund sort of wide open for the discussions on that one?

And then we'll go to the next slide.

And so these are uh council guidance we're looking for to help inform us on our decisions.

So here's some sort of problem statements.

Um I'll just go through them and then kind of open it up for discussion.

So something to think about is should should we require new dwellings, all new dwellings to contribute to the multi-mobile network, um, you know, either at their frontage or in U of Rotterdam, so we'll expand on it a little bit.

But should should each unit be required to help participate in the infrastructure.

Um should we be prioritizing the right-of-way dedication now for these uh substandard width streets, um, even though we may not be building a road for a while, or or are we okay with just requiring the adequate setback so the city can come in and buy that property in the future?

The trade-off is it gets to remain on that property for the time being, but it's it um which reduces costs for the applicant or process for the applicant, but it would increase city costs if we come through when we come through with a city project to build that because we'd have to buy the infrastructure.

It still imposes the same limit on the property size that can be developed, right?

So it doesn't matter.

The housing units in any way, or therefore the redevelopment potential of that piece of property, right?

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

So, what what is that?

So that's part I don't understand.

Like what is that cost that there's an actual cash out lay for to the right away.

It's more the improvement of that right-of-way.

Okay.

Um it it I think I think the struggle is more on whether or not we should require that frontage improvement, that two and through.

Okay.

Or or either picking it up or requiring a setback, probably doesn't impact the the development quite as much as requiring the the um the improvement is the expensive.

Yeah, but so the cash outlay at the time of redevelopment is not really impacted by the choice between those two approaches.

That's a good idea.

It's a different thing later where they could capture some value back from the city.

The future owner could.

Yes.

Right.

Okay.

I'm I'm wondering a question, just thinking about how we went through Franklin with a lot of neighbor discussions and trees that were in the wrong place.

If we get a dedication, do we think that makes it more or less likely that that property we're gonna end up with a tree or a little garden box, or if it's dedicated to us, maybe that's easier, or maybe that doesn't matter.

If it's city right away, it's easier in the future.

So maybe say, hey, don't plant that tree there, that's not the right spot.

Okay.

The more things that get installed there, if it's private property, it the more it's just you have to take care of it later.

Well, we changed design on Franklin.

We tried to accommodate, right?

Because we wanted to be neighborly, but um, that is there's a cost to that.

So okay.

And I'll just go through so then we can come back.

Um so this is back, the third bullet is about that sidewalks.

Um, should we require sidewalks all to be modernized through infill development, or or are we okay with like a decision tree where if it's built within a certain amount of time or if it's a certain width that it's allowed to remain, even though it does it meet, does it meet today's standards?

Um the the next bullet is requiring a full frontage improvements for larger developments, even if adjacent properties are not fully developed or matching um existing conditions.

This is a little bit more of a uh a two and through and this does talk about larger developments, but I would like to have the council weigh in on just generally about um uh two and through with infill development.

Um the exploring the development intensity threshold.

We talked about that, tying the intensity rather than the application type to the improvements, and then allowing exceptions to two and through extensions where the adjacent infill potential is very limited.

So if it's completely built out, do we like to do that?

Like that Quimby run, are we fine with it?

But if there was a big vacant property in east of that, maybe that's where we would so some of that stuff could be built into the discretionary pathway, right?

Some of those things could be solved that way rather than separate policy.

Yeah.

Okay.

So we have some next steps on another slide that I'll save till we end, so I'm ready for discussion.

I thought it might, these are really good questions.

I thought it might be good to go to that one that had kind of everything on a on a page, and just to talk about that decision tools for waivers and this idea of this voluntary discretionary path first.

Understanding some of these other questions about what that would be, you know, we can talk about later.

But how do people feel about that as sort of a threshold question of allowing this sort of off-ramp for these type of infill small scale?

And I want to I want to you know really emphasize small scale infill because to me, anything inside our UGB, we are filling in, we are doing infill, but I recognize it's totally different if you have you're on eighth and quimme than you are if you're in the southeast area where there's nothing built yet.

So want to be clear there.

But how are people feeling about that discretionary option that staff might explore defining how that would work and giving people an option to do that?

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

So we'd get there's a lot more, and this is initiating a project.

Right, what a street is right, yeah.

Because that's what's required to make this work.

So I I generally support that.

I think the key part's gonna be the definition of what qualifies for that option.

And um as a concept, yes.

Okay, right.

I have a question on the first pull-up there, but but I'm I'm I'm I support that.

Sure, yeah, that's a little bit more sort of tactical, but okay.

So it sounds like that is something to me, to my knowledge of being here for the last five years and hearing people pooping me about their projects and hey, can you talk to the staff?

Which isn't really my job.

But there's a lot of conversations going on.

Um there's sort of an informal like path of trying to work with staff and sometimes getting a waiver and sometimes getting this.

But it I think a formalized path would be much better in a recognition that these are the types of housing that we want to um support.

And I did, you know, this presentation is amazing.

The memo is really great.

Um we're having this conversation because we're very pro-housing council and city, and we want to build housing, even though we're identifying all these barriers and there's things going on in state law, we want to build housing.

And so one of the downsides of discretion and the reason why the state has sought to take away discretion from cities is discretion has been used to block housing or to make it hard to build housing.

So it's just something to think about when defining this is how to make sure we infuse that value into it, right?

Instead of the value pro housing.

The value that we want to help housing be built, right?

We're not gonna use these tools to suddenly start saying we're imposing extra things that are gonna make it hard to build housing.

Um, but it sounds like we can start looking at how to achieve that.

Okay.

Um we can sit here for a minute or we can go back to those other questions, but other things that are coming up for people just hearing this, anything you want to start talking about?

Yeah.

Well, so on the expanding the do not widen list.

I think the the hardest thing there for me is envisioning, you know, what do we want the city to look like in 10, 20 years?

And so the answer kind of depends on well, what are we anticipating the future of that corridor looking like?

If it's you know, uh a five-lane 45 mile an hour boulevard, like I don't think anybody wants to see that.

Well, some people actually do.

Oh yeah.

Um but if it was, you know, like I spend a little bit of time looking at like what are the smallest cities that have streetcar systems, like sometime in our future, I think that would be really cool to contemplate.

But if we're not planning ahead to actually provide the right-of-way for that, it's never even gonna be an option.

So I I feel like I I think I'm a yes uh to expanding the do not widen list with maybe the asterisk being I would like to see a transit master plan or a uh bicycle master plan that says actually for the for these for these designated routes, we are gonna set aside some right of way.

But for everything else, yeah, let's not uh require widening.

Uh let's not acquire additional right-of-way.

But that that's another step that's part of the TSP and of future conversation.

Yeah, I I can speak to that quickly.

I mean, we've been working on a list for the past six or seven months of streets in the city that do not meet their transportation system plan designation, but essentially functions.

So there are plenty of streets in River West, like this.

Colin brought up 14th.

There are a bunch of named streets in between 14th and the river, Newport Galveston that are like 50 feet wide, or alleys that are a little bit substandard, but there are a bunch of garages in the way, and it's we're never really gonna get to the full width.

But right now, if you do a development next to them and you trigger right-of-way dedication, we have to go through a waiver process, and that costs people you know four thousand dollars to do something that we already know we don't want to do, but because we don't have it written down, it wouldn't be equitable for us to pick and choose who gets to do it.

So we want to lay that list out early on.

Eighth street is another one.

We're not that's that's never gonna get wider.

There are enough houses in that area, and the corridor essentially functions as I mean, maybe from a bike and pedestrian perspective, we're not quite where we want to be, but it's it's unrealistic to assume that we're going to get to the place that's our ideal in that specific street corridor for certain building outside.

Yeah, um, so it's it's really just about codifying where we know we're we're probably not going to get to the right place.

Um, and you're gonna have a chance to talk about that in the upcoming transportation system plan.

That's when we would be talking about do not widen it's just sort of a preview that that's where we're going.

And you'll be part of I think that is part of accepting more of existing conditions basically across the theme comes up in multiple places, probably, especially with the sidewalk stuff, and and um you know, I mean, on that core eighth street as an example, that's why we're trying to get people to think about biking on the on a different corridor, yeah, sixth street.

Yeah, sixth street.

So you know, we have to accept some of these limits because we can't, we just don't have the resources, and it's practically doesn't make sense, and the conflict that it would generate is enormous.

So I think that philosophy has got to inform the thinking.

Yeah, maybe Colin, can you go back to that list of questions there?

All right.

Anything else coming up for folks?

Well, the intensity versus the type things seems really important to me that we focus on intensity of the that's one of the threshold ones, I think as well.

Yeah, so can we go back to that first bullet?

Because that that's kind of the intensity, right?

There and the refining the infrastructure thresholds is what you're talking about.

So I I guess the question I had on this is you talk about well, let's remove the definitions and just look at the intensity, which makes a lot of sense to me to approach it in that manner.

I'm just wondering those designations are middle housing, you know, those are those are there for reason they were developed.

I'm wondering what the the downside of removing that kind of criteria from this is um you know, can you think of any other um I mean uh unintended consequences of of reducing that or removing that?

Yeah, anyone else on the panel jump in if you feel like there's more to add, but I think that there's a little bit of a tension between our maintenance funds and development, you know, if we're not getting uh old water main improved or utilities placed in the right part of the street, or um to and through, we're either putting costs on future developers or putting costs on to our water services maintenance funds, streets maintenance fund, um, or in some cases, you know, if we're talking about things like whether or not there's a sidewalk, it's um you know, comfort walking around a neighborhood.

Do we want kids to be able to walk on the side of the street, or do we want them in the road?

Um, do we want excessive like 88 pathways for people who use wheelchairs versus like are we are we thinking about specifically kind of housing not at all costs, but but with with a reduced investment in the sort of like ideal version of the city, or are we willing to absorb the costs of getting where we want to in different ways?

So there's there's a little bit of a like we might get a sort of a less good finished product um for citizens to use, or we might be um not getting an investment in public infrastructure that would reduce the sort of burden of our maintenance funds.

Yeah, I think I get that.

I'm sorry, I get I just feel like the intensity really meets that need though to me, because that's the designed use of that.

That that will we grow, we will need X, Y, or Z to meet the need of the intensity.

I I I just want to understand, and and so I'm very much behind that that kind of concept.

I'm just wondering if we remove designations tied to a particular intensity.

Is there any blowback for that?

I just before I just walk away from those destinations that are stores that come up more on the planning.

Yeah, I think um, even with the limitations on notice and who can appeal land assessments related to housing, like as I said, really uh the lines are getting pretty close to each other as it is already between middle housing land divisions and the middle housing itself.

And in fact, a code package of amendments that Pauline's working on right now that you'll see pretty soon, um, just explicitly removes ride-away dedication as a requirement for a middle housing land division.

We have the option in state law, and we're just proposing to remove that as a requirement because in many cases the middle housing is already on the ground.

We get pre-apps for triplex and quadplexes that have been there for 20, 30 years, and they want to come in and do a middle housing land division.

They just want to divide the law.

Basically put lines on paper so they can be sold off separately.

And historically in the development code for the last two years, it's triggered a lot of infrastructure improvements.

And so state legislators and our and you know, council priorities.

We're just trying to remove some of those barriers if houses are being there.

Impacts are on the ground already.

So to answer your question, I can't right now think of uh an immediate downside to doing that to focusing more on unit count and not whether they're on their own lot or or all on one.

There's there's like water and sewer implications for that, which we're also wrestling with in terms of how many laterals there's supposed to be.

You wouldn't capture that through an intensity use the water and sewer.

Uh it's some of this is just about like billing implications and what what's easier to um like in the long term for folks.

So it generally makes sense to have individual water services with meters going to separate units so that people are you know paying for the equivalent of water on the sewer side, we care about it a little less.

So um the 27th in Wichita is I think the example that um in the memo that speaks most closely to this, and we'd be looking at new uh water services to each of those units, and then probably keeping the shared sewer service.

Council Platt, I think one of the things we're kind of always like we talked about earlier where people come out of the the pre-app and say, Well, I'm not doing that because this application triggers improvements.

Right, I'm gonna do something similar because it doesn't we're letting we're letting the improvements drive the application.

So, for example, if somebody came in and they wanted to do a three to divide a property into three, which is a partition that would require a lot of infrastructure, but they could come in and do a triplex, which is the same three units, and then come in later and do with just a building permit and then come in later and do a middle housing land division and then not have to do improvements that that for that that partition would have triggered.

So we're just want to sync up just lining it up, yeah.

Intensity to improvement and not play the scanflation type of my filing board.

Yeah, in terms of the two and through stuff, the thing I I worry a little bit about are we just transferring some of the cost to future development, especially in a context, you know, if there's one where basically everything's developed and it's just a a lot, that's different because you're not gonna have to worry about that, and but in an area where there might be future, and and I just I don't know the answer to the question because it the the who pays and when they pay, it you know, especially if it's the site serving.

I've been trying to think about it as site serving infrastructure versus kind of system or community serving infrastructure, and it seems like I mean water and sewer, I guess, are both, but they seem more site-specific to me when I think about public health and safety, and you know, you you want to have good quality water that shows up and is reliable and that we can bill correctly and all that stuff.

And the same thing on the sewer side when you leave the building.

So you know, I don't I don't want to just transfer the costs here.

Um, even thinking like, well, maybe the site serving stuff is the stuff that we you know made, there's still discretionary path, so in the circumstances we make some changes, but that's what we're focusing more on, and the system serving stuff we're really backing off on the requirements, right?

Because we're never gonna build the sidewalk network, for example, without a public investment of some kind, in my opinion.

It's just never going to happen.

The sidewalk is the easiest one to conceive of there, right?

So it's the water stuff that's hard.

But that framing of site serving and kind of core infrastructure, water sewer and roads and access are important to some extent, right?

For sure, but um so I don't know how what the answer is to that question, but I don't want to just push the costs off to five years when another infill development happens, and then have to pay more because we did something today.

Yeah, I don't know if you can answer that.

So that's some of the in loo, right?

Like, if you do a sidewalk in loo, then I kind of paid a little piece of so when they come in, they don't have to pay for the whole sidewalk, you know.

Like maybe it's some of that idea, but I think that is the trade-off here.

You are pushing a cost onto either future developer the city or or maybe some of both, right?

Right, which is around the city.

Right.

So I would be interested in here.

I I love the idea of the fee and loo programs, and I would I would like to see them expanded not just for sidewalks, but also for things like you know, we have a couple, I don't even know what to call them, cycle tracks or cycle paths.

I want to know if we can expand them and use them in other areas too, because a lot of times we hear about developers will hit these these triggers and then shy away from it, and there's this like, well, I don't want to be the first one to trigger that.

So we're addressing this in some areas, like in the southeast area.

Um, but can we expand the fee and lo program to other kinds of infrastructure too, so that the city has a little more coordinating ability to plan centrally for things that have these sort of network level effects that would avoid or at least mitigate some of these trigger mechanisms that developers then shy away from.

So I I like the in Lua programs.

Do I also like that?

I'm sorry.

Go ahead.

I was just gonna say I also like the that idea of the like a septic to sewer, but doing it for other things too.

I mean, having that sort of evolving one, but I think that's a great idea that maybe we could use as well.

Yeah, I think we need to think about where where we start to collect those funds from.

What's really nice about the septic sewer one is there are some like water quality revolving loans that we can sometimes inject into that, but if there are um are other ways we can start to slowly build up some of the funding to do some of that.

I mean, people write to us about their gravel roads, yeah.

Um, and what's interesting is they're not maybe not thinking about okay, if my gravel roads improved, that's nice for me when I come into my neighborhood, but also that's all this extra storm water because it's not it's now not a permeable surface, right?

And so, like there's all these different trade-offs, but maybe we're slowly improving those with some sort of fund, right, instead of having development to it.

Okay, I just want to um just on the threshold question around not looking at application type, looking at intensity, and feeling like there's consensus on letting stuff check that out.

Um looking at more options for fee and loo.

Are we feeling yes?

Yeah, okay.

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

Is that true?

Or are we saying that you set the fee?

Yeah, how do you set the fee?

I guess is the question.

Yeah, that's what I'm saying.

How about the sidewalk fee?

Well, any of them if you were to do one for a water main or some other frontage, like what would how would you about setting the fee?

A latecomers agreement or like a reimbursement district, like some of the things that we're gonna do that's a little bit of a different discussion.

I'll come back to that.

But right now, I'll just talk about the Wood River Village one.

There's a basically a formula for how much sidewalk you would have had to build, and then on a like a square footage basis of that, that's translated into a fee when they pay that when they pick up the building permit.

It's not a good thing.

And it's based roughly on those kind of costs to build it.

Roughly, roughly.

I mean, you could do that for other utilities as well, or you could set it at 50% or 75%, or you need to it's kind of a policy thing, which if you know that there's going to be some matching funding coming from another source.

Right.

And I think that would be sort of the policy decision.

Okay, we're gonna take 50% of the hit, you're gonna pay.

Yeah, and either your neighbors or us are gonna pay the rest of it, right?

Or we do the 100%.

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

So we just have to acknowledge that as well.

Absolutely.

Megan, what were you saying about uh some story?

No, well, I just wanted to ask.

I mean, that those are some things that we do like in larger greenfield developments.

Yes, so um what Councillor Norris is talking about is um a concept where where a developer puts in a piece of infrastructure that would serve potentially serve the neighbor.

And then we have an agreement.

There's actually um a portion of our our municipal code that allows them to install a reimbursement district um that's in place for a certain amount of time.

And if that neighbor develops and taps into that, then they pay their their share back to the the original developer rubber.

So that does those are options we don't see used a lot.

Okay.

Okay.

All right.

Um, so back to the questions, and maybe maybe we could take a look at next steps.

Can I ask one other thing about sidewalks?

I mean, I do think that um it seems like we should be narrowing also what we're talking about, like we should be talking about the improvements immediately, what it would cost to a sidewalk immediately adjacent.

And I mean, we read some examples, at least in one piece of input about having to pay for the sidewalk across the street or the ADA ramp across the street.

It seems like those costs are maybe also generate providing placing a larger burden on some of these developments.

So if we're talking about in lieu of fee, I I think we should be thinking about that.

Um where you touch the proper where the property touches, you know, where the sidewalk would touch the property, and if it's on the corner, it's maybe a little bit different calculation than if it's just on the street, right?

Yeah, but um not having to do some of that extra stuff.

Those those systems are really getting into these these broader, like system level, community level shared resources, and again, I think future councils are gonna have to figure out how to pay for how we're gonna pay for that and actually make some substantial investments besides small piecemeal stuff that we can do through at least a sidewalk and field program.

It doesn't buy us that much improvement.

Yeah.

Um, so we've we've we've touched on a few of these.

Um I think it I think we've all sort of said it makes sense when you are the dead end that your two and through should probably be able to be a little different if you're eighth and quimby and there's nobody else.

Yeah, take that weirdo diagonal if it works, right?

Um I think there's some support there.

Yeah, so maybe let's take a look at next steps and and see um if we're all looking okay here.

We've talked about a lot of these.

So um refining the do not widen list.

Um you're gonna be seeing a middle housing land uh division code package next month from the planning division.

Um the uh drainage and density discussion will be is is moving through staff right now.

Um just ask a question about that.

Let's just try to get creative on some other ways to allow some of that stormwater disposal that might reduce some costs.

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

Um instead of having to build your own swale or whatever.

Yeah, and it just we're we're evaluating different options for that, how that would happen in infill developments versus greenfield, um, starting an internal discussion about that, and that's actually eventually going to feed into a rewrite of the central organs stormwater manual, which we're in the process of KF.

So a lot of stormwater discussion coming up, I think, before we present any of those options or where we're at with council, we want to get a little bit further along.

Okay, the pathway, but uh working with Carrie and her team on the developer tool kit through the pro housing grant.

Um we're also uh looking for we're gonna be discussing um policy and funding approaches uh that can be addressed.

I mean, this biennium, and we'll be doing goal setting for the next biennium.

I think some of these are gonna quickly just practically need to be pushed off of that.

Um there will be the transportation standards and talked about moving forward, uh, the drainage and density, the home committee recommendations, and then again the pro housing grant.

So those were all relatively um soon.

And I don't think we specifically called out, but home committee and of course the state have all been talking about the sort of infrastructure revolving loans and other ways to just help pay for the infrastructure.

Maybe on one side is the regulation, and the other side is just funding the stuff to get it done.

So, yeah, Mike.

In some of the email exchanges I had with a few people in the last day and a half or so, one of the suggestions per ideas was really identifying what are some specific infrastructure investments in certain parts of town that if they were made would reduce the obstacles and the financial challenges you have kind of unlock.

And that's not really showing up here on this list.

I'd like to see that show up on this list because I think it can inform conversations about how resources get used in the future or what resource needs might be, um, how we might spend some of that money if we were able to spend it as a city and do some of that work via any funds that might come from the state.

It just seems like an important piece of data to have to inform the ongoing conversation about this.

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

Well, I feel like that might show up in sort of the pedestrian master plan or the bike pen, you know, master plan that says, hey, we've identified these quarters, and then we're going, okay, let's pick a few of these that also line up with infill development, right?

Like maybe it's this these gravel roads that are near a bikeway or something like that.

On that thing, I mean, what about like then in inventory of vacant lots where there is adequate infrastructure there, or there does seem like there could be a lot of opportunity on the or these are already in lower costs.

Yeah, that's kind of the flip side.

Yeah, but I'd also like to point out too.

I think we have opportunities with when we have our renewal districts humming, right?

And we have resources, that's really what that's a tool for to put that money.

So say let's put that money back in and put a corridor in place.

That's what kind of why we did second street, right?

We can you know, sort of catalyze not only placemaking, but also remove some requirements for development with use of those funds.

So I mean our urban renewal districts are I mean, certainly the central district, um, but the other ones aren't so much places where there's as much opportunity for yeah, but also to point out the site-specific program does also allow for that trade-off of saying, hey, we're gonna reinvest the value that you are creating with this project back into that project that can be used to help a SDCs and infrastructure requirements in place.

So we have some of these mechanisms in place.

But I think we're looking for you know to expand that toolbox with some policy work and some funding work beyond just use of our renewable as a source.

I think what you just said might sort of fits in that second big bullet of like that policy and funding of looking at how to unlock other places that it makes sense for us to just address it and unlock it versus.

It could be it may not be a huge project, but it might be eight or ten blocks, and then it might be something.

I would say our Southeast Interceptor is a great example of that of that was a 70 million dollar investment is very big, but that is really what and it helped to address some of the subject of the sewer, but also help to get expanding and allow for some infill development that we wouldn't have allowed otherwise.

So I would argue a lot of our CIP it does point is pointed in that need to think about.

We could even be more explicit.

Well, and it's fair to say that our geobond projects are also reducing costs for our developers all around the city, right?

And we're collecting paying for that.

And just that's the same problems they didn't help pay for in the past.

Well, that that puts the bow on the whole conversation because the reason that we have a geobond and a TUF and all these other things is to address infrastructure deficiencies because they we haven't kept up, right?

For various reasons, be they decisions in the past, be they inflation or whatever.

So it is important to think about if we are reducing these requirements, what that means for the future.

But I think if I think what I'm also hearing in this discussion is about is about the small scale infill that we really want to get going.

That is the target here.

So just keeping that in mind of like we're not deregulating the whole city, right?

We we still need development to build infrastructure, but these are the ones that would be really good for us to build for housing reasons, for climate reasons, right?

This is what we want to be doing.

So I think it aligns.

Is there a tiny TIFF pathway that is specific to infill?

Yeah, elsewhere as well.

Maybe not.

We get more than fresh rate.

What is it?

Like how many units?

Jonathan.

Four.

Oh, that's you can do it with four, you can't so the administrative.

It's hard with administrative brand, but it is possible.

But that's something to think about.

Is there a way to tailor something similar for small?

Okay.

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

I'm almost looking to you all.

I think I think we've got the guidance that we need to move forward.

I mean, I maybe a general sense of priority of what you know, yeah.

I think I think there seemed like there were some somewhat simple things like looking at the intensity and so the application type, starting to create that discretionary pathway.

Those feels like those can sort of move forward.

Um I think the the fee and loo is like maybe more complicated, right?

So I don't know what what are the prioritizing.

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

So I think it's gonna go because that's like five years out before it's finished.

It would be a portion of it.

It would be part of the overall process because I think one of the things we want to talk about is like I think you can create safe routes to school or places where maybe a fee and loo would go.

So if you create the the probe the program, we have a framework already, and we just need to expand it.

So that's not that hard.

I think in terms of where we apply the funds.

That's gonna be a good idea.

I understand that different in terms of removing this obstacle, let's get that done.

Yeah, yeah.

I think look I think very common.

Yeah, I think those frontage, how we can reduce those frontage seems like a uh priority, right?

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

Yeah, I think we are.

Okay, yeah.

I mean, I'd call it a widened to do not widen list if I were you putting it.

Wide all right, with that, let's stop this discussion.

Thank you very much.

This is really background information was really good.

So great thank you.

Great prep, thank you.

More discussions to come.

All right.

So we're gonna transition now to the um utility stuff that we do build.

We're just talking about all the cool systems that we do need to keep our water and see where going.

And we are a little bit behind.

And really, just to preface this before uh staff presents.

So and we're gonna in the future do a better job of distinguishing distinguishing between work sessions and study sessions.

What you just had was a work session because it is asking for some direction you're kind of co-creating with you.

This is more of an information session.

This is grounding information, nothing that we're needing to come out of tonight with some big decision, just general kind of like are we in the right?

Are you kind of tracking with us?

You'll you'll see some general questions at the end.

So I think we can cover this and make up the time that we've lost a little bit.

Absolutely.

All right, good evening, council or afternoon, Ryan Oster, director of the engineering department.

Brittany Barker, principal engineer.

Jason Sir, principal engineer.

And I'm the designated slide clicker, so this will mostly be the three of them presenting.

But to preface this, uh I was here in May, we were talking about transportation CIP focusing on the geo bond and the transportation capital fund.

Uh we ran out of time, so this is our revisit on the utility side.

And it's a great segue into what you were just talking about, because I think you were all hitting on it.

The housing goal is wonderful, and all that increases demand on the system, whether it be an outback, you know, with our distribution, with our collections, or over at the WRF.

So what you're seeing here is a reflection of some of these council goals that are having consequences on our utility system.

So agenda for today is we'll real quick, it'll look familiar, just kind of the mid-biannium update process, an overall calendar timeline, and then we'll hit on the water stormwater and water rec funds, and then Dan will do a high-level introduction into utility rates, and we'll just confirm a few council related priorities as we roll into starting these higher level utility rate discussions.

So once again, uh this is really, you know, we do this every year.

It's it's an annual update to our five-year capital improvement program.

So we added fiscal year 31.

Um that actually has been officially adopted now, and so it is one of the attachments in the uh council packet as well as some technical memorandums from both Jason's team and Brittany's team, and so reference those if you would like.

Um, and really just making sure we're still in alignment with council goals and uh with all the other influences we have on our system.

So where we are today, uh you know, we in May of 2026 we were talking about transportation and geobond in June.

We actually did do the mid-biannium budget adjustments that was last week, and so here we are today towards the end of June.

Uh Jason will speak on this a little bit more, but we are anticipating the collection system master plan, the WRF facility plan, as well as the public facility plan, which are separate and distinct things, all coming back before you for adoption later this year.

Uh but because of the needs out there, we are leaning ahead.

We are getting into these already.

Some of that which council has already approved, uh, so we're getting a good jump start on that.

And then towards the end of this year, in December and in January, we'll start the formal biannual budget process again, and included in that will be a more robust utility rate discussion.

So with that, I will hand it over to Brittany.

All right, thank you, everybody.

Um as a reminder, I know you've heard me talk about these many times, but we have many guiding documents, but the three on the screen here the 2021 integrated water master plan, the 2024 inconduit hydrofusibility study, and the recently adopted 2026 outback facility plan are all the guiding documents that are generating our five-year CIP list.

And some of those key items are resiliency, capacity with condition requirements, that's growth, and then maintenance, a repair and replacement program, and I'm gonna touch on some funding opportunities.

So I just wanted to give you an update on some of these larger scale projects that are triggering a lot of um the discussion from the water fund.

Um our outback facility improvements.

We have exciting news.

Our NEPA process was completed last week.

So we are moving forward with our town site act process.

Um you'll be seeing more of that in the coming months.

We recently uh awarded the owner's rep contract for that.

They're developing an RFP, the request for proposal for design and a construction contract.

So you'll be seeing those shortly.

That's for the pre-treatment and in conduit hydro work.

Um, so later this year you'll see that.

Um BRIC funding.

The application is due next Wednesday to the state.

We are working on that.

Um I know previously we talked about uh if we're not successful with BRIC, we'll look at WIFIA.

We did evaluate that due to the city's um excellent credit rating, our uh interest rate is about the same as WiFIA if we were to go through with general um revenue bonds.

So WiFIA does require um excessive amounts of reporting and an additional initiation fee.

So we're still exploring lots of options there.

Um, as far as Franklin water line improvements go, last month they started night work that was for waterline specific improvements, so that's going, which is exciting.

Um we also have Aubrey Inconduit Hydro Power Design.

We are at about 90% right now, anticipating final design this fall, and then our construction package will come to council winter time of this year.

So we're getting much closer there, which is exciting.

And then we have the River Well one, we're calling it the renewal design contract.

That River Well One building that's um adjacent to the amphitheater has settled, and the um casing, the um outside pipe that goes down to suck that water out is failing.

So we are working on a design contract to work through that to get that operational right now.

It's being used for emergency use and uh intermittent use.

So all of these things are coming up.

You'll see a design contract award, I think in August for that Riverwell one.

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

So two years ago.

We applied in fiscal year 23.

We were not successful, and then we put together an application for fiscal year 24, and the week before they were due, they terminated the program.

Um but at the end of March they reinstated the program.

Um so we had to modify our application to the latest requirements because they did change some of the criteria, but we're working with the same consultant that helped us with that last application, and we're feeling very promising.

Good.

So yes.

I rode my bike on Franklin today, and there was the huge hole as you're going east.

Yeah, just after the underpass, and it looked like some really old pipe.

I thought maybe we have a piece of it here tonight to show off on you.

Yeah, we want to see it.

Yeah.

So yeah, it's a good reminder.

There's the 1930s, 1950s pipe that we're still in today.

Not to wear mine.

Thank you.

All right, and then getting into the stormwater fund again, our guiding documents.

We had a 2014 stormwater master plan that we updated at the beginning of this year.

Um, that's our guiding document.

Indicated both in the 2014 and the current one that we had improvements on Franklin Underpass as well as South Aubrey Butte that we had to address.

So the Franklin stormwater improvements are anticipated to start in September.

Um South Aubrey Butte has an interesting story I want to share with you, as many of you might be interested living in that area.

Um we we've been developing that project for a while.

It was part of the Newport project design.

New Newport was one of the seven areas that we had to improve in the South Aubrey Butte area.

We were working on developing the design.

Um, and we had included some new infrastructure as part of the Aubrey Butte water line.

We used a synergy opportunity to put in some some dry wells, and those were not performing as well as we thought that they should.

We went, we did a little bit more testing, infiltration testing, um, not coming out well either.

So then we started connecting with a geologist and doing some exploratory work up there.

We did some coring has that.

I'll just explain this a little bit.

Oh my god.

Um, inner geologists.

I know, yeah.

Whatever this is, it's cool.

It's very fascinating.

So we did two core samples along Saginaw, um, down to a hundred foot depth to try to understand if there's any sort of fractured layers in there that we could get some good infiltration.

That segment is basalt, there's little gas pockets there from the lava.

We essentially that was um at a hundred foot depth.

We did not get any infiltrating layers in that hundred feet.

It's all that.

Yeah, we have um a dozen or so dry wells that are up on the butte.

We have maybe four or five of them that work really well, and everything else doesn't perform very well.

Um we did some geophysics survey, which is drilling um 18 inches down, putting these probes in, and there's 10 of them or so on a run, and they do um an evaluation of what's underneath so they could see the layers up to 100 feet, and we were using these core samples to kind of correlate between actual and what they were seeing with the colored layers.

Um we were hoping we would be able to put in some stormwater injection uh wells, those are the deep uh underground ejection controls in this area.

However, as part of all of this geotechnical work or geology and looking up record maps down to at least 200 feet, if not more is solid rock.

Wow, up on the butte.

And the edge of the butte is right along Newport.

So the um volcanic rock of the Butte is very, very old, two and a half to 25 million years old, and then you've got um the next youngest is the Bend Pumice layer, which we all are hoping to get into when we're um doing our stormwater work, and then you have the Tummelow Tuff and Chevlin Park Tuff, which you may or may not get some infiltration there.

So the challenge that we have on this project is we were hoping we could go deeper and get into those well infiltrating layers.

Our design had proposed 56 dry wells all throughout the Butte.

Um after we did more investigation, it's telling us that that's not really gonna help uh get that water off the butte and and down into the system.

So we're kind of switching gears with this new information.

And we're going to go out for a new design contract to kind of explore some creative solutions, likely all surface improvements, and maybe some land acquisition to get some detention based and spacing.

Which can tie into what you were talking about of a public space where private storm water could integrate together with it.

Send it there.

Yeah.

And Ben Barry did a great segue into the view.

He was talking about how it's solid rock, and that's what we have discovered in this process.

So yeah, it's unfortunate because it's taking us longer to complete this design, but we feel like we did a lot of investigation here.

And what we would have proposed would not have been effective, and I think that would have been a poor investment.

So we're excited that we went forward with this exploration.

We'll have a little bit more to do to pinpoint our improvement areas.

And then as far as funding goes, we are pursuing the clean water state revolving funding for South Abrete.

We do have two million dollars of principal forgiveness that we are allocated for this project, which is exciting.

It's gonna change to half a million dollars annually per city in the future.

So this is our last big chunk that we'll get.

And yeah.

All right.

We'll transition over to the water reclamation fund now.

So Ryan didn't let me bring any cool props in from the sewer system.

We'll look at pictures, that's fine.

Okay.

So yeah, Ryan mentioned that we're actively working on both the master plan for the collection system as well as a facility plan for the WRF.

So that's the master plan out there.

In combination uh of those two master plans, we also are delivering the sanitary sewer system public facility plan, the SSS PFP, if you're tracking.

Um so that that PFP is really the comprehensive plan level document associated with a master plan.

That is actually driving the critical path for adoption of all of these three plans if we want them to happen in concert, which is estimated as Ryan said earlier in the fall of this year.

Both of those master plan efforts started in 2024, and so we are deep into the effort there.

We are starting to consider landing these efforts.

We are starting to get into the financial planning associated with the delivery of the solutions that we are identifying.

And so through that master plan process, we are looking at the 20-year planning horizon with year zero being next fiscal year or the beginning of it as we talk from projects from zero to five years, year zero is the start of next fiscal year.

As Ryan said, we are taking action on some projects, namely the large digester four project that I'll talk about in a second.

That's when you guys adopted these uh findings for little bit exemption a couple weeks ago.

So those are coming in.

We are doing what we can to take action rather than wait until adopting these master plans before a project is initiated.

On the collection side, the main two aspects that we look at are capacity and condition.

Um what the master plan is also showing us is our continued need for programs, such as the repair and replacement, that's maintaining our existing system, making sure it's working order, as well as the septic to sewer program, which was mentioned several times in the last um uh agenda item here.

But overall on the collection system, what we're finding is in that first uh near term, zero to five, is there are not many um capital large scale medium scale or even small scale capital improvement needs that we um have identified.

What we do have is a southwest sewer phase three, which is extension through the Romain village, which is a pump station neighborhood and out to a septic area.

So then those neighbors would have an opportunity to apply to the septic sewer committee for potential selection.

Five to ten years.

We're looking at several other projects.

Once again, these are kind of in that small till medium scale of what a capital improvement project would be.

Decommissioning of the Highland Pump Station, which is near the north interceptor up there off of um Hunnel, um, and then some shovel and park, shoving pump station improvements on the west side of town, just to name a few.

But then in the year 10 to 20 is when we do see the need for capacity expansion within the collection system.

The main one here is the East Interceptor, so that's a large-scale project that we would be building off of the North Interceptor that was recently completed, or somewhat recently.

So coming down most likely a handy road alignment to then serve the east side of town, then that does allow the state to alleviate the core or the central interceptor from the flow that that does currently receive, or even decommission the phase one extension or stubby of the southeast interceptor.

So that would be what yet.

10 to 20 years.

And then also on the south end of town, really around where the thumb is located.

So really looking at some sewer infrastructure, not or down peril are probably where the large scale improvements are going to be happening on the collection side.

So the digester and the clarifier at the facility, there are they're not on here or this is the collections.

Great question.

So this is all meant to be the collections.

Got it perspective.

Yeah.

So and then this is where you brace yourself.

So this is the WRF side of things.

So R as you mentioned.

So digester 4 shows up in that zero to five year time period.

But backing up half a step here, the key elements here that we want to look at are the capacity, the condition, but also the regulatory.

So that is what governs what we have to treat the sewage too.

We did just recently receive a new 10-year permit, the water pollution control facility permit, which is what the EQ issues us, and that says what you have to treat your F12.

So that was a huge effort that the team did accomplish to get that new permit, which gives us the limits to then know what improvements we need to instill so that we can actually stay in the in the heroes.

So we also getting that 10-year permit allows us a runway to make some improvements.

They typically do a five-year permit, but we advocate for 10, so we can do the stuff for once.

We achieved it.

And then also there is R and R repair replacement at the treatment plant on things wear out and do need to be replaced.

This is where the opposite of the collection side is.

It gets heavy up front, and then it does bleed out as we get into that 10 to 20 years.

So the initial investment here is zero to five years, digester four, haul waste.

Those are that's the project that you guys approved the solstice or the LOMIT exemptions for a couple weeks ago.

So we're working through that.

Um working on the owner's rep contract to get that project going, and then we'll go through the EOR and the general contractor.

The secondary clarifier four is a project that we will be adding in the fourth year, fifth year of the five-year CIP, and then but the bulk of that spending will happen then into that five to ten year time frame.

Um those are the two different really flow streams, the solids and then the liquids.

Um, so both need drastic improvements.

Digester 4 is prioritized enough first.

Then we get to the five to 10 year, we're talking about adding another primary clarifier and another iteration basin, and then 10 to 20 years, it's really the another digester.

So there are other improvements necessary, but those are just snapshot of what we're looking at.

And those stuff's in the especially the first zero to five years, are they reflected in the current rates or no?

Is that part of the reaction?

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

Yeah.

Okay.

So as we are initiating that project, the funding package for where the dollars coming from, where it's estimating it's an 115, 120 million dollars to deliver this project for just digester four and halt waste.

So we have had meetings in BEQ to see whether the clean water state revolving fund can support it.

There are limitations there, so exploring other opportunities such as WIFIA, that's where we're we're getting to.

So that's kind of where we uh we'll take the conversation, but we are looking for revenue or financial funding opportunities to support that.

Okay.

Uh so just to summarize that real quick.

Uh, you know, the big takeaway, and counselor Riley, you just hit on it.

We put a lot of effort into these master planning efforts, these facility planning efforts.

And just to hit on it real quick, that the DEQ, the WPCF permit.

I just want to call out Jason and his team.

They they got the EQ to flex and to bend.

Getting a 10-year permit is huge to really clear the runway for us.

So kudos to him and his team for a couple years worth of effort to do that, and then stepping back the town side act process.

We're on year three of that.

Um, you know, we started that, and we're like, oh, this should you know it should take a year, maybe two, and of course, you know, we're in year three now.

So again, just kudos to Brittany and her team.

Both of those uh are were huge efforts, and we're we're seeing some light at the end of the tunnel.

So the big takeaway though is um, as you noted, like we have some big demands on the on the utility system, and our current rate structure and the way we've done this historically, it doesn't necessarily support the needs that we're showing out there in the system.

So this is where we have to go through this iterative process of what rates is is the community comfortable supporting, how do you balance that with all the other rate demands?

You know, whether it's from the fire, from the school district, from parts district.

It's a big equation with lots of variables there.

So Dan's gonna just kind of kick us off here and just give us a high-level overview of all the inputs and all the constraints and really the iterative process that we go through in setting rates.

Yeah, and again, no props, this is the least, potentially at least exciting.

Um wanted to kind of set the stage for how we go about setting rates.

Um there are a few processes that we go through with varying levels of frequency at which we do them.

Um they're broken out here in these different levels.

Uh first off, we have revenue requirement.

This is what we do every year.

Um, this is essentially where we're taking, we're looking at the system, what are the financial needs of the system, how much rate do how much revenue do we need to collect to be able to support operations, maintenance, and capital infrastructure to keep things moving.

Um, so that's what we do every year.

That's part of our modeling process, which we'll get into in a couple slides.

Uh, another process that we do is called our cost of service study.

This typically aligns with our master planning efforts.

Uh, this is where we do a deeper dive into customer classes.

We're looking at kind of the average usage characteristics of the different customers, talking residential, non-residential, multi-unit, um, industrial, and looking at are they paying their proportional share of their impact on the system?

And then lastly, we have the broader, kind of more macro rate design, where we are looking at kind of those base charges versus volume charges and making some of those bigger, uh bigger changes to the structure.

Um, and so those are kind of the three different processes that we do.

Um, if you go to the next slide, it's not as simple as just taking this is how much it costs to operate our system, the set revenue is equal to that.

Uh, there are a lot of other policy objectives that we have to try to keep in mind as we're going through this, have a few of them captured here.

Um, affordability, conservation, proportionality, public acceptance, rate stability, and revenue stability.

Uh, you know, just as examples, as we're working through modeling, we don't want customers to be shocked by oh golly, I have a 15% increase in my bill next year.

Um, you know, we're also trying to uh balance things between base and volume charges for conservation and incentivization, that sort of thing.

Um, so a lot of different policies, as Ryan mentioned, it's these are pieces to a bigger equation.

Um, and we'll go into what it looks like for the actual bottling.

So, this is the nuts and bolts of what we're doing uh on a daily, weekly, monthly basis with working with engineering and with the water services to make sure that we're building financially sustainable plan.

Um, so each of the three water services has a 30-year financial model that we've worked on with our consultants.

Uh, but we we help manage it with with uh input from the other departments.

But this is at a very high level, kind of a graphical summarization of what the process entails.

Uh, first section are the inputs that we put into the model.

Uh, this is just a sampling, but at a high level, growth assumptions.

This is looking at how many customers customers are we adding each year, how much water are they using?

We're using historical data, we're working with CDD to get kind of some of their projections on what developments are coming in, how many units are we expecting to add to the system?

And this is one of the biggest drivers, as you might imagine to our revenue.

Um, in previous years where we had significant population growth, that was really driving our revenues quite high.

We've seen population growth stagnate in the last couple years, and so even with rate revenue increases, uh, we're not seeing the same uh proportional increase in our revenues.

So, as much as we raise rates, we're not seeing the same leverage, we'll say.

Just a reminder to folks that we're talking about people that pay City of Bend water, right?

And we don't get any revenue from Avion.

If we're in Southeast or some of these places that have been starting to expand, there population growth is happening, but we're not seeing the revenue, right?

Yeah.

Yeah, so absolutely.

So that's one of our major drivers.

Um next up, we have expenses.

This is probably the area that we have most control over compared to customer growth or demand.

From an expense standpoint, this is our operating maintenance.

This is looking at our personnel that operate the system, chemicals, electricity, the cost of water meters, uh, all the equipment that goes into it.

Um, and then obviously we have the capital improvement plan, uh, which are big capital investments, uh, big chunks of dollars uh being spent out of the funds.

And then lastly, we have kind of the economics of the of the situation.

Uh we have inflation, construction cost inflation, CPI is where a lot of the inflation indexes we use to help inform our assumptions.

But another big one is kind of what's going on in the bond market.

Because a big part of our capital funding strategy is determining pay as you go versus debt funding.

And so what our interest rates are in the bond market will heavily impact what we can afford as we move forward.

So we take all those inputs and we have to make sure that what's coming out of the model fits within the constraints that we've set for ourselves, or that various other parties have set for us.

For instance, debt coverage ratio, we have set in our fiscal policy.

Basically, this is an evaluation or measure of how well we can pay for our debt, how uh comfortable we are with our revenues coming in, paying for our debt service.

Um this is also required in our debt uh coverage, sorry, debt covenants when we issue bonds, the agreements that we sign have debt coverage ratios required.

Uh another requirement is in our fiscal policies.

We have reserves, and I have a couple of the reserves here in kind of that lighter blue.

We have an operating reserve, that's about that's a three-month requirement, three months of operating expenses, rate stabilization.

This is a million and a half in water and a million in sewer.

Uh and this reserve is intended to kind of offset economic shocks.

If there were any sort of recession or something, this could help alleviate any sudden spikes in rates.

Uh capital reserve, this is for unexpected maintenance projects that might be needed.

And this is about five billion dollars in each of the in the water and these sewer funds.

That a lot of our uh debt holders require, then we have a certain amount of uh money held aside to pay debt just as a as a backup.

So those are some of the constraints that we have that uh keep us uh within certain bounds in our modeling.

Uh so once we have all these different inputs, we then have these these bottom four boxes are our the levers that we can pull.

So this is our iterative process where we're trying to balance the model and accomplish all those objectives that we talked about earlier.

Um the four things debt funding, again, deciding whether we can pay for things with cash or whether we need to leverage debt, uh raising rates, uh operating expenses, we can decrease expenses, we can delay projects, programs, that sort of thing.

Um, and then obviously in the CIP, we can look at project scope and timing.

We often work with engineers.

Is this a project that we can stretch out an extra year to kind of flatten any spikes?

And so, at a very high level, that's how the modeling works.

Uh, we work with our consultant uh to do some QAQC each year, and they help a little bit with the balancing as well, just to make sure there's nothing unexpected.

Um, but ultimately out of all this, we come to our proposed rates.

We'll go to the next one.

Um, and this is a really cool line graph that I think tells an interesting story.

This is our proposed sorry, our adopted rates for each of the funds over the last 10 years.

I know it's a lot of very similar colored lines, and I apologize.

Um, but just to set some context here, so we we have three separate models for the different funds, and we adopt the revenue increases separately, but we do manage them kind of in aggregate to accomplish those policy objectives.

Um, so you'll see as you kind of go back in time and move forward, there's shifting in kind of what our priority is as a city and what we've needed to invest in.

Um, as you see, if you go back to FY17, uh there was a bigger investment in the stewer fund, which is that red line, and you see water is is below it, is lower at 2%.

Uh that was at a time when the Southeast Interceptor was going in.

There was a lot of expansion going on, um, some renovation uh or maintenance of different projects.

Then you see COVID happening in FY20.

Uh we adopted rates a month and a half, two months after everything shut down, and so affordability had come kind of to the forefront of what was being prioritized.

And then you see us climbing back up and kind of stabilizing at that 3%, and then slowly climbing up as we've been feeling the impacts of construction inflation and just general inflation to our uh to our expenses.

So, all of that said, um we didn't include future years, uh, Councilor Riley.

You you asked about kind of future years and whether these master plans are incorporated here.

So much is going to change between now and fall as we get those master plans, those facility plans.

Uh, there's just a lot of unknowns in terms of what is prescribed in those plans and what can we realistically accomplish, and we want to include in our financial models.

Um that all being said, you see the steady climb, there's an upward pressure on rates.

Um, with these additional projects that we were hearing about, these additional plans, uh, we do anticipate continued upward pressure on rates.

We we just didn't want to put any numbers out there to kind of anchor ourselves anywhere when we just don't know quite where those plans are gonna land.

Um but that is kind of the the long and short of rate modeling.

Happy to answer any questions.

Yeah, and inflation adjusted.

Yeah, go for it.

Sorry, are those inflation adjusted or nominal?

Uh so this is just the percent that we increase.

If you factor in inflation, I would say we're they're slightly above inflation the last couple of years, but maybe slightly below.

It went years of eight, nine percent inflation.

In 2022, yeah, rates didn't keep up.

Our our target the the direction that we've been receiving for the last several years has been trying to keep to roughly a three percent, because that had been kind of the prevailing CPI for a number of years.

And so it was intended to keep pace with inflation.

But to Eric's point, there are been a number of years of of outpacing inflation where we tried to keep things uh lower and more affordable.

And I'll just highlight the the takeaway from this, you can see you know that the circle line, the storm water line, you know, an eight percent isn't as scary as it looks because that's an eight percent of a very small uh bill.

Uh and then the water funds are really good example, it dropped to zero in COVID, and then we adopted the master plan.

So we've generally been kind of following what the master plan pointed us towards, so you see water in the triangle continuing to climb an increase.

And if water generally stays at that level, Brittany can build everything she's been talking about.

Um what's going to be difficult is the square, the sewer, the sewer side, because you can see that rate is dropping down in the last couple years, it's been two percent or less than two percent.

That continued rate will not fund what Jason's proposing that we need to do in the master plan.

So obviously not looking for any guidance or direction now, but um just showing that's where we sit today.

So are you required to limit the per when you're designing the rate?

Are you required to only include what's like in the master plan in terms of projected projects?

Because it's the capital costs that are gonna really drive that rate.

Well, so a master plan is gonna show basically this is what the system needs over the next 20 years.

Then we pull that apart and we say, well, this particular improvement is actually being driven by a hundred new homes.

So we can actually make that a cost to the developer.

Um maybe that's a land use requirement, maybe we capture it in the SDCs, and then so we really trim that down.

But then when you talk about an East Interceptor or a digester, obviously that's a city cost, right?

That's something that we need to consider within the rate structure.

But you are limited to what's in the WPF, the public facility plan, um, in terms of what you can include what you can actually, which projects you can um include in the base for the rate.

Like we have to fund these projects, how are we gonna do it?

Here's the ones we're doing in SDCs, and this is what we're left with in the overall rate.

That's what that's that's the scope of what you can consider in terms of rate calculation.

Well, the WPCF is more about the quality and the treatment of the actual waste that comes into the system.

It doesn't really work.

Well, the master plan, I guess the master plan.

The master plan, yeah, we'll outline you know, this this is the need in the system based on housing goals, based on density goals, based on anticipated growth.

Because I guess my point is just you know, if we have a five million dollar reserve, that's great.

And we know we've a hundred and twenty million dollar project coming.

We could have been building up a with a different rate structure, we might have building a larger reserve and not have to have the same impact now on rates.

Um so I'm trying to understand what you can legally consider in calculating the rates.

Is there any limits on that or not?

Not that it would be on the No, no, we're like, yeah, I mean, there's there's some municipalities that literally just look at the master plan and say, okay, you need 500 million over 20 years.

We're gonna set a rate structure to support that.

Yeah.

And and we don't do that here because we we do factor in these these objectives, which we'll get back to here in just a second.

And and that's part of the question to you as council tonight is you know, what other what other information can we staff, whether it be from finance, engineering, or water services, you know, what what can we bring to the table to help you kind of understand the demands and needs of the system?

And then really the values that Dan highlighted here, and I'll flip back a couple slides.

Are these still appropriate?

Is there anything that you as a council would like to?

I mean, and we don't have to do it here and now we could prioritize these, we could add stuff, we could take away stuff.

And and really, we've got a long runway here.

We don't have to really, you know, hammer this down and nail it down today, but we are gonna need to have a pretty intense rate discussion getting into this fall and over the winter.

And so before we start modeling a lot of this, we want to make sure we're starting from the right spot.

Well, what I think you just said is really important to continue to state in these discussions around that we try to look at what growth could pay for versus what is a citywide, you know, water quality necessary infrastructure, right?

Um I think that's good to continue to show people that we're being careful about what we're asking ratepayers to support versus what you know, new growth can help support.

Um, because there's a world in which you could say I'm gonna fund 90% of this through SDCs, but then your fees are gonna be super.

The front size, you can say, Oh, I'm gonna I'm gonna limit the STCs, keep those low, encourage development, but then you're putting a lot of that cost on the memory rate areas.

Well, it's like I'm thinking too like legislatively, you know, any sort of legislative funding or federal funding that's like coming to understand.

Having this good list of projects and saying being able to say these are the ones we've we've tried to fund other ways, and these are the ones that are on our backs that we're trying to keep costs low for ratepayers is helpful when we're the break grant's a good example, like the rates we have today in water, can build what we need at the Outpack facility.

A 10 or 20 million dollar break grant would mean, oh, great, those rates actually could probably come down a little bit.

So there's relief there if we get some some federal or state support on the okay.

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

Just to clarify whether affordability and proportionality include the idea of someone who uses a lot of water for landscaping because they really like big green lawns versus someone who lives in an apartment and has a you know much lower impact on water.

Do we have do those concepts capture that hey, you have the ability to pay, you're using a lot of water, you're gonna have a significantly higher bill than someone who's because we hear a lot about people who I think are surprised by the baseline monthly charge seems very high.

So I'm using very little water, and then I'm using a lot more water, but my bill doesn't change that much.

Good evening.

You were waiting back there.

Just in case, good evening, Mayor and members of the city council, I'm Gillian Achner.

I work in water services as a water policy analyst.

I arrived at the city at in January of 2014 when we were kicking off a major rate structure reform process for both sewer and water simultaneously.

For those people who were at the table and watched this happen, it was a big lift.

And I just want to be clear.

So you have two parts of your rates, right?

You have the rate increases that happen, and then you have the rate structure that's how you collect the revenue that's required to serve all the needs that you heard about today.

Proportionality is specific to how you recover your cost in a way that is proportional to how people are imposing costs on the system.

You heard that earlier.

And it it that intention is tied to we we cost allocate every piece of our assets in our system based on how it serves our community.

And some of those things are equally shared by everyone, and some of those things like the amount of water we use and how people peak as you reference with irrigation in the summertime, is allocated specifically on how much they use, and that's why we have a volume charge in our water.

So for somebody living in multifamily who is directly paying their bill, which I don't I'm looking at Dana, we have nobody in multifamily right now who's directly paying their utility bill that I know of in a big multifamily unit.

So that they don't experience a peaking charge the way a single family residential uh unit does.

If if uh you are a single family, that is that piece of if you use less water, your bill will come down, and that's tied to that affordability.

And that's why back in 2014, the city council made the decision to actually increase the proportion of a bill that was recovered from that volume charge.

It used to be um proportionally the volume charge was slightly higher than the um the the excuse me, the base charge was slightly higher than the volume charge, and they flip-flop that.

So we recover a larger proportion of the revenue in our volume charge, and that allows some autonomy over people's bills based on how much water they use.

Does that answer the question?

It does.

Um I didn't know about that history either.

Well, what's interesting is I think we still hear from people that we have a pretty high franchise fee, and I would be interested.

I know this work is coming, and maybe someone can remind me the timeline on sort of a ratcheting up.

If you start to go over this many gallons in a private single residence, now it's more, right?

Like a tier.

A tiering, right?

Um, of once you are starting to really really use water for your lawn or your irrigation or whatever, then you're gonna pay a little more.

Um I think one of the things that um for people who are lower income and would like to low, you know, keep conserve and lower the bill, they don't see that much impact when it's because they're in maybe a smaller home or something, and they just really can't impact their bill that much.

So I know that discussion is coming.

Maybe you can just remind us when we were thinking about that restructuring.

And while she's up here, she always up here.

Um, you know, the you've you've presented with the human rights and equity commission twice now, and you've had this conversation.

I don't know if there's anything you wanted to share about that or okay.

All the doing that'd be great.

Thank you for cueing on that as well.

Yeah, so two things.

One is um in your goal setting for 25-27 biennium, you basically prioritize in your rate objectives conservation by calling on the city staff to start looking at a conservation-based rate structure.

So that says how do we look at different options, such as what they call an inclining block rate or a tiered rate structure to begin to send a louder price signal for those who use higher levels of water.

Um there are ways that you you can structure that such that the lowest tier could be even lower than what people are paying today, and your highest tier can be say, you know, it depends on how you break it down and how you tie it to the the amount of um change you want to see in your system.

Just as a note, City of Redmond is looking at this right now, they're hoping to uh review that um by the end of August and make a decision on whether or not to adopt an inclining block rate system, uh rate structure.

Um so and as for the human rights and equity commission, so part of the work we've been doing in in uh preparation for that water rate structure discussion is looking at affordability.

Because we want to be able to send a loud price signal at the same time as caring for the most vulnerable members of our community, looking at how we serve them today through our low-income assistance program.

And so we went uh you we were a pilot for the AIM tool and looking at how we could use that tool to evaluate how that program is currently functioning today.

Are we missing part parts of the community that may be eligible for that program and are for whatever reason not using the program?

And so um Dana Wilson and I excuse me, Dana Chenwith and I are continuing to um work through that process and evaluate that program, and uh we asked HREC to help us make sure we were asking the right questions.

Um part of that is determining what should we be measuring?

What's the desired outcome?

Is it just purely increasing the number the participation in that program and the and what does that mean?

Um and and we measure it now in terms of things like shutoffs, rate of shutoffs, and and the participation rates and and the distribution of that, and look we're looking at it across the city and how we're reaching people.

Great, thank you.

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

Just wanted to emphasize the importance of conservation in terms of us thinking about and not you know completing that project and having a good set of options for a rate structure that really gets there.

I I you know I think there's a good chance if some of the current trends persist that we we might actually start to see some declines in production from um even some of the springs that we're facing if we that we that we get our water from if we see the trend that's currently present uh persist over time and getting ready for that and have a having a fee structure that can really incentivize conservation, I think is one of the bigger tools that we know we have around um achieving conservation goals.

So it's just really important we have a good options on that conservation structure and the rates.

Um Dan or whoever regarding the growth projections, what is your underlying assumption?

Is that PSU uh population growth?

Is that what that is?

The only reason I ask is because you say it's driven by the growth plan.

Our growth plan's old right now, and we're not gonna have a new one for five years, right?

So what are we doing in the interim right now?

So we use PSU in conjunction with kind of historical rates.

So PSU comes out every year.

So we we calibrate that every year tomorrow.

And regarding homes or that's more stale, but okay.

But we are using the numbers for that, right?

So the PS they're all kind of connected.

Okay, so the PSU is sort of the basic.

And last rate stabilization is anything that our country has done internationally uh caused us to hit that recently.

We haven't leveraged the rate stabilization reserve in any time that I can.

I haven't ever seen it touched.

Thanks to this one.

Interesting.

Okay.

Okay.

Thank you very much.

Appreciate all the information.

And we are gonna adjourn.