Seattle City Council Transportation & Utilities Committee 7/21/21

2021 meeting of the Transportation Utilities Committee will come to order.

The time is 930 a.m.

I'm Alex Peterson, chair of the committee.

Will the clerk please call the roll?

Council President Gonzalez?

Present.

Council Member Herbold?

Present.

Chair Peterson.

Present.

For present.

Thank you.

If there's no objection, today's proposed agenda will be approved.

Hearing no objection, the agenda is adopted.

Good morning.

We have 15 items on today's agenda, many of which are appointments to Seattle City Light's customer review panel and the Seattle Public Utilities customer review panel.

We also have a public hearing on Seattle City Light's petition to vacate a portion of Diagonal Avenue South, west of 4th Avenue South, to provide to other departments of city government to facilitate the completion of the bike and pet trail through Georgetown and an off-leash dog park.

We will receive a briefing on the most recent independent financial audit of Seattle City Light.

We'll then have our first discussion of three ordinances that will implement Seattle Public Utilities rates for three of the four SPU lines of business, drainage, wastewater, and freshwater.

At this time, we will open the public comment period, the general public comment period.

We will also have time later for the public hearing, as I mentioned, on the vacation of Diagonal Appalachia South, that portion of that road.

For the general public comment period, I ask that everyone please be patient as we operate this online system.

We are continuously looking for ways to fine tune this process of public participation.

It remains a strong intent of the city council to have public comment regularly included on meeting agendas.

However, the city council reserves the right to modify these public comment periods at any point if we deem that the system's being abused or is unsuitable for allowing our meetings to be conducted efficiently and in a manner in which we are able to conduct our necessary business.

I will moderate the public comment period in the following manner.

We will have 20 minutes, up to 20 minutes.

Each speaker will be given two minutes to speak.

I'll call on two speakers at a time and in the order in which they're registered on the city council's website.

If you've not yet registered to speak but would like to, you can sign up before the end of this public comment period by going to the council's website at Seattle.gov.

The public comment link is also listed on today's agenda.

Once I call a speaker's name, staff will unmute the appropriate microphone and an automatic prompt that you have been unmuted will be the speaker's cue that it is their turn to speak and the speaker must press star six to begin speaking.

Star six.

Please begin speaking by stating your name and the item that you're addressing.

As a reminder, public comment should be linked to an item on today's agenda or to the committee's subject matter.

Speakers will hear a chime when 10 seconds are left of the allotted time.

Once you hear the chime, we will ask that you begin to wrap up your public comment.

If speakers do not end their comments at the end of the allotted time provided, the speaker's microphone will be muted to allow us to call on the next speaker.

Once you have completed your public comment, we ask that you please disconnect from the line.

And if you plan to continue following this meeting, please do so via Seattle Channel or the listing options listed on the committee agenda.

I do want to note that Councilmember Herbold has joined us, so the full committee is here.

If you're calling about the Diagonal Way street vacation, please wait until later in the agenda for the public hearing on that item.

The regular public comment period for this meeting is now open, and we'll begin with the first speaker on the list.

Please remember to press star six before speaking.

The first speaker is Blair Perlman, followed by Sylvie Reynolds.

Go ahead, please, Blair.

Hi, my name is Blair Perlman.

I'm a resident of Green Lake, and I am asking the committee to support and advocate to the mayor to open West Green Lake Way North.

This road was closed due to COVID and it was one of the keep moving streets in Seattle.

And now that Governor Inslee has removed those restrictions we're asking that this committee support the reopening of the road for cars in both directions.

Cars and bikes have coexisted on this road for 30 plus years.

There's never been an issue with accidents or bicyclists and cars being able to use the road.

The closure has caused unbelievable amounts of traffic around the community.

It's diverted people's shopping habits.

And rather than shopping local, they're actually driving to North Cape to get their shopping done because they don't want to sit in the 20 to 30 minute traffic that this road closure has caused.

It's cut off communities like Ballard, Finney, and Green Lake from crossing over to the other side and even residents in Fremont, people with mobility issues.

I'm just shocked that the city hasn't received an ADA complaint at this point about this closure as it's closed off half of the lake to people that used to park and use this lake.

The putt-putts Bongos, many businesses, Green Lake Crew have complained to the city to please reopen this road as it's been detrimental to their survival and we've received no response.

A petition is circulating right now and approximately 3,600 people have already signed.

So I urge this committee to strongly consider reaching out to the mayor and advocating for the opening of this road.

Thank you.

Thank you, Blair.

Next, we have Sylvie Reynolds followed by Paul Andrews.

We have only six or seven speakers, just for the committee members to be aware of.

So go ahead, Sylvie.

Hi, this is Sylvie Reynolds.

I live in Green Lake.

I'm calling to support the reopening of West Green Lake Way North to cars in both directions for 24-7.

The entire community is just up in arms and furious about this.

And there are so many stories about individuals not being able to access the lake for recreation because of the closure.

And it also impacts drivers because they have to drive around the whole lake.

The traffic around the lake is incredible.

I'll just read a few comments from the petition.

that people have left in support of opening the road.

Someone says, we deserve access to the entire park.

Someone says, please open West Greenway way back up the closure of the large inconvenience and makes traffic way worse.

Someone else says, I live by the lake and used to access this road on a daily basis.

Now I have to go through the entire neighborhood to do the same.

It is also backed up traffic.

People are not able to access a tennis course and track and there is no parking.

Hardly anyone uses this closed road except to exercise and it doesn't connect to anything.

The road already has bike lanes on each side.

You can just go on and on and read the comments.

It just impacts everyone and we urge you to please reopen the road.

Thank you.

Thank you, Sylvie.

Next up, we have Paul Andrews followed by Noel Miller.

Go ahead, Paul.

Press star six on your phone to begin speaking Paul Andrews.

Paul Andrews, if you're there and ready, please press star six.

Yes, there you go.

Finally.

All right.

Yeah.

Took a while.

All right.

Yeah.

I'm Paul Andrews.

I'm representing the PRCC, the Fenway Reach Community Council today.

I wanted to read into the record a formal letter that the PRCC has forwarded to the city to request again the reopening of West Green Lake Way North.

I understand there is movement at the council level on this.

And we wanted to thank Alex Peterson for his response to our recent query.

This letter is addressed to the mayor, the SDOT director, and the parks superintendent.

On behalf of the Finney Ridge Community Council Board of Directors at the RCC, we request that West Green Lake Way North be restored to two-way vehicular traffic with existing bike lanes.

This is a necessary arterial route providing a vital east-west connection For Finney Ridge, it provides link between Ballard, Green Lake, Floral Woodland Park, and Wallingford, University of Washington, East Green Lake, North Lake Union, South I-5, and light rail stations.

West Green Lake Way North was initially closed to promote social distancing and increased bicycle walking areas during the COVID pandemic.

With low traffic volumes during the lockdown, traffic was rerouted to other two-way arterials on 50th, 80th, and Winona.

As business and park facilities reopen, the traffic volumes are reportedly back to pre-pandemic levels, if not worse, causing significant congestion on these streets with accompanying air pollution and excessive fuel use from the delays.

The Moose Seattle levy funded a new traffic signal at the easterly terminus of this arterial and Stoneway Avenue North based on the city's own traffic studies showing that the peak traffic volume exceeded 11,000 vehicles per day.

in June of 2008. And we've attached that traffic.

I'm sorry if this goes over.

I wanted to read the entire letter.

I appreciate the forbearance of the committee.

Thank you.

Thank you, Paul.

Next up, we've got Noel Miller followed by Trip Allen.

Go ahead, Noel.

Yes, go ahead, Noel Miller.

Good morning.

I'm Noel Miller, a resident of the Finney Ridge neighborhood, and I'm supportive of the points made in the Finney Ridge Community Council letter that Paul was reading.

As a 40-year career transportation and utilities professional, it is somewhat mystifying to me as to the rationale to keep the road closed while SDOT is developing plans to design a cycle track around the west side of the lake.

Currently there is a serious lack of vehicular capacity on our roadway network during peak demand and the continued roadway closure is exacerbating this fact.

I am a cyclist as well and do not see a reason that reopening the roadway now will pose a danger to cyclists as the roadway has paved shoulders and there is no on-street parking allowed.

I'm appreciative of both Council Member Strauss and Pedersen's involvement in working to resolve this current situation with the mayor and SDOT.

Thank you.

Thank you, Noel Miller.

And next we have our last speaker who's present is Trip Allen.

Go ahead, Trip.

Press star six on your phone.

There you go.

Go ahead, Tripp Allen.

Tripp Allen, it looks like you pressed star six, so it looks like you can go ahead and speak.

We're not hearing you, though.

Okay, we're not hearing Trip Allen, the last public speaker, so please do send an email to...

Hello?

Yeah, go ahead.

Hello?

Yes.

Am I in now?

Yes.

Cumbersome.

Yes, go ahead.

I've lived on the northwest side of Green Lake for 20 years, where the new multimodal paving project begins.

I'm going to skip a lot of my comments because it basically are ditto.

I support the comments made previously by the first four callers.

We're sick of it.

We're fatigued from the paving project as it was and pandemic.

It is time to open that road.

It failed as a reimagining experiment.

No one uses it in any capacity.

Why would anyone use a deserted street for recreation when a park is a few steps to either side?

The existing road and the existing bike lanes on it were fully functional and safe.

Those lanes on that road are a full two plus feet wider than the lanes on the two-way new paths around the lake.

I vehemently oppose The idea of building more two-way multimodal type lanes anywhere they don't believe they're dangerous.

Do not build another more costly and dangerous two-way path to one side of autos.

They need to be fully separated from a street to be safe and effective.

This closure is inconvenienced people.

It's put extra burden on residents.

with traffic noise, traffic emissions, and road rage.

I'm upset at how the city is continuing to move the goalposts and play hide the ball from the people.

It is dishonest.

I was surprised, Dan, to hear in your Monday summary that there is now ideas to open it only during commutes and weekends.

It is wrong.

We're tired of being disconnected.

Give us our street back.

Thank you.

That concludes our list of speakers for the committee this morning, and we'll go to the, because we do have 15 items to cover, we will go ahead and jump in.

Thanks for folks taking the time to call in.

We do hear you.

Will the clerk please read the titles of the first five agenda items into the record?

Agenda Items 1 through 5. Appointments 1987, 1919, 1988, 1989, and 1990. Reappointment of Michael Hansen for a term to April 12, 2024. And appointments of Timothy O. Skeel for a term to April 10, 2023. Leo L. Lamb for a term to September 30, 2022. and Carrie Lynn Mead and Joel Paisner for terms to April 30th, 2024 as members City Light Review Panel for briefing discussion and possible vote.

Thank you.

Colleagues, for both the Seattle City Light Review Panel and the Seattle Public Utilities Review Panel, we were fortunate that our seasoned members stayed on long enough to complete their review and endorsement of the multi-year strategic plans of both city-owned utilities.

It's a lot of hard work, and after those important milestones, we're having some natural turnover.

and ready to welcome some new members who are willing to serve.

I believe we have three of the appointees present to meet the committee this morning.

Not everybody's able to be here at 9.30 on a Wednesday morning, but obviously their agenda packets are published, their appointment packets are published, and we have a good group of appointees here.

We want to ensure we vote on all five today to get City Light's review panel back to full capacity to provide proper oversight for this large city agency as we move forward.

So we're going to turn it over to Lee.

Good morning, Lee.

would like to meet these appointees who are here.

Great.

Thank you very much.

And we're very excited to bring to you five, four new members, as well as one reappointed member for your consideration today.

Timothy Skeel is in our economist position, which is a mayor appointed position.

Carrie Mead came to us, a nominee from the Northwest Energy Coalition for our non We have Leah Lamb as a nominee for the residential position.

He actually came to us through Council Member Peterson's office.

So thank you for that nominee.

Michael Hansen is our current co-chair.

He is up for reappointment and he spoke with you at the last committee meeting regarding our strategic plan.

And finally, Joel Paisner is our nominee for the Suburban Franchise City position.

So I thank you again for hearing them and considering their appointments.

So let's, council member, do you wanna then go on and?

Let's hear from our appointees who are able to be here this morning.

And Lee, if you could introduce the ones in the order you'd like them to speak.

And we'd like to hear why they'd like to serve and what they're looking forward to most.

And again, the appointment packets are all published online for these qualified individuals.

Thank you.

On my list, the first present is Carrie Mead.

Good morning, everybody.

I am going to keep my camera off.

I'm bouncing my newborn son.

You might hear him.

It's an honor to be appointed and I have been working in the energy efficiency industry for over 10 years.

I'm the executive director of the Northwest Energy Efficiency Council.

which is a nonprofit trade association.

The real excitement that I have of joining the review panel is because the energy industry is going through major transition.

And I think a municipal utility like City Light is in a really incredible position where you can kind of lead the direction that we would like to see electric utilities go.

There's a lot of innovative policy happening in Seattle around building efficiency and in the energy space in general.

And I would love to be a part of supporting the utility as they work through and process the strategy going forward.

So apologies, my little guy is not asleep at the moment, but it's an honor.

Thanks.

Thank you for being willing to serve and being here as well as you could.

Next up is Leo, Leo Lamb.

Good morning.

I'm Leo Lam.

I live in Fremont and I would like to thank Councillor Peterson's staff for reaching out to me.

Apparently I was popular on next door.

I am a former faculty at University of Washington in the electrical engineering department.

So I'm really excited to go behind the scene and help the utility company that I have used for almost 28 years.

And I'm very proud of them for being carbon neutral since 2005. I'm particularly interested in climate change, given that my dissertation was on energy storage for sustainable energy.

And my father was chairman at the IPCC, the Intergovernmental Panel on Climate Change.

And I have lived in Seattle since 1998 by the way of London, UK.

And I'm very pleased to be part of the team.

Thank you.

Thank you.

And finally, we have Joel Paisner, our Suburban Franchise City Representative nominee.

Hi, good morning.

Nice to meet you all.

I live in the city of Lake Forest Park, but have lived in Seattle in the past and been a customer of Seattle City Light for 30 plus years.

It's a great utility and I too am honored to serve, especially with some of my newly esteemed colleagues here.

I'm an attorney.

I began my career as a civil deputy prosecutor in King County.

and have worked in and around municipal government my whole career.

Currently, I spend a lot of time representing rural electric utilities up and down the Northwest from Alaska, throughout Washington, and some in Oregon.

So I bring a little different orientation to utility representation.

But Seattle City Light is a leader, and it'll be a challenging, interesting time to be able to support what the utility is trying to do in terms of climate change, efficiency, and really trying to be equitable to all of its customers.

So thanks for the opportunity, and I very much appreciate it.

Thank you very much.

Colleagues, I know you all read the appointment packets.

Do you have any questions for these potential appointments or for Lee about the others?

Well, we're really fortunate to have you step up to serve.

This is, you know, we have lots of advisory boards and commissions.

Some are, you know, formal for, you know, oversight for ballot approved or, you know, voter approved ballot measures.

And this obviously overseeing, helping us to oversee a $1 billion utility enterprise is critical.

So we appreciate your attention to this and there are lots of hours involved and hard work.

asking those questions of Seattle City Light to keep them doing the good work they're doing.

So thank you for your willingness to serve.

Council members, unless one or more of you wish to separate out any of the applicants for a separate vote, I'm happy to do these as we normally would as a group.

We would vote on all five of the appointments together.

Does anybody wish to separate anybody?

Hearing no wish to do so, I'll now move that the committee recommend approval of appointments 1987, 1919, 1988, and 1989. And wait, sorry.

Let me say that again.

Appointments 1987, 1919, 1988, 1989, and 1990. These are items one through five on our agenda.

Is there a second?

Second.

Thank you, it's been moved and seconded to recommend passage of these appointments.

Any final comments?

Okay, will the clerk please call the roll on the recommendation of the five appointments be forwarded to the full city council?

Gonzalez?

Aye.

Herbold?

Yes.

Morales?

Yes.

Strauss?

Yes.

Chair Peterson?

Yes.

Five in favor, none opposed.

Thank you.

The motion carries, and the committee recommendation is that the appointments be sent for approval to the July 26 City Council meeting.

Thank you, everybody, for joining us.

Thank you, Lee.

Thank you, everybody.

Thanks so much.

Thanks, Lee.

See you at a review panel meeting.

Yeah, look forward to it.

Thanks, everyone.

So will the clerk please read the short titles of the next five agenda items in the record?

Agenda items six through 10. Appointments 1991 through 1995. Appointments of Gretchen Glaub, Maria McDaniel, Khalid Mohammed, Tiffany Sevilla, and Mickey Sotos as members.

Seattle Public Utilities 2018 to 2023 Strategic Business Plan Customer Review Panel for terms to July 31st, 2024. For briefing, discussion, and possible vote.

Thank you.

Colleagues, we've got another five appointments, this time to Seattle Public Utilities' customer review panel.

As with Seattle City Lights' review panel, after the recent completion of its updated strategic business plan, we're bringing in fresh recruits for the next round of oversight.

We have, I think, four of the five appointees who were able to make this 930 meeting this morning to introduce themselves and meet you.

Of course, the appointment packets are all online for review.

Let's turn it over.

I think we may even have the general manager here.

Is that right?

Yes.

Hi, General Manager Hara.

Good morning.

Hi.

Good morning, Council Member and Committee Chair Peterson and members of the committee.

We really appreciate the opportunity to introduce this great new group of proposed members of our customer review panel to you.

We're very excited about this diverse group and the perspectives and experiences that they bring and how they'll contribute to the development of our next strategic business plan.

So I'm introducing five people today, and I'm just going to go over their little description about them and ask the ones who are in attendance to just say a couple words if that's okay.

Yes, please.

Thank you.

So Gretchen Glob is the Salmon Recovery Coordinator for Sonomish County.

She's interested in Puget Sound ecosystem recovery and is working to recover endangered species and restore salmon runs.

Maria McDaniel is a current member of the Customer Review Panel, and she works for the City of Seattle as an Information Technology Department employee as a Senior Business Analyst.

Maria is interested in continuing work with the customer review panel to help address issues surrounding those living in RVs, the ones, you know, living in them as a primary residence and available services to them to safely without judgment dispose of human waste.

Khalid Mohammed is the operations assistant and registrar at Summit Public School.

Khalid is interested in bringing a social and racial justice lens to the work of the panel.

As a Muslim and Somali-American, he is excited to bring his perspective to the work of our utility.

Tiffany Sevilla is a stormwater management engineer with the Port of Seattle.

Tiffany wants to help identify emerging strategies for building community wealth and is passionate about working towards environmental justice to support public health.

Mickey Sotos owns three businesses in Seattle, Cafe Pederoso, Bang Bang Kitchen, and Bang Bang Cafe.

As a member of the customer review panel, Mickey would like to help educate marginalized communities on clean water issues while bringing a business owner's perspective to the work of the customer review panel.

This group of proposed members is the most diverse in the history of SPU's customer review panel.

And they bring a wide range of experience and backgrounds and geographic locations to the panel.

So I'm going to ask the two that have been able to attend to introduce themselves.

And I'll ask Khalid to start, please.

Can you guys hear me?

Yes.

OK.

Hello, everyone.

Hello, Council Member Alex.

Thank you for your appointment.

My name is Khalid Mohammed.

I live in West Seattle and I actually work in West Seattle.

I'm a former Minnesotan.

I live in Seattle now about two years, two and a half years, I would say two years.

Pretty excited about the work.

the Seattle Public Utilities has been doing, and I'm more than happy to be part of this great team that will do great work in the next three years and contribute back to our communities and make sure that we represent the communities that call Seattle home, no matter what their background is.

Thank you so much.

And I'll ask Miki Sotos to also introduce herself.

Hi there, my name is Miki Sotos.

Mommy, thank you so much.

I met you during the protests.

And it's the first time that I ever really saw what SPU does.

And it was, you know, I always had, you know, I paid my utility bills and all that sort of stuff, but it was really the first time that I had experienced what everybody does.

And I'm really excited to get involved in civil service, something I've been interested in for a long time.

So I'm really excited and I'm really honored to be a part of it.

Thank you.

Thank you both for being here.

And General Manager Herrera, thank you for going over the resumes of the others.

Colleagues, happy to have you ask any questions of our two potential appointees here or any questions of General Manager Herrera about the other appointees so that we can vote on the five that are before us today.

OK.

Well, I know we all read these packets.

They come from a diverse background, bring a lot of things to the table here, which is really appreciated because as we know, SPU has got four lines of business, I mean, four lines of business really, and you're asked to do other things that aren't necessarily in your regular lines of business.

So we appreciate SPU stepping up to do a lot of things, especially during the pandemic and also trying to, and managing your rates as well.

So thank you for doing everything that you're doing, and we appreciate the customer review panel asking the tough questions of the utilities so that we can have oversight from a couple of different angles, this committee as well as the review panel.

Well, colleagues, unless one of you would like to vote on these separately, we can just vote on them all at once, all five of them.

Not seeing any requests for a separate vote, so I'll go ahead and move all five.

I now move that the committee recommend approval of appointments 1991 through 1995, items six through nine on, or excuse me, six through 10 on today's agenda.

Is there a second?

Second.

Thank you.

It's been moved and seconded to recommend passage of the five appointments.

Any final comments?

Okay, will the clerk please call the roll on the committee recommendation that the five appointments be approved for forwarding to the full city council.

Gonzales?

Aye.

Herbold?

Yes.

Morales?

Council Member Morales, I couldn't quite hear.

Yes.

Strauss?

Yes.

Chair Peterson?

Yes.

Five in favor, none opposed.

Thank you.

The motion carries and the committee recommendation is that the appointments be sent for approval to the July 26th city council meeting.

Thank you, General Manager Hera for being here and for your team at SPU and for all the appointees willing to serve.

Thank you.

Thank you very much.

We appreciate everyone's consideration.

Thank you.

Will the clerk please read the title of the next agenda item into the record?

Agenda item 11. Clerk file 314451, petition of Seattle City Light to vacate a portion of Diagonal Avenue South, west of 4th Avenue South, for public hearing, briefing, and discussion.

Hey colleagues, we've seen other legislative action around this.

It's complicated, but it's all good.

This is the next step in the ongoing multi-departmental work to get the Georgetown-South Park Trail completed, as well as other items.

The action we're considering today vacation of a portion of diagonal way also happens to be city lights needs by making operations at itself service station facility more efficient the city's policies regarding required public benefits for vacation of the right away at the facility are met in large part by city like conveying ownership of a piece of land needed for the georgetown the south park trail as well as providing enough land for uh...

awfully stockpile and contributing toward construction of both This complicated transaction required the cooperation of four city departments, City Light, SPU, Parks, and SDOT.

We're actually going to have a public hearing on this, or at least an opportunity to have a public hearing.

I'll open and close it, but I don't think we have any speakers for it.

So could I get a confirmation from IT that you're not seeing any separate public comment speakers for the public hearing?

There are no public hearing registrants.

Okay, I'm gonna still go ahead and open and close the public hearing, and then we'll have the presentation.

And somebody might pop in while I'm saying this, so we'll give them that opportunity.

These are the same procedures we use for the regular public comment period.

People call in, they get two minutes, press star six.

So I'll just go ahead and open the public hearing for clerk file 314451 and noting that there are no speakers.

I will now close the public hearing on Clerk File 314451. And we'll hear the presentation.

If anybody's listening and they do want to comment, they can just email us, council at seattle.gov.

But I think we'll turn it over to, well, let's hear from central staff first.

Hi, Lish Whitson, nice to see you.

Did you want to comment before we turn it over to the executive departments?

Sure, just very briefly to sort of frame your decision today and potentially at your next meeting.

So this is a street vacation.

CLC Light has petitioned the city council to vacate the public's use of a portion of Diagonal Way.

The council has adopted policies that include a two-part test about whether or not to vacate right-of-way.

The first test is called public trust.

analysis and it's because the city holds ownership and right of way in trust for the public.

So that part of the analysis asks the council to consider impacts to transportation, circulation and access to properties, utilities, use of the right of way for utility functions, Light, air, open space, views, and the use of the right-of-way as a frame for urban design and urban form.

And finally, consider use of right-of-way streets for public access and public assembly and free speech.

The second analysis, if the council finds that it's appropriate to give up the right of way, is then a public benefit analysis.

And the council should consider whether or not the benefits that the public will be receiving from the vacation proposal outweigh the loss to the public from the right of way.

Council has a two-phase approval process for vacations like you do for term permits and sky bridges.

So this is the first phase of that approval.

If you vote to approve the vacation, it would give City Light the ability to permanently close off the right-of-way.

But they would not actually own the right-of-way until the second phase after they've provided all of the public benefits that they're committing to provide today.

I'm available for any questions throughout the meeting.

Thank you, Lish.

That's an excellent overview of the policies that previous council put in place.

And I want to thank those members of the previous council that put those in place.

And anybody who had a part in that, that's really helpful to set up these guidelines because we are giving up something and we do expect that public benefit in return and these the principles you laid out are really important and I think we'll see that these are being met here.

Council members any questions for our central staff before we turn it over to I think Beverly Barnett from SDOT will go first.

And again, we're not suspending the rules today.

We're not voting on this today.

We had the public hearing.

Even though there are no speakers today, we'll get the presentation, and we'll vote on it at another meeting.

We'll go ahead.

Beverly Barnett, welcome.

Well, thank you.

We're very happy to be here.

This project has turned out really well.

So I'm Beverly Barnett with SDOT, and it's my job to manage the vacation program, and I think Chair Peterson and Lish have given a good overview of what we look at and what the policies cover.

So what we want to present to you today, Tim Kroll from City Light, who's been the project manager, is going to present the PowerPoint.

We do find that the PowerPoint is the best way to understand the project.

So you can see the maps and the location and the public benefit proposal.

And then following Tim's presentation, we do have Mike Schwendeller from Parks, who's the project manager for the off-leash area, and Haley O'Brien from SDOT, who's worked on the trail connection.

And so they'll be available if there's any questions.

We also have Michael Jenkins, who is the executive director of the Design Commission, and we find the committee usually has some questions about what the design commission looked at and what their priorities were.

So the SDOT recommendation is included as part of your packets.

And this was, it's a very straightforward recommendation.

There's nothing that we particularly need to highlight.

This project was interesting because it's really kind of all about the public benefit.

As Tim goes through the PowerPoint, you'll see that the right-of-way that's proposed for vacation is right-of-way that is dead-end, that hasn't been used by the general public for a long time.

It's adjacent to City Lights South Service Center, and the vacation will allow City Light to fully incorporate it and do drainage and other kinds of upgrades on the site.

So after we go through everything, if there's any questions about the SDOT recommendation or the process or anything for Mike or Haley, and we do want to hear from Michael Jenkins, but we're really happy to be here because everything just worked out with this.

We believe that community is very supportive of the public benefit proposal.

And this was a real effort between Parks, SDOT, and City Light.

And everything really came together with this.

So unless there's questions for me, I think the best way to understand the project is for Tim to jump into the PowerPoint.

All right.

If that's all right, I will share my screen.

Hopefully, that will work.

Okay, is that good?

All right, so thank you for your time, council members.

The site of the vacation request is, that's our south service center by the West Seattle Viaduct in Soto area, and it's at the south end of that, in between our, again, on this view, in between our service center yard and Costco.

Here's another view of it from the west.

So this is the strip of street that it's actually not open now.

It's fenced off and we are operating it under a permit from SDOT, a street use permit, but we're looking for a more permanent security before we proceed with our improvements.

The strips On that side and on that side are owned by City Light.

So really, all the adjacent property owner is us, Seattle City Light.

As Beverly mentioned, it dead ends.

It dead ends at the Burlington Northern Santa Fe Railroad, so there's really no traffic that would be ever using that site.

A comparison of no vacation, vacation options.

The vacation allows us to have the security to make our investments and upgrades in the area for more efficiency.

The public benefit, of course, misfired there.

Public benefit is only in the vacation option.

There are important SPU infrastructure utilities, surface water drain and sewer, and a potential future water main in the area and the SPU's access and use of that will be preserved.

If the vacation is granted by a memorandum of understanding and then also when the time comes to transfer the ownership of the property by a partial transfer of jurisdiction to SPU so that they would have the same rights to operate those utilities that they do now if it were it being a street right of way.

We, City Light carried out a community engagement plan, which was approved by Department of Neighborhoods, quite extensive, including a survey.

And the results showed great community support for the proposal, over 90% supporting the vacation, 87% supporting the flume property transfer for the public benefit, 83% viewed it as a fair public benefit.

Other results, Georgetown community has for many years, even before our project, they've supported the off-leash area and the trail segments.

And through our interaction with the community, we've made improvements to the project.

We've added trees.

We've added bringing water into the site for plant irrigation and water for the dogs to drink.

lighting so that the trail can be used 24-7.

And early versions of the proposal involved kind of relying on future funding requests in the CIP to the council.

But since then, we've identified existing authorized funds, so it's fully funded as it stands.

The public benefit then would be an off-leash area and trail segment in Georgetown.

Wanted to point out that the vacation site is in Soto and the public benefit site is in Georgetown, a little distance away, but one that we think creates more benefit for the community and fits in with their plans and the proximity to that neighborhood.

Uh, so the flume location for the public benefit is, uh, there's Boeing field and there's the Georgetown community.

So it's south of the south part of the Georgetown community.

Um, and I wanted to highlight also that in addition to, you know, it's not just the property city lights also putting significant money, uh, pledging significant money into the development of the off leash area and, uh, uh, trail.

There's a famous S-dot picture of this Georgetown to South Park connection, rather long project, larger project, and this city light's helping with this portion right here in the middle.

Again, overview there, South Myrtle Street, Boeing's operation, East Marginal Way, this is our old flume we used to, When the Tuamish River was moved, we had a flume to allow our cooling water from this old Georgetown steam plant to make it to the river.

And that's been out of service now for many decades.

Just details of how we're going to transfer the property.

The larger segment is going to go to parks for the off-leash area and other amenities.

And this strip on the west will be for the trail part, which will be transferred to Eston.

Just a general overview of the amenity.

It'll have a large off-leash area here, and then a smaller one for small and shy dogs, as Parks often does.

A lot of paving for the access into the benches.

Feeling good about this design is sort of setting a new bar for ADA accessibility for off-leash areas.

And having the sidewalk paving helps that.

And then actually using the trail as a way to get from one area of the project down to the other.

There are some details of the entrances, you know, the famous, the typical so-called airlock gates for the dogs to come in through the different areas and the benches.

Here are some amenities that were expected at the site, benches, bike racks.

water that'll be available for the dogs and the gates and the parks rainbow sign on the off leash area.

SDOT just provided this general, the path will be a shared path for bicyclists and pedestrians and with some buffer on each side.

So milestones on the project.

So this is the street vacation approval.

This by itself, even when council were to take action on that, does not actually transfer the property.

We will have a separate ordinance for that to transfer the off-leash area and trail property from City Light to Parks and to SDOT.

And that we expect to be in front of the council in the near future, next month or so.

The project schedule calls for completing the design this year and the construction planned for next year.

This just recaps the contributions from the different departments.

It's a multi-department project.

Parks and SDOT are each in for $400,000, and that would be cash or in labor, in-kind work for labor for the design.

And for the development costs, City Light is picking up the rest of almost $2 million of cash for the development costs.

You know, when we add that to the value, the assessed value of the property that's being transferred, it comes out to a total City Light contribution of about $3.8 million.

And the total project is about $4.6 million with all departments considered.

And that is the extent of it.

Glad to take your questions.

I'll keep this up in case people want to refer back to any of the diagrams.

Thank you, colleagues.

Any questions on that PowerPoint before we move on to the other city departments?

Really appreciate those maps.

Every time we hear another piece of legislation for this project, the maps get better and more clear, and it's really helpful to see the trade trade-offs that are being made.

Beverly, you want to turn it over to the next?

Yeah, I think so for looking at the off-leash area and additional questions on the trail design, we have Haley O'Brien and Mike Schwendeller here.

They envision being available for questions because we feel like Tim Kroll's, the group presentation kind of covered it.

So they're available.

We do have Michael Jenkins, who has some comments on the design commission process.

And then everyone else is available for questions.

So I think Michael would be next then, unless there are questions on off-leash area or the trail design piece.

Collings, any questions at this point before we hear from Mr. Jenkins?

Just a reminder, we're not voting on it today.

So if you have questions, you can get answers between now and when we vote on it at the next meeting.

Let's go ahead, Mr. Jenkins.

Welcome.

Good morning, council members.

Can you hear me OK?

Yes.

Great.

Thank you.

Yeah, I just wanted to take a few minutes.

This was a important project for the commission and certainly an important project for the Georgetown neighborhood.

I just want to remind council members about the role of the commission in vacations.

As Lish had in his opening comments, stated in his opening comments, the commission and all the reviewers look at two fundamental issues, public trust, which is the loss of the right of way, and its impact on the function of the remaining right-of-way, and public benefit.

How does the public actually benefit from public realm improvements to offset the loss of the right-of-way?

We also have a unique role when the city seeks a vacation of a right-of-way, because as with all vacations, there needs to be concurrent development.

And so we also review the proposal like we review all the capital projects that come before us.

So we conducted that review concurrently as well.

And then the full commission actually looked at this project three times.

It was an important project for the commission because of the outcomes.

In terms of the loss of the right-of-way, given the nature and the role of this segment of Diagonal Avenue itself, the commission really didn't find any significant issues and frankly, sees the support and gives support to Seattle City Light based upon the proposal, which really enhances safety and security for the South Service Center, as well as allowing them to address ongoing utility needs, specifically what Tim had talked about with drainage on their site.

In terms of the public benefit package, I think it's fair to say that the commission was impressed in general with Seattle City Light's transfer of underutilized land to fill a need that was identified by the Georgetown community through what was clearly significant community engagement.

The Georgetown community has been deficient in these resources, frankly, and I think it also provides an important lesson for our electeds in seeing the role of converting underutilized city properties into working community assets.

The commission was concerned that the transfer needed to be supported with specific commitments to improvements equivalent to other open spaces that we've seen in the city.

So Seattle City Light created an important partnership with SDOT and Parked to implement physical improvements that really makes this open space a community asset.

I'm glad that Haley O'Brien is here today as well.

She's managing the Georgetown to South Park Trail.

This is an important part in that larger commitment, a commitment that the council funded last year, and one that the design commission is currently working with SDOT to evaluate design specifics.

I think what we see here also, which is also unique, is that the result of this project, that the costs associated with the development exceed the actual value of the flume property, which was an important part, I think, in the project's success.

and one that we want to thank Seattle City Light for doing much more than they originally intended to do beyond the transfer of the property.

So on behalf of the commission, I want to thank Seattle City Light for that leadership.

We're just thrilled to see such a positive outcome and especially how city departments can work together to create positive community outcomes.

So thank you.

I want to, again, thank Tim Kroll and his team for committing to such an important project for this neighborhood.

Thank you, Mr. Jenkins.

Thanks for your work for the Design Commission too, and for reminding folks yet another thing that they are very helpful in moving forward.

Beverly, appreciate your description of all the departments involved because it shows how well the city government can work together internally to get things done.

colleagues, are there any questions while we have the departments here?

Again, we'll get to vote on this item at our next committee meeting.

OK.

Well, thanks, everybody, for joining us today.

Really appreciate it.

And for the public that's listening, these materials are all online.

The PowerPoint's very helpful.

All right, everybody.

Thank you.

We'll move on to the next item on the agenda.

Bye.

Thank you.

Thank you.

Will the clerk please read the title of the next agenda item into the record?

Agenda item 12, presentation, 2020 outside financial audit of Seattle City Light for briefing and discussion.

Thank you.

Seattle City Light, one of our municipally-owned utilities, has an outside auditor, conducted an independent review of its financial and other records.

It's a standard for this billion-dollar city-owned enterprise.

It's a massive undertaking.

Today, we'll have a presentation from the outside auditor, Baker Tilley.

In addition to the presentation, the audit reports are included with the online agenda.

I'm pleased that our electric utilities financial statements are in a clean audit with no material adverse findings.

This is a testament to the good government work of Seattle City Light.

In addition to keeping their financial records in good shape, they're delivering clean energy, keeping their lights on, and utility rates low.

So welcome.

We have Mara Brugger.

Did you want to introduce folks?

Oh, you're on mute.

Good morning.

Thank you, council member.

We have this morning Mike Simmons from Seattle City Light, who will be the lead for the utility, who is our comptroller.

And then Aaron Werthmann from Baker Tilly, who has been a longtime outside auditor for Seattle City Light.

So I will hand it over to them.

Good morning, council members.

I'm Mike Simmons.

I'm the accounting director.

I'll get out of the way quickly.

Just wanted to clarify that City Light issues a separate set of financial statements.

They do become consolidated in the city's reporting, but these separate financial statements are important to you, our governing body, and also to interested readers such as bondholders, investors who make, right now we have in excess of $2 billion of debt outstanding.

The financial statements themselves, it is supporting document number two.

It's a 97-page lengthy document with our balance sheets, with our income statements, with lots of information.

It's my team's job to prepare those financials.

City Light Management is responsible for the accuracy of the information in there, but the engagement and the role of the auditor is to express, to perform a review, an audit, and express an opinion about the accuracy of those.

So that is the role of the auditor, Aaron, and he's going to make a presentation about that engagement that they've performed for us.

So I'd like to introduce Aaron Werthmann of Baker Tilly.

They've been working with us now for several years.

They are one of the larger firms nationwide, and they do, I guess, specialization in electric utilities, especially municipal, both water and electric.

So I'd like to introduce Aaron and allow him to make his presentation about the audit completed.

All right.

Thank you, Mike.

definitely appreciate the opportunity to present our 2020 financial statement audit.

Next slide.

So what I want to do as part of this presentation, I want to go through an audit overview, you know, just give you a little bit of background of what is it exactly that we do as part of our audit process.

I then want to go through our internal control communication and then conclude with the auditor's communication with those charged with governance.

And then lastly, open it up to any questions that anyone may have.

Next slide.

If we were to take a step back and look at this year's audit, it was definitely a unique year with the COVID environment.

Given that environment, it's of no surprise that we had to conduct our audit 100% remotely this year, which can obviously add complexities.

In addition to that, City Light did have an individual, a key individual in the audit that had moved on into retirement.

But given all those things, I think this year's audit went very well.

Management, again, was prepared, cooperative, and available.

We were able to maintain our audit schedule.

For some perspective, we performed four weeks of fieldwork.

I'll use that term loosely.

Remotely, again, one week of preliminary fieldwork in the fall, and then three weeks for our final in the spring.

Last week of our fieldwork was April 9th.

And one thing to note, at the end of this year's audit, we did not have any adjusting journal entries.

We identify no errors or corrections to your financial statement.

So again, great job by the management team and staff.

Great testament to the work that they performed during COVID.

Next slide.

Our audit was performed in accordance with generally accepted auditing standards.

Those are the standards that we are required to follow as auditors.

We follow those standards in any of our audits, whether it be your utility or any of your peer utilities.

In addition, because you receive federal funding, we also need to audit you in compliance with government auditing standards.

Those are auditing standards that have additional requirements due to the due care of the audit, our quality assurance, our continuing professional education as an audit team, the supervision of our audit team, and also our independence of our audit team.

Our objective is to obtain reasonable assurance that your financial statements are free or material misstatement.

At the end of this year's audit, your financial statements have received an unmodified opinion, which is also known as a clean opinion, which is the highest level of assurance that we can provide as your audit firm.

Next slide.

When we take a look at your audit, I'd say 30% of what we do is specific to internal controls.

What we'll do is we'll take a look at all your major processes, whether it's your expenditures, your receivables, your billing, take a look at those processes, we will identify what key controls or what key internal controls are part of those processes, and we'll test those to make sure they're effective.

I would say a majority of the types of controls we look at are information technology based, so much so, in fact, that we use a certified information systems auditor to go about and conduct that testing.

I will say that this IT internal control portion of our audit engagement continues to grow every year, and that's not surprising given the dynamic nature of cybersecurity and information technology.

But that's 30% of what we do.

40% of what we do then is relative to substantive testing.

That would be taking a look at your fixed asset additions, tracing those additions back to the invoices, taking a look at your cash and investments, making sure that your cash and investments are reported at fair value, things like that.

This is basically the nuts and bolts of the audit, if you will, and that's 40% of what we do.

And then the remaining 30% has to do with our planning of the audit, and then also the financial reporting at the end of the audit engagement.

But what I've done here is I've listed the major areas of focus.

Most of these should be of no surprise, capital assets.

If you were to look at your balance sheet, you'll see that that makes up a majority of your balance sheet.

Again, revenues, accounts receivable, some significant estimates, which we'll talk about in a bit.

Next slide.

I mentioned earlier that as auditors, we provide an opinion on your financial statements.

I did want to clarify, though, we do not provide an opinion on internal controls.

However, as part of our audit, when we come across significant deficiencies in internal controls, we would need to communicate those to you.

The profession requires us for any internal control to evaluate the severity of the breakdown.

So when we identify these internal control deficiencies, we need to categorize those.

And the most severe would be what we call a material weakness.

That's a control breakdown or lack of controls that is that there would be more than a reasonable possibility that your financial statements would be materially misstated because of that lack of control.

And again, that's the most severe.

But we did not identify any material weaknesses as part of this year's audit.

The next category would be what we call significant deficiency.

Obviously, it's less severe than a material weakness, but it's large enough that it would warrant your attention as governance.

And again, we did not identify any significant deficiencies as part of this year's audit.

Now, in any audit that we complete, we will often have minor control deficiencies industry best practices, things to that extent.

At the end of the audit engagement, we'll communicate those with management, which we do every year as part of our audit process.

Most of those, I would say, are always going to revolve around the information technology area.

Again, because it is so dynamic, it is constantly changing.

But we had those discussions with management and just wanted to further emphasize that we didn't deem any of those to be material or significant.

Next slide.

Within the audit results letter, there's a certain section that has to do with our required communication with you charged with governance.

A couple things I wanted to touch on are some of the highlights.

One is, if you take a look in those financial statements that Mike had referenced earlier, in note one, it contains all of City Light's accounting policies.

An example of that would be your capitalization policy.

Well, what we need to do is we need to make sure that your policies comply with generally accepted accounting principles.

And then not only do the policies comply, but that you're following those.

So if you get a chance, I would urge you to take a look at note one to see the different types of accounting policies that are used with putting your financial statements together.

Now, I often get asked when governing bodies or bondholders or anyone looks at your financial statements, what are the limitations of those financial statements?

Or what could potentially be the risks?

And I'll always say that it's anything that has to do with an estimate because it's exactly that.

There are amounts or disclosures that we don't, that there includes a significant amount of uncertainty.

So I think a great example of this would be City Light's proportionate share of the employee retirement system liability, pension liability.

So one of the important assumptions that goes into that determination of that liability is a discount rate.

And your actuaries have determined that that discount rate should be 7.25%.

So with that discount rate, City Light's proportionate share of that retirement system liability is $265 million.

Now, if we were to increase that discount rate to 8.25%, that liability would decrease to $169 million.

And then likewise, if we decrease the discount rate to 6.25%, your liability would become $379 million.

So as an auditor, can I sit here today and tell you that your liability is $265 million as recorded in your financial statements?

I can't say that with certainty, but what I can tell you is more than likely that liability, depending on certain assumptions, upcoming potential changes in the future, is more than likely somewhere between $169 million, $379 million.

But again, this is just one illustration that, one illustration that there is sensitivity, and you should be aware of some of those things.

A couple other items that are sensitive estimates is the self-insurance liability that we have recorded, the allowance for doubtful accounts relative to your accounts receivable, your other post-employment benefit liability, your unbilled revenues at December 31st, year-end, and then your environmental remediation liabilities.

So again, we document all these in your letter.

Next slide, please.

If we had any significant difficulties encountered in performing the audit, we would need to disclose those.

And for this year, we did not.

Just note again that as part of the audit process, if we had any significant difficulties or significant findings, this would not be the first time that you folks would be hearing about those.

I would reach out to you separately the moment that we identified these items, and we would have these discussions on a timely basis.

If we had any uncorrected misstatements, we're required to disclose those to you, and those are attached to your audit results letter.

I just know that these uncorrected misstatements are not material, and they were identified by management, not as part of the audit process.

Oftentimes, these immaterial entries to your financial statements are not recorded simply to expedite and process your financial statement results.

So late in the year, sometimes additional entries may come to light.

If they're small in nature, management may choose not to change the entire financial statement book.

And as such, we're needed to just show you what those are.

So again, attach this letter.

You'll see some uncorrected misstatements.

But again, they were trivial and immaterial.

Next slide, please.

If we had any disagreements with management, we would need to disclose those.

And we did not.

And again, we had no other significant findings or issues conducting this year's audit.

Next slide, please.

If we had any material corrected misstatements, we would need to disclose those.

And again, pleased to report we did not have any adjustments as part of this year's financial audit.

Next slide.

Attached to that audit communication letter, we also have management representations.

And if you haven't looked at that, I would urge you to do so.

Within this representation letter, management will attest to many different things as part of the audit process.

They'll attest to their thoughts on fraud, fraud risk, internal controls, accounting policies, significant estimates.

But again, if you haven't, take a look at that so you can see the types of things that management is taking or making representations to.

relative to the audit process.

Next slide.

If there were any communications from the management team with any other audit firms, we would be required to be notified of those communications and please report that we are not aware of any communications with any outside auditors or accountants.

Next slide.

Auditor independence, as you're more than likely aware, we as an audit firm require independence to be able to conduct your audit.

And I'm here to state that our firm and every individual on our audit is independent in fact and in appearance relative to your organization.

Next slide.

And with that, I'd like to open up to any questions.

But again, I just want to state we appreciate Mike and his team Everyone at City Light for all their help during this process.

Again, you can imagine how difficult an audit is normally.

But in a remote environment, it adds different areas of complexity.

But again, very pleased by the effort of the department staff.

And again, we were able to conduct the audit without any issues.

And again, appreciate all the help that they've provided during this process.

But at this time, I'll take any questions anyone might have.

Thank you very much.

Thank you for that thorough independent overview of Seattle City Light's financial statements.

And it's good news that there are no material adverse findings there.

And colleagues, this is just an informational item on our committee agenda.

We're not voting on anything.

Any questions, colleagues, for either City Light or for our independent auditor?

Yes, Council Member Herbold.

Thanks.

I'm a little bit more familiar with the Seattle Public Utilities Audit, having chaired the committee with oversight of SPU for a while.

And the SPU financial audits also included specific recommendations, but they incorporated information that clarified whether the department accepted the recommendations and their implementation status.

I see that there are some recommendations starting on page 19 of the audit results document, but I didn't see where to find information about how Seattle City Light will be implementing these recommendations.

We have a management response letter in the process of going back to Aaron.

As he mentioned in overview, the recommendations are largely around technology access, password policies, audit logs, we're rounding up those responses in conjunction with the people at Seattle IT who are going to be carrying those out for us.

But we do plan to, we're in the process of, or we do plan to accept and carry out all of the recommendations.

Thank you, Mike.

Appreciate it.

And if you were probably planning on doing this anyway, but please do circulate that to members of the committee so that we can just close the loop on that.

Thank you.

Will do, and thank you.

Thank you.

Colleagues, any other questions for either Seattle City Light or for the independent auditor?

OK, well, thank you for joining us today at our committee.

We appreciate it.

And if we do have any follow-up questions, we will reach out to you.

Thank you very much for your time and your attention on this matter.

It's greatly appreciated.

Sure.

All right, thank you.

Well, next we're going to go to our other $1 billion enterprise, Seattle Public Utilities.

Will the clerk please read the short titles of the next three agenda items into the record?

I might.

Oh, yep, she's there.

This is Deputy Clerk Schwinn.

I'll read those items into the record for you.

Great, thank you.

Agenda item 13, an ordinance relating to drainage services of Seattle Public Utilities, adjusting drainage rates to pass through changes to treatment rates charged by King County and meet capital financing requirements.

Agenda item 14, an ordinance relating to wastewater services of Seattle Public Utilities, adjusting wastewater rates to pass through changes to treatment rates charged by King County and agenda item 15, an ordinance relating to rates and charges for water services of Seattle Public Utilities, revising water rates and charges and credits to low-income customers for briefing and discussion.

Thank you.

And colleagues, as our clerk said, this is just for briefing and discussion today.

We'll be voting on these at the next committee meeting.

And we've seen these numbers before.

Items 13 through 15 on our agenda, these rate ordinances are implementing the strategic business plan and rate path endorsed by not only the customer review panel, but the full city council resolution 3-2.

0, 0, 0 on May 10th.

Fortunately, the average SPU rates are lower than what was promised during the previous strategic plan in 2017. This was made possible thanks to ideas proposed by our previous SPU committee chair, Councillor Herbold, as well as a laser focus of our general manager, Mami Hera, and her team.

Keeping rates low is important because rates are regressive, with lower income households paying a larger percentage of their household income for utility bills.

There are many cost drivers.

Unlike Seattle City Light, we've got several lines of business here at SPU.

There are pass-through rates that we can't control from King County for wastewater.

There's environmental protection projects required by the state and federal government, labor costs, of course, and utility taxes charged by our general fund, actually, for both utility enterprises.

So today we'll hear from Seattle Public Utilities, and then at our next meeting, we will vote on the three ordinances.

And I believe our central staff analyst is here.

Hi, Brian.

Good night.

Thank you for joining us.

So do you want to make any introductory comments on these items before we turn it over to General Manager Harrah?

Thank you, council member.

No, I don't have any introductory comments.

I'm happy to just turn it over.

Thank you.

Okay, thanks for your ongoing work on the strategic business plan and the rate path and during our previous meetings.

General manager Hera, please.

Council member Peterson, thank you for the introductory comments and thank you everybody for your attention to these three rates ordinances.

I'd like to provide a little bit of context if that's okay.

Our practice is to adjust rates serially for each of our three lines of business on a three-year cycle.

So we would typically bring you a three-year rate package for one line of business for each year.

So in effect, for example, we would propose solid waste rates one year, water the next, and drainage and wastewater rates the following year.

But because of the anticipated financial impacts of COVID on our community's finances, you know, we did not implement a scheduled three-year rate increase for 2021. Therefore, the water rate increases only for two years, 2022 through 23, and the drainage rates and wastewater rates are for three years, 2022, 2023, and 2024. And this way, we'll keep on our anticipated serial three-year cycle.

And as Council Member Peterson noted, you will recall that Council adopted our strategic business plan and rate path for 2021 through 26 back in May.

And the legislation before the committee enacts rates identified in the strategic business plan.

But I'm very pleased to report that the rates we're opposing are slightly lower.

than the 4.2 annual average rate increase projected in the strategic business plan.

And Maria Ko, our rates manager, is with me today to walk you through a presentation of how that all works and to answer any questions you might have.

So I'm gonna ask Maria to begin the presentation unless Council Member Peterson, you have any questions before we start.

Please proceed.

Well, thank you, everybody.

My name is Maria Coe, as Mami said.

I'm the rates manager at SPU, and I'm going to give you an update on the rate path for both water rates through 2022 through 23, and drainage and wastewater rates for years 2022 through 2024. So before you are three separate sets of legislation for your review and approval that, hold on, there we go, that will adopt rates as part of our strategic business plan.

First, we'll briefly visit what you endorsed as part of the strategic business plan.

Then I'll show you what the overall updated rates are based on the results of recent rate studies for these lines of business.

And then finally, I'll give you some background on why the rates have changed and highlight the changes in each of those lines of business.

So to begin with, this is our currently endorsed rate path.

As you may remember, we proposed this rate path as part of our strategic business plan earlier this spring, and the council formally endorsed it in May.

You'll notice in the lower right-hand corner, the overall average rate path is 4.2% amongst the combined lines of business.

The gray area shows the rates that council has already adopted by ordinance.

As Mami mentioned, we typically conduct rate studies for each of the lines of business every three years.

Based on the rate studies findings and several other factors, which I'll highlight in a minute, we have good news with respect to the proposed rate path going forward.

So this is the slide we really wanted you to see.

This slide provides an updated six-year rate path, incorporating the proposed rate studies, which is shown in the blue shaded area.

The new average annual rate is now at 3.9% compared to 4.2%, which was originally proposed, as you saw in the previous slide.

This change is due to several reasons, which I'll detail in a moment.

But before we get to that, this next slide, excuse me, This next slide highlights the changes to the average residential customer bill as a result of the lower rates.

Again, it's a slight decrease, but every little bit counts.

So first we'll start with the water rate study.

Here is our proposed lower rate for the water rate study.

You'll notice that the rate path is lowered to an average of 3.1% per year compared with 3.4% per year adopted in the strategic business plan.

As mentioned, typically we have three-year rate cycles, but with COVID, we were able to keep water at 0% for 2021, so we were proposing two years of increase to sync up to our regular cycle.

Since the strategic business plan, the Water Fund has not only sold bonds, but was able to refund into fees or buy back and then resell at lower interest rates existing debt.

Coupled with a recent rating increase to AAA, which is the highest rating possible from standard and poor's, the fund recognized savings from the bond issuance that was not incorporated into the strategic business plan.

The strategic business plan also assumed less revenue from wholesale water customers.

Since then, wholesale water rates and revenue are being held constant, resulting in increased revenue relative to the plan.

As we come out of COVID, we are anticipating revenues related to development to now grow a little more slowly than previously anticipated.

And finally, the consumption forecast was updated to reflect increased population and density, whereas we were previously anticipating a small slowdown.

In addition to consumption, growth and consumption, we have also updated the utility discount program assumptions to reflect continued growth in that program.

Next, we'll walk through the drainage and wastewater rate proposal, which like water, reflects updates to the strategic business plan, but since it was developed and approved.

For the drainage and wastewater rates, we were able to produce a rate path that is not only smoother compared with the strategic business plan, but also lower.

The strategic business plan projected average annual wastewater changes of 4.7% compared with updated projections of 4.2%.

Drainage rates were projected to be an average rate of 6.7% annually, but are now at 6.3%.

Much like water, drainage and wastewater was also able to recognize significant savings from a combination of new lower cost bonds, refunding, and defeasance activity in late May.

The fund also had the rating agency's negative outlook designation removed from its rating as a result of strong leadership and stable performance through COVID.

Customer assumptions were also updated in line with water, which reflects the increased density and participation in the utility discount program.

Increasing consumption places downward pressure on the rates.

Finally, the King County wastewater treatment rate.

When the strategic plan was adopted, the county was projecting 10.25% treatment rate increases every other year.

Since the treatment rate accounts for 40% of the fund's expenses, the double digit increases followed by a year of no rate increase was causing large swings in our rate path.

The county has since adopted annual increases of 4% for 2022 and is projecting annual increases of 4% during the rate period, helping to smooth our rates further.

We thought it would be important to highlight one of the main drivers of our rates.

The Ship Canal Water Quality Project is the largest and most expensive project the city has ever undertaken.

It is one of a host of projects required under a federal consent decree, which significantly impacts our rates for those two lines of business.

The table provides a snapshot of the impact the consent decree projects have on each of the wastewater and drainage rates.

This final slide provides an updated six-year rate path.

Again, incorporating the proposed rate studies, the average annual increase is now at 3.9% compared to the 4.2% originally proposed.

Essentially, SPU was able to leverage our bond sales, better ratings, and changing county treatment rates to our advantage, ultimately lowering rates to customers.

Thank you.

Council member, we can't hear you.

Thank you for that presentation.

I was just wanting to relish this slide for a little bit longer and want to thank again, SPU for their laser focus on managing those rate increases, getting them to closer to the rate of inflation, besting the previous strategic plan by implementing so many, initiatives to lower those rates, especially when we don't have a lot of control over some of those rates, the pass through from King County, for example.

Council members, any questions about this presentation or the three ordinances that will be implementing the rates for those three lines of SPU business?

Again, Council Member Strauss.

Thank you, Chair Peterson, and thank you to SPU for coming before us with this information today.

This slide indicates where we're going and maybe Director Hara, if you could briefly share with us, I know you shared at the beginning of the presentation on other slides, what is the difference between these rates and the strategic business plan proposal rates so that we could all have it in one place?

Sure, of course, we have a slide that I believe that shows that we had previously proposed for an average of 4.2% annual rate increases.

for the six-year rate period.

And now we are proposing 3.9.

And additionally, the 4.2 bettered our projection from the strategic business plan that had preceded the newest one.

So this represents successful attempts to better in terms of affordability.

And I do have to give many thanks to members of council, including Council Member Peterson, Council Member Herbold, you know, who have been our chairs, and to others such as yourself who have taken a very serious interest in how do we increase our affordability.

You know, I have to really share what advocates that council members are for rate affordability.

Thank you.

Thank you.

And so I'm seeing drainage at 8.6 in the proposal and wastewater 3.1.

Can we slide back to where we were?

Here's a great, I mean, this does it justice here, I guess.

What I'm seeing here is that drainage was reduced by nearly 2% and wastewater was also reduced for this year, which thank you, congratulations, good work here.

I know in our conversations we discussed similar to how Seattle City Light, their rates are dependent upon Bonneville Power Administration's rates that are passed through to the city.

Can you speak just a minute about how we have the similar situation with King County for both drainage and wastewater?

Yes, of course.

I don't know that folks are generally aware, I mean definitely council is, but that the general public is aware that King County provides treatment services for our wastewater as a city and that our rates include the cost of King County treatment and we do not impact the rates that they set, but so we, they're normally just passed through and included into our rates.

Is that sufficient or would you like more detail?

Yes, no, it's helpful context to understand that while you do your best to reduce our rates, some of it is out of your control.

In this case, King County sets rates that we have to then pass on to Seattleites.

I'm noticing here, and I know we discussed before this meeting, the drainage and wastewater, specifically the drainage rates, and they are the highest percentages on this chart.

When we discussed, we were talking about the consent decree that we are under for drainage water.

Could you speak to that and also to the How large are the projects that you are working on right now to meet that consent decree?

I know that we have the Ship Canal Water Quality Project, which can you remind me, is that the most expensive project the city has undertaken?

I guess the question here is, can you help me understand why the percentages are so high?

Yes, of course.

Maria, can I ask you to go to the Ship Canal Water Quality Project slide?

Great, wonderful, thank you so much.

Yes, the city of Seattle has inherited a legacy system that includes a combined, not in total, but a significant portion of the city is served by combined sewer and drainage system that will overflow in extreme storm events.

and that must be controlled through different measures that can include detaining the water before it goes to the wastewater treatment plant and don't prevent overwhelming the capacity of that system or through green infrastructure, depending on the characteristics of the system and the land that feed into the stormwater system.

And so, in any given place.

And so we use a variety of approaches, and we are mandated to reduce overflows to no more than one overflow per outfall per year, which is an exceedingly high threshold that is well beyond any national thresholds.

This is a, you know, kind of a local state requirement.

And so our consent decree embodies those requirements through projects that are anticipated to meet that requirement.

So the overall cost of the projects, which I will get to so I don't misquote it, drives our rates to a pretty profound degree.

And that is why our drainage and wastewater rates are as high as they are.

It is the primary driver in addition to the King County treatment pass-through costs.

Thank you.

I just wanted to receive that information here on the record because it is important for us to understand that there are cost drivers which create those high percentages.

And then I also want to highlight the fact that you again have brought us a rate path that is lower than what was in the endorsed strategic business plan.

So understanding that we have a lot of work to do to meet that one or fewer overflows per year.

There's a lot of work to do, and that's where a lot of these cost drivers are coming from.

Just for the general public's awareness, those overflows are different than what has happened at the West Point Treatment Facility when they have had outflows that pollute the water.

And so it is important that we increase our, better our water quality and this is where those dollars are going.

And so I guess just once again, understanding that we have very high cost drivers influencing this rate path and Seattle Public Utilities has done a great job to meet our external drivers and reduce our rates as best as possible.

So thank you, Director Hara, and thank you, Maria.

Thank you very much, and to all of you for your interest in making sure that these costs are low and that these programs are well run.

Thank you.

Colleagues, any other comments or questions?

These are our last three items on the agenda, and we'll go ahead and conclude the meeting.

There are no final questions.

Just a reminder, we'll have these ordinances back to our committee to actually vote on them.

So seeing no final comments.

from the committee members.

We'll go ahead and say goodbye to SPU.

And thank you, Brian.

Good night for being here.

And thank you, colleagues.

This concludes the July 21st, 2021 meeting of the Transportation Utilities Committee.

We will meet again at our next regularly scheduled time, which is Wednesday, August 4th.

Thank you all for attending.

This concludes the meeting.

We're adjourned.

Bye.

Thank you.

Bye.