Tacoma City Council Study Session: Budget, Rates, and Home in Tacoma Debrief, October 8, 2024

The Tacoma City Council and Public Utility Board met in joint study session on October 8, 2024, starting at 12:00 PM, to review proposed 2025-2026 biennial budgets and rates for Tacoma Public Utilities, Public Works, Environmental Services, and the Capital Facilities Program, followed by a debrief of the Home in Tacoma public hearing. No formal votes were taken; the council recessed and reconvened for a regular council meeting at 5:10 PM.

Public Comments & Testimony

• Home in Tacoma public hearing generated "easily a couple of hundred" oral comments, letters, and emails, including two petitions with a few thousand signatures each.
• Public input reflected both support and concern on zoning, standards, affordability, and trees. Specific zoning requests included upzones and downzones, including a request to downzone North Yakima and Car Streets near Lowell Elementary.
• On trees, two petitions were submitted; some community members supported stronger tree preservation/planting to meet canopy goals, while others feared requirements would reduce housing capacity.
• Participants raised concerns about infrastructure capacity, displacement/demolition, taxes, and called for permit process streamlining and follow-up measures for parking and tree standards in other districts.

Discussion Items

Tacoma Public Utilities 2025-2026 Proposed Budget and Rates

• Director Jackie Flowers presented a 12% increase over the current biennium across all three enterprises (power, water, rail), with proposed system-wide average rate increases of 5.3% for power, 6.5% for water, and 2.3% for rail over the two years. For a typical residential customer, power would rise $6.72/month in 2025, water $2.88/month (inside city), with rates effective April 1 (power) and January 1 (water).
• TPU highlighted inflationary pressures: utility construction costs up 20-30% (Handy Whitman Index), transformer costs up 282%, and potential BPA wholesale power increases up to 13%.
• BCAP: enrollments grew from 1,300 to about 8,800; average five-service bill would go from $310 (2024) to $329 (2025) and $350 (2026). With automatic BCAP credits, bills would be $274/$292; with additional earned credit, $230/$248. Power and water contributions to BCAP are increased, with water's credit rising $1.
• Director Flowers clarified that proposed rates are cost-based and separate from the gross earnings tax (GET) discussion; GET exemptions, including a possible grant exemption, were discussed by Deputy Mayor Hines and Board Chair O'Lachlin. Chair O'Lachlin expressed support for moving Environmental Services under TPU as a cost-cutting measure; Deputy Mayor Hines noted the council's budgetary authority concerns and suggested the conversation be placed on a 2025 GPFC agenda.

Public Works 2025-2026 Budget

• Director Ramiro Chavez presented a budget focused on core services, with funding from general fund ($4M, 1.7%), rates and fees ($13M), internal services ($62M), and dedicated revenues ($82M). Current biennium accomplishments included 292 blocks residential overlay, 399 blocks surface treatment, 553 blocks preventive maintenance, ~788 curb ramps, and the residential PCI rising from 61 to 68 while arterial PCI fell from 58 to 45.
• The department secured $30.3M in grants in 2023-2024 with a $4.6M city match; 2023 alone brought $14.5M and 2024 $58.8M in grants.
• Proposed 2025-2026 includes 32 capital projects ($106M investment, a 71% increase in project count), a new $2M grant-match proviso, sidewalk program funding ($2.4M), low-income sidewalk ($1.2M), safe routes to school ($1.3M), active transportation ($900K), and Vision Zero efforts.
• Parking fund changes: monthly permit rates +6% ($232K), residential permits $60 to $100/year ($35K), on-street meters +25 cents to $1.25/hour ($410K), removal of low-performing meters, and postponement of three vacant positions to balance the fund.
• New positions include 2 real property services FTEs for Home in Tacoma permit review and 1 NCS officer for right-of-way encampment complaints, plus $500K for remediation measures.

Environmental Services 2025-2026 Budget

• Interim Director Geoffrey Smyth presented ES's three utilities (wastewater, solid waste, stormwater) and OEPS with a total proposed budget of $659M for the biennium, an increase of ~$50M. Personnel costs are 25% of budget, up 14%.
• Proposed residential rate increases: solid waste now 5.5% per year (previously 4%), stormwater 8% per year (previously 6%), while wastewater remained consistent with prior plans. Average residential bill would rise ~$10/year (6.5%) from $155/month.
• Tidy Up Tacoma removed 7.6 million pounds of garbage since April 2023; 311 complaints turned around in 3-4 days versus 10-day SLA for 97% of cases. The budget includes $4.3M for encampment cleanups, $3.6M for litter/debris, and funding for a second litter crew.
• BCAP enrollment in ES grew from 717 (2022) to 2,315 (Sept 2024), with ~15,000 eligible households (25% of customers). BCAP credits provide up to ~$40/month discount for fully enrolled customers.
• ES reported several grants totaling $5.5M plus a new $1.4M Department of Ecology grant, and an EV fleet increase of 250%. Moody's upgraded the Solid Waste Utility to AA3 (from AA2).

Capital Budget and Capital Facilities Program

• Nick Anderson outlined the 2025-2030 Capital Facilities Plan (CFP): 216 projects, 35 new, 64 removed. Transportation projects make up 57% of the CFP. Funding is primarily REET, grants, and general fund, with utility service charges for utility projects.
• Katie Johnston noted REET revenues declined 50% between 2021 and 2023, reducing available REET from over $30M last biennium to ~$20M this biennium. Projects like the Fishing Wars Memorial Bridge retain previously appropriated $9M federal grant with no new 2025-2026 funds; total replacement estimated at $300M+.

Home in Tacoma Zoning and Standards Package – Public Hearing Debrief

• Planning staff presented a summary of public input and answered council questions on affordability, ownership, trees, infrastructure, and implementation.
• The bonus program for affordability: UR1/2 zones require two additional units or payment into the housing trust fund; UR3 requires two units or 20% of building, or $72,000 payment. Fee amounts were based on residual land value.
• Staff projected that most units in UR1/2 will be for-sale ownership; paired with down payment assistance, Habitat for Humanity funding ($938K for 28 homes), and single-family repair program (270 homes since 2019).
• Trees: proposed on-site tree credits are 25% of lot area (UR3), 30% (UR2), 35% (UR1); existing trees can count at increased credit. Preservation thresholds: trees <6 inches exempt, 6-18 inches require permit with canopy loss fee, >18 inches require variance; if adding units, trees can be removed down to required credits without fee. Staff compared tools to other jurisdictions.
• Infrastructure: package includes updates to Titles 2, 9, 10, 12, new side sewer and solid waste manuals, and allowances for shared services. Permitting plans include enhanced level of service for projects of six units or less, pre-application meetings, and an ADU accelerator.
• Next steps: October 22 study session for potential amendments, October 29 first reading, November 19 final reading.

Key Outcomes

• No votes or formal decisions were taken during the study session; all items were informational/review.
• Council members gave direction to staff for follow-up data: parking revenue collection analysis (Mayor Woodards), TPU BCAP dollar specifics (Mayor), and capital project status updates (Mayor/Diaz).
• The executive session was cancelled and will be rescheduled; the regular council meeting began at 5:10 PM.
• Ceremonials were announced for upcoming meetings: Green Tacoma Day (Oct 12), Arbor Day (Oct 26), Indigenous Peoples' Day (Oct 14), and Hindu American Awareness Month (October).