I would like to open tonight's town council work session of June 22nd, 2026.

The first uh the both items um the applicant has asked for, staff has asked for 30 um minutes.

Does anybody have a problem with that?

All right.

Um we are we do have a quorum, we do have four people here, but we do have three people out tonight.

Um the first item for discussion is the stormwater utility discussion.

Mayor, member of council, good evening.

Last we were with you in December, we presented a minimum level service for the future of the stormwater program that meets both regulatory requirements and minimum level service to both operate and maintain all of our stormwater assets.

At the conclusion of that conversation, you asked a very simple question.

You asked us to come back and give you the numbers.

That's what we're here to do this evening.

Presenting for us from WSP is Elizabeth Treadway, she's the project manager for this task that's been working with us.

Uh, prior to his departure for Richmond, she'd been working with David Boulevard on this, so she is not new to this.

She's been with us since the beginning.

So without further ado, Ms.

Treadway.

Good evening.

We're going to talk about and reiterate what that level of service looks like and the actual potential rates under different scenarios.

So let's get right to it.

The direction that we were given was to look at the stormwater services from the perspective of minimum compliance, both with your permit as well as to ensure that we are maintaining the infrastructure to comply with the requirements under the permit to be effective in the dedication of resources.

And so one of the things that is in the cost model is a crew that will support those activities.

So we've looked at different ways, also consistent with how other water infrastructure is funded.

The cost of services that we have built is focused around major cost allocations.

In this case, we are representing both personnel and non-personnel costs, but importantly capturing what debt service, what your payments are both for letters of credit as well as CARP, the equipment acquisition requirements to support this program.

What you will see on the screen is the summary of what is in the FY27 budget that is called out as stormwater.

What you see in our forecast out five years is to recognize the full range of costs that would support if there was a utility in place.

And that last line, that indirect cost allocation represents recovery to the general fund for those services that are provided by others than the direct providers of services.

So those are folks like your town attorney, like personnel, finance, those administrative costs that are supporting stormwater.

Now, those costs occur right now.

It's not that they aren't already in your expenditures, it's that they are not allocated specifically in this case to stormwater.

So you won't see that number in FY27, but those folks exist, those services are in place as they are supporting the broader range of services across the community.

So the two really major elements that we see driving those long range costs really are wrapped around the cost of debt service for your capital program.

In addition, we have expenditures that are needed in your general operating cost for support of the services, and you'll see that that number does increase in our FY28 projection.

Personnel is fairly consistent over that time period.

So when we look at this, we're going to look at different ways in which these numbers influence the operation and cost allocation across the community.

When we think about the capital projects, we want to pay attention to the fact that what we built into the cost model is that cost of money, the debt service letters of credit, those kinds of costs are calculated on an annualized basis.

But your spend rate is significantly higher than that in order to meet the requirements under your permit conditions.

So the next two years are averaging about five million dollars in capital projects a year.

Future years, it smooths out to a smaller number.

Some of the projects that are represented here are listed on the presentation.

I'm not going to go over all of those, but they simply demonstrate where investment is projected to occur during this initial analysis for overall spending.

One of the things that we also analyze is what is the impact then to the general revenues of the community.

So you do have recurring costs to supplant those costs, for example, with taxes.

We're looking about a one cent tax increase.

It potentially has the has the impact of having to do a tax rate increase as that bond debt increases.

The indirect cost allocation is a positive contribution to the general fund.

Again, it represents those services that are provided by other operations than the individuals that would be specifically assigned to the utility.

So there are eight positions that we analyze that would be directly funded by the utility, but we have all the other supporting costs that we recognize, and that's a positive contribution to the general fund to cover those kinds of activities that you see listed there.

Again, legal finance, public works administration, fleet operations, those kinds of supporting services.

When we look then at how do we distribute this cost, we looked at the real property tax.

And in the case of the concept of balanced distribution of cost, engaging everyone who's a direct benefit received by the services that are provided.

One of the things we recognize under a real property tax is that non-taxable properties, whether it's government, whether it's nonprofits, are not participants, though they are definitely benefiting from the services that are received, they are not contributing to the general revenues of the community.

When we look at the cost based on the demand for the public service, we now bring everyone into the fold.

Everybody gets to get into a contribution of relative nature based on the demand for public services.

If nature could take care of this for us, we could wipe all the development off the map and return all the land to its natural state.

But in fact, that's not the consequence.

As we densified population, we were challenged to put public services in place.

As you see, public works does a lot of those basic infrastructure, whether it's transportation, water, sewer, stormwater, solid waste, all those services get triggered because we like to live close together, we like to work close together, and that triggers the need for aligning those costs to those who are directly receiving the benefit of those services.

That's what the utility structure allows us to do.

So we take the utility structure and we analyzed it in two different methodologies.