Tacoma City Council and Public Utility Board Joint Study Session - May 21, 2024

This joint study session of the Tacoma City Council and the Public Utility Board (PUB) on May 21, 2024, focused on emerging issues at Tacoma Public Utilities (TPU), review of Charter Review Committee (CRC) recommendations, and a council consideration request for early childhood care funding. The meeting also included discussion on scheduling future charter amendment reviews and a mayoral proposal for a business vandalism relief fund.

Tacoma Public Utilities Emerging Issues

• Power (Chris Robinson): TPU faces generational challenges from climate change, including the energy transition (retiring carbon-emitting assets, electrification), and direct impacts like extreme weather and wildfires. A key challenge is the widening gap between generation capacity and demand, illustrated by a January 2024 cold snap where the Northwest hit a 36,000 MW peak but was 5,000 MW short, requiring imports from the desert Southwest. Renewable resources (wind, solar) lack firm capacity, and transmission permitting is difficult (10-20 years). Inflation is severe: transformer costs up 280% since 2019, and utility construction cost indexes (Handy-Whitman) far exceed CPI. TPU owns four hydro projects, three of which are up for relicensing—a costly and lengthy process (e.g., Seattle City Light spent $80M on studies for one project). The Bonneville Power Administration contract ends in 2028, and renegotiations are underway. Over the next 10 years, TPU Power anticipates over $300 million in new costs. Wildfire mitigation is a growing concern. Rate increases are occurring industry-wide; for example, Pacific Gas & Electric (California) rates are about 45 cents/kWh, 4.5 times TPU's current rates.
• Water (Scott Dewhurst): New regulatory mandates are driving costs: lead service line inventory (compliance deadline October 17, 2024), PFAS treatment (though Green River supply is PFAS-free, groundwater wells have PFAS, with treatment costs not yet in current CIP). Pipeline One requires over $100 million in investments over 30 years to meet WAC pressure standards. The Howard Hanson Dam downstream fish passage project is moving forward; Tacoma's non-federal sponsor share is about $15 million. Construction cost inflation is also affecting water, with the Engineering News Record index showing continued increases (though slower). Tacoma Water has excess supply (107 MGD available, demand ~30-35 MGD) and is seeking wholesale customers to offset retail rate pressure. PFAS concerns may drive other utilities to seek water from Tacoma.
• Customer Experience (Latasha Wortham): TPU is focusing on customer experience through a "North Star" strategy emphasizing compassion, equity, and action. Examples include the "My Account" portal, which improved TPU's customer satisfaction ranking from 74th out of 90 utilities in 2017 to 20th in 2023 (first place for website/My Account). Paperless billing grew from 27% to 57%, saving $383,958 in 2023. This customer-centric approach is designed to mitigate the impact of rising costs and emerging challenges.

Charter Review Committee Recommendations & Council Amendments

• Item 15 – Internet as a Utility: CRC proposes adding internet to the list of utilities under TPU's jurisdiction (permissive). Councilmember Bushnell supported it as an equity issue, noting broadband access is essential, and the amendment would allow TPU to step in if private sector fails. Vice Chair Laughlin (PUB) and Deputy Mayor Hines opposed, citing different business models, cost, and potential public confusion. The city attorney clarified that the city already has general authority to operate internet service but not as a utility under the charter. Bushnell agreed that the amendment is not strictly necessary but provides clarity. The item was left open for further discussion.
• Item 16 – Non-Resident Utility Board Member: CRC proposes one PUB member reside outside Tacoma but be a customer of at least one utility. Councilmember Bushnell supported it as representation for the many non-Tacoma ratepayers (over 50% of customers). PUB Board Member Gallagher opposed, noting that a single member cannot represent all outside jurisdictions, and that the board's fiduciary duty is to the city, not ratepayers. Deputy Mayor Hines and Vice Chair Laughlin also opposed, citing the city's general fund liability and the impracticality of adding one member to a five-member board (would create an even number). The city attorney added that the board's role is fiduciary to the city, not representation of ratepayers. The item was not moved forward.
• Item 17 – Shared Services Audit: CRC requires a performance and financial audit of general government services used by TPU. Councilmember Bushnell supported the intent, but noted that such audits can be done by ordinance without a charter amendment. PUB Board Member Clos McGann supported the amendment, stating that shared services issues have persisted and an outside audit would ensure accountability. The estimated cost range is $350,000–$547,000 based on prior studies. The item was left open.
• Item 18 – Purpose of Inquiry: CRC proposed clarifying that the PUB board can make direct inquiries of staff only for budget and policy formation, and only as a body. Councilmember Walker noted that the language could be more restrictive than current practice. Councilmember Daniels suggested amending to allow individual board members to inquire, similar to council rules. Deputy Mayor Hines offered to work on aligning language with council provisions. The item was referred back for revised language.
• Council Amendment C2 – Allowing PUB Members to Hold Other Elected Office: Councilmember Bushnell proposed allowing PUB members to hold other elected offices (except city council). Supported by PUB members and council. The mayor and council agreed to work on language to clarify the intent.
• Council Amendment C3 – Volunteer Incentives for PUB Members: Councilmember Bushnell proposed allowing the utility to provide incentives (e.g., stipends) to PUB members. Currently the board is volunteer-only. The city manager noted potential legal and IRS implications. Councilmember Bushnell argued it would increase diversity by making service feasible for lower-income individuals. Deputy Mayor Hines and others supported the concept. The item was referred for further legal review and language refinement.

Council Consideration Request – Multicultural Child and Family Hope Center

Councilmember Daniels presented a CCR for a $1.5 million loan from the Urban Development Action Grant (UDAG) fund to support the Cora Whitley Family Center, a 32,000 sq ft facility with 19 classrooms for 326 early learners. The center would double the Multicultural Center's capacity and fill 10% of Tacoma's early learning need. The loan would be zero interest, deferred, and potentially forgiven after 20-30 years of use as a community facility. The city's Community and Economic Development Director Jeff Robinson confirmed the fund can be used for economic/community development and that the loan meets the state's "poor and infirm" exemption to the gift of public funds clause. Approximately $4 million remains in the UDAG fund. The item was tabled due to time constraints and will be brought forward at a later date.

Key Outcomes

• TPU Update: The presentation was informational; no votes were taken. Council and board acknowledged the need for continued communication on rate impacts and customer support.
• Charter Amendments: Items 15, 16, 17, 18, C2, and C3 were discussed. Some will be revised (e.g., 18, C2, C3) and brought back. Items 15 and 16 appear unlikely to move forward without significant changes. Staff will prepare revised language.
• Scheduling for Future Charter Review: Council agreed to use time limits (30-45-60 minutes per item based on complexity) and to hold future study sessions in a more relaxed setting (e.g., Room 16 or Urban Waters) to facilitate discussion. Remaining items will be prioritized; the full council will vote on which amendments to place on the ballot by June 25.
• CCR Tabled: The Multicultural Center funding request was tabled to a future meeting.
• Mayor's Proposal: Mayor Woodards announced plans to bring forward a $25,000 contingency request for a matching fund to support Broadway businesses vandalized early on May 19 (over 50 windows damaged). The city will partner with the Chamber of Commerce.