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Record of Proceedings

Tacoma City Council Study Session and Joint Meeting with Public Utility Board - August 20, 2024

City Council Study SessionTuesday, August 20, 2024
BodyTacoma, Washington
SessionCity Council Study Session
DateTuesday, August 20, 2024
StatusFILED
Video Record

STREAMING COPY IN PREPARATION — RECORDING AVAILABLE FROM THE ORIGINAL SOURCE

Transcript — Verbatim
0:00

Whoa, I'm I'd like to call to order at the joint city council study session of August 20th, 2024.

0:10

Clerk, will you please call the roll?

0:12

Board Member Clos McGann.

0:15

Here.

0:16

Board Member Gallagher.

0:18

Here.

0:18

Board Member Watson.

0:20

Absent Vice Chair Bridges.

0:23

Here.

0:23

Chair O'Lachlin.

0:24

Here.

0:25

Councilmember Bushnell.

0:26

Present.

0:26

Councilmember Daniels.

0:28

Councilmember Diaz.

0:30

Absent.

0:31

Deputy Mayor Hines.

0:33

Councilmember Rumba.

0:34

Council Member Sidalgay.

0:36

Here.

0:36

Councilmember Scott.

0:37

Here.

0:37

Councilmember Walker.

0:39

Here.

0:39

Mayor Woodards.

0:40

Here.

0:41

Mayor and Council members of study session material sent to you at 1102.

0:45

Great.

0:46

Thank you very much.

0:47

All right.

0:48

I want to thank our public utility board for joining us today.

0:51

Um to go over a couple.

0:53

I so before I start, I want to go over just a couple of housekeeping housekeeping items.

0:58

Get that out of my mouth, John.

1:00

Um, as we get into our presentations this afternoon, I just wanted to remind the council that we also have a couple of executive sessions and topics that are anticipating may take at least two hours in our in our executive session.

1:13

So I just want to remind us to keep our questions focused and our comments brief so we can get through the substantive topics we have this afternoon with plenty of time for our executive session topics.

1:25

Um, at this time, I would like to call on public utility board chair, John O'Lachlin to provide opening remarks.

1:32

John, I'll hand it over to you.

1:35

Thank you, Mayor Woodards and uh members of the council.

1:39

We're excited to be here.

1:41

There's some um important topics on tap that we've uh been given some previews on, and I'm looking forward to uh hearing about it with you all.

1:54

All right.

1:56

So our first agenda item today is the Tacoma Public Utilities Long Range Financial Plan.

2:02

And I'm gonna call on Tacoma Power Financial Planning Manager Michelle Brown to begin the presentation.

2:08

So you all, because we have so many presenters today, you will see the presentations up on these two screens, these two or these four screens, these two here and these two behind us.

2:19

And unfortunately, staff is gonna be giving the presentation from behind um at the podium because we didn't have enough room for everybody.

2:26

So I hate to somebody's back was gonna have to be to them, so I hate I hate it's you all, um, but that's where the podium is.

2:35

So Michelle, go ahead and begin your presentation.

2:39

Sure.

2:40

Okay.

2:41

Good afternoon.

2:43

My name's Michelle Brown.

2:44

I'm the financial planning manager for Tacoma Power, and I'm here with Lena Vaux, um, the principal data analyst at Tacoma Water to provide a long-range financial plan overview for our utilities.

2:56

So as we go along, the first few slides will discuss common financial practices between Tacoma power and water, and then we'll become more specific to each utility.

3:08

So if you could go to the next slide.

3:14

So our long-range financial plans are the basis of our recommended system average retail rate adjustments over the long run or the next 10 years.

3:23

Both our customer rates and the budget recommendations for 2025 and 26 are supported with financial forecast summarizes and summarized in this updated plan, which will be published on our myTPU.org investor website once the budget and rate setting process is complete in November.

3:45

Next slide.

3:48

So developing a long-range financial plan is incredibly important to maintain the financial health of the utilities into the future, especially since our utilities are very capital intensive with assets that have long lives and they can be impacted by many risks.

4:05

The power utility operates and maintains seven dams, some of them built in the early 1900s, and around 2400 miles of transmission and distribution lines.

Discussion Breakdown — Share of Meeting
Procedural█████████████████████████████████████████████52%
Public Utilities███████████13%
Water And Wastewater Management██████████11%
Public Transportation█████6%
Public Health████5%
Environmental Protection███4%
Climate Change██2%
Public Engagement██2%
Public Finance1%
Summary of Proceedings

Tacoma City Council Study Session and Joint Meeting with Public Utility Board - August 20, 2024

The City Council met jointly with the Tacoma Public Utility Board on August 20, 2024, starting at 12:00 PM, to receive briefings on the Tacoma Public Utilities Long Range Financial Plan, the Tacoma 2030 Climate Action Plan and 2023 Progress Report, and a water regulations update. The Council then continued its study session with a debrief on the South Tacoma Groundwater Protection District Moratorium Extension Public Hearing, discussed council committee appointments, and entered an executive session.

Public Comments & Testimony

  • During the South Tacoma Groundwater Protection District Moratorium Extension Public Hearing, 20 people provided comment (12 written, 8 oral). Comments reflected general support for an extension; one commenter opposed. Suggestions included expanding the moratorium to new impervious surfaces, applying it to all development until the code is updated, and excluding existing metal recycling. Some comments asked for scientific-based recommendations, climate change considerations, and outside expert review. Others raised concerns about diesel truck air pollution, tree canopy preservation, and open space preservation—topics outside the moratorium's scope but incorporated into related city initiatives.

Discussion Items

  1. Tacoma Public Utilities Long Range Financial Plan (LRFP) – Michelle Brown (Financial Planning Manager, Tacoma Power) and Lyna Vo (Principal Data Analyst, Tacoma Water) presented the LRFP, which underpins recommended system average retail rate adjustments over the next 10 years. Key points:

    • The plan is based on a cost-of-service model; rate increases needed to cover projected expenses are determined by the gap between revenue at current rates and expenses.
    • Tacoma Power faces significant inflationary pressures (Handy-Whitman Index for electric utility costs far exceeds CPI) and plans over $300 million in necessary large projects over 10 years.
    • Wholesale revenue is volatile (8–26% of total revenue) and helps reduce retail rates; a rate stabilization fund is used to smooth impacts.
    • Tacoma Power's 3.5% rate adjustment in 2024 was lower than peers (e.g., Seattle City Light at 9.5%, Snohomish PUD at 5.8%). Residential bills remain among the lowest in Western Washington, especially with customer assistance programs.
    • Tacoma Water faces similar trends: rising construction costs (Handy-Whitman Index up ~40% since 2019 indexed), demand decline due to loss of West Rock, and opportunities in wholesale water markets. Debt management refinancing saved $16 million.
    • The Integrated Resource Plan (IRP): Power's IRP was adopted by the board on August 14, 2024; Water's IRP is underway, completion expected end of 2024. Power's IRP findings are included in the LRFP; Water's will inform subsequent planning.
    • The LRFP is a work in progress; further discussion is scheduled for the September Government Performance and Finance Committee (GPFC) meeting.
  2. Tacoma 2030 Climate Action Plan and 2023 Progress Report – Kristin Lynett (Sustainability Manager, Environmental Services) and Rochelle Gandour-Rood (Education Outreach Manager, TPU) presented. Highlights:

    • The city's goal is net zero greenhouse gas emissions by 2050. Transportation is the largest source of emissions, followed by industrial and natural gas buildings (~20%).
    • Progress on 28 community actions and 18 municipal actions: 11 more actions moved to good/completed status from 2022 to 2023.
    • Building energy use: fossil fuel use increased in 2023, but a decarbonization strategy completed in 2023 recommends replacing fossil-fuel space and water heating equipment in ~1,200 households per year (200–300 more than natural replacement) with heat pumps. A $2 million state grant will support 50 low-income households; a $250,000 federal grant supports a regional building electrification navigator.
    • Transportation safety: Tacoma continues to see a rise in traffic fatalities and serious injuries; Vision Zero and the upcoming Transportation Master Plan update will address this.
    • Tree planting: Tacoma Tree Foundation engaged 421 volunteers; 15 acres added to protection status. A free street tree program (Gritchit City Tree) is accepting applications through September 2.
    • Electric vehicle charging: TPU's community charging program installed chargers at two multifamily properties and one church; over two dozen projects in pipeline. Vandalism is a growing issue.
    • Tacoma Rail's divestment of the TRMW line saved ~118,000 gallons of diesel annually; zero-emission locomotives planned.
    • Grants: Since 2020, the city has received almost $113 million; $110 million more obligated through the Climate Commitment Act.
    • The city is not staying within its carbon budget; a mini-plan update is underway, and the Sustainable Tacoma Commission has met with council members to share priorities.
  3. Water Regulations Update – Kim DeFolow (Interim Planning and Engineering Manager, Tacoma Water) presented on two regulations:

    • PFAS (Per- and polyfluoroalkyl substances): EPA's final rule (April 10, 2024) enforces limits on six PFAS compounds in drinking water, with five years to comply. Tacoma Water's Green River and North Fork wells have no detections; most in-town wells have detections near or just above limits. Because the majority of supply is from the Green River, overall customer exposure is low. A planning project with a consultant has kicked off to evaluate compliance strategies, including using more Green River water or selective well use. A placeholder for PFAS treatment is in the 10-year CIP. Recommendations to the Utility Board are expected in early 2025.
    • Lead and Copper Rule: EPA requires all water systems to inventory service line materials. Tacoma Water has no evidence of lead service lines; historic lead goosenecks have been removed. To statistically validate that no lead exists, the utility is physically inspecting 384 randomly selected service lines where material is unknown. As of the meeting, 360 inspections were completed; all found galvanized steel, copper, or plastic. The inventory will be submitted to the Department of Health by October 2024.
  4. South Tacoma Groundwater Protection District Moratorium Extension Public Hearing Debrief – Adam Nolan (Senior Planner, Planning and Development Services) reviewed the public hearing. The moratorium, first adopted March 2023 and extended six months in March 2024, expires September 20, 2024. It temporarily prohibits new underground storage tanks, metal recycling, and auto-wrecking uses. The staff recommends an extension without modifications, as modifications would require additional process and time beyond the expiration date. The council can extend, extend with modifications, or not extend. First reading of the extension ordinance is scheduled for the evening's council meeting (August 20), with final reading on August 27. Staff noted that public comments on issues like impervious surfaces, air pollution, and tree canopy are being addressed through other city initiatives (e.g., code update work plan, Health Impact Assessment, Home in Tacoma project, One Tacoma Comprehensive Plan update).

  5. Council Committee Appointments – Mayor Woodards presented a resolution for 2024 Council Committee Appointments, filling vacancies and adjusting assignments. A correction was noted: Councilmember Bushnell will step down from the Community Council, replaced by Councilmember Sidalgay. The resolution will be considered at the evening council meeting.

Key Outcomes

  • No formal votes were taken during the study session; decisions are scheduled for the evening's regular council meeting and future meetings.
  • LRFP: Staff will return to the GPFC in September for further discussion on budget and rates.
  • Climate Action Plan: The mini-plan update continues; the Sustainable Tacoma Commission's priorities will inform next steps.
  • Water Regulations: Tacoma Water will complete the PFAS management strategy by mid-2025 and submit the lead service line inventory by October 2024.
  • Moratorium Extension: The council will hold first reading of the extension ordinance on August 20 and final reading on August 27, 2024. The moratorium expires September 20.
  • Council Appointments: The resolution will be considered that evening; a correction to replace Councilmember Bushnell with Councilmember Sidalgay on the Community Council will be brought as an amendment.
  • Executive Session: The council convened an executive session to discuss potential litigation and review a public employee's performance, not to exceed 60 minutes. The meeting stood recessed for executive session and was later called back to order only to extend the session.

Meeting Transcript

Whoa, I'm I'd like to call to order at the joint city council study session of August 20th, 2024. Clerk, will you please call the roll? Board Member Clos McGann. Here. Board Member Gallagher. Here. Board Member Watson. Absent Vice Chair Bridges. Here. Chair O'Lachlin. Here. Councilmember Bushnell. Present. Councilmember Daniels. Councilmember Diaz. Absent. Deputy Mayor Hines. Councilmember Rumba. Council Member Sidalgay. Here. Councilmember Scott. Here. Councilmember Walker. Here. Mayor Woodards. Here. Mayor and Council members of study session material sent to you at 1102. Great. Thank you very much. All right. I want to thank our public utility board for joining us today. Um to go over a couple. I so before I start, I want to go over just a couple of housekeeping housekeeping items. Get that out of my mouth, John. Um, as we get into our presentations this afternoon, I just wanted to remind the council that we also have a couple of executive sessions and topics that are anticipating may take at least two hours in our in our executive session. So I just want to remind us to keep our questions focused and our comments brief so we can get through the substantive topics we have this afternoon with plenty of time for our executive session topics. Um, at this time, I would like to call on public utility board chair, John O'Lachlin to provide opening remarks. John, I'll hand it over to you. Thank you, Mayor Woodards and uh members of the council. We're excited to be here. There's some um important topics on tap that we've uh been given some previews on, and I'm looking forward to uh hearing about it with you all. All right. So our first agenda item today is the Tacoma Public Utilities Long Range Financial Plan. And I'm gonna call on Tacoma Power Financial Planning Manager Michelle Brown to begin the presentation. So you all, because we have so many presenters today, you will see the presentations up on these two screens, these two or these four screens, these two here and these two behind us. And unfortunately, staff is gonna be giving the presentation from behind um at the podium because we didn't have enough room for everybody. So I hate to somebody's back was gonna have to be to them, so I hate I hate it's you all, um, but that's where the podium is. So Michelle, go ahead and begin your presentation. Sure. Okay.

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