Budget Committee Meeting Session II 10-13-26

Good afternoon.

The October 13th Select Budget Committee meeting will come back to order.

It is 1 12 p.m.

Will the clerk please call the roll?

Here.

Councilmember Foster?

Here.

Council President Hollingsworth?

Present.

Councilmember Juarez?

Here.

Councilmember Kettle?

Here.

Councilmember Lynn?

Here.

Councilmember Rink?

Here.

Councilmember Rivera?

And Chair Strauss?

Present.

A present.

Thank you.

And Councilmember Saka, we are going to present this proclamation if we will need your signature, if nothing else.

or if you wanna join us for about three minutes, then we will switch back to the presentation.

With that, before we begin our fourth item of business, I would, right before we went to recess, we called the roll on adding signatures to the proclamation honoring the Seattle Chongqing Sister City Appreciation Day.

I do want to check, Council Member Juarez, would you also like to sign on?

Yes, thank you, Chair.

Thank you.

And so as we are having this proclamation coming forward, we will briefly go at ease now to present the proclamation to our delegation of folks who have come over from our sister city, Chongqing, China, to the city of Seattle.

We've already had amazing visits with the Woodland Park Zoo today.

I know you're off to see the Seattle Chinese Garden that we discussed briefly this morning.

And what really also struck me is I'm getting to see again folks that I got to meet while on my visit to Chongqing.

And it demonstrates the depth of our relationship, that it is not a one-time meeting, that it is an ongoing relationship.

so much so that Jim Dawson had darker hair than I did when he started this sister city relationship in 1983. And now his hair is whiter than Paige's.

So with that, colleagues, we had a nice brief discussion before we came back into session.

And so we won't be receiving comments from the delegation right now.

But does anyone have anything that they would like to share at this time?

Councilmember Cattle.

Thank you, Chair.

I just wanted to welcome our visitors here and also thank the work that's been done by those to help facilitate.

It's really important to have members of the team who are focused on our international responsibilities is very key because Seattle is a gateway to the world, and as I've said many times, and the world back to Seattle.

and so but that needs to be assisted so I thank Stacey Jellick, Ms. Jellick from OIR who puts the international into OIR and for her work across all the sister city relationships but beyond that as well to include the 13 delegations, countries that are represented here in the city of Seattle and so I just wanted to thank our visitors but also those to help make it happen.

Thank you very much.

Thank you, Council Member Kettle.

So if there is no objection, the rules will be suspended to allow our guests to join us here on the dais and we will go into a brief ease.

That doesn't mean that anyone can leave.

That just means that we will be at ease for the session.

So if you'd like to mute the microphones and come on up.

They're hot.

All right, welcome back after our short period of being at ease to welcome our sister city from Chongqing, China to the city of Seattle.

With that, we will move right into the fourth item on our agenda today.

Clerk, will you read the fourth item of business into the record?

Agenda item four, Office of Planning and Community Development for briefing and discussion.

Thank you.

And we are now moving out of general overview and macro budget picture into each department.

So as akin with the last section of our budget process, if you're the committee chair of the department overseeing the department, If you are the committee chair of the committee overseeing the department, I will call and recognize you first and last during the presentation.

For example, OPCD and SDCI both report to Councilmember Lin's committee, and so he will be the first and last in these presentations.

With that, I'm gonna turn it right back over to our committee table.

We've got HB Harper and Ketel Freeman joining us with Lish Wits and our director of central staff.

With that, I'm gonna turn it over to you.

We'll hold questions until the end or if there's an even stopping point, but we'll turn it over to you for now.

Welcome.

B. Harper, Council Central staff.

So, Office of Planning and Community Development has three areas of work.

The Seattle Design Commission, which is largely unchanged from last year, and is primarily funded by real estate excise tax, as well as some general fund.

The Equitable Development Initiative, which is showing a reduction in this year's budget, primarily due to the removal of one-time council ads from last year, and that BSL is funded through jumpstart and short-term rental tax proceeds and planning community development.

So that's the budget summary level where a lot of the work related to the comprehensive plan as well as regional center planning happens.

I know council's been tracking a lot of that long range planning work.

That area of work also does include the long-range planning position that Council added last year ongoing, as well as $100,000 in outreach, which Council added last year ongoing.

So that BSL is funded through a combination of JumpStart, short-term rental tax and general fund.

And so overall, the picture here is that we're seeing an 11% decrease in the proposed budget as compared to last year.

In terms of labor, the proposal is to eliminate two vacant positions for 1.5 total FTE.

One position is working on the downtown activation plan, which was scheduled to sunset in January, 2028. However, it's been vacant for, I believe, most of the year.

And then also a halftime administrative support role, which had provided kind of a front desk support, but again, had been vacant for some time.

So in looking at the funds appropriated to OPCD, you'll see that the short-term rental tax fund, jumpstart and real estate excise tax are all pretty stable.

There's a significant looking reduction in the general fund.

And so that's achieved primarily through the removal of those one-time ads that council added last year, which appropriated general fund for EDI grantees.

And then also through those position reductions that I mentioned, But finally, one other way that that reduction is occurring is through a swap to shift overhead and administrative costs to jumpstart.

So that brings us to our one and only policy consideration for council to be aware of for this department, for this presentation, which is that the swap for overhead funds to come out of jumpstart instead of the general fund, it does reduce the EDI funds that are available for grantees It's by a pretty modest one percent and maybe the equivalent of depending on if you all are aware EDI grants can either be capacity grants which sort of help an organization to build up the ability to do capital work or a capital grant which are bigger dollar amounts so it could be the equivalent of several like four or five capacity grants or one capital grant that would not be available in terms of funding not for the current round.

So no grantees that are currently in the program would be affected, but for the next round, that would be the case.

So we didn't necessarily identify any options here for council, just wanted you to be aware for context.

And with that, I'm happy to take any questions.

Thank you.

And council member Lynn is chair of the committee overseeing the department.

You are recognized.

Thank you, Chair, and thank you to our presenters.

Not really any big questions or comments today.

I think it's, as you went over, fairly straightforward.

I do just want to speak to the Equitable Development Initiative as a fairly significant part of the budget.

I know there have been questions in the past about how quickly those funds can be deployed and there are oftentimes difficulties in getting those funds out the door because of how long it can take for our small developers and our community-based organizations to get projects off the ground.

I do think there's been a lot of improvement over that, including based on some of the push from Council to ensure that those funds are being deployed.

But I also just want to speak to the incredible importance in the long run that these EDI projects are making.

You know, it's still a relatively new program, but I do think these are critical investments.

You know, during this time where we're not seeing the growth now that we were a few years ago, but when our city was growing at just record pace, and you were seeing the impacts on displacement and we obviously still have those displacement pressures but EDI was just one of those critical tools and continues to be and so glad to see continued to support obviously there's the cut to those one-time funds but overall glad to see EDI being continued to be supported in this budget proposal.

Thank you colleagues.

Thank you, Councilmember Lin.

And when we were having the conversation about one-time programs versus ongoing last week, We glossed over it a little bit while OPCD was here.

EDI was started as a one-time program funded by the megablock sale of Broad Street that was vacated during the State Route 99 tunnel conversion from the viaduct.

And we decided to make it ongoing through the jumpstart fund is one of the four original priorities.

Clearly JumpStart has many more priorities now and it is also important that we continue funding this work.

As we celebrated Indigenous Peoples Day yesterday at Daybreak Star, it was clear the impact of the EDI funding as They have been recipients of the EDI funding to make structural improvements to ensure that their building is sound, continuing that legacy of Bernie White Bear and others on the council.

No question from me.

Colleagues, any other questions about OPCD's budget?

We've got Councilmember Juarez.

And apologies, Mr. Chair, for missing this morning.

Apologies for that.

So my favorite exciting people, Lish and Ketel, thank you for being here.

Not that you're not exciting as well, but I've been around with these two for quite a while.

I went through the OPC on the 26 and 27 budget, went through the reductions, and so I just have the one standard question, and it'll keep coming up, and I'm sure I'll discuss it with the budget chair as well.

So we are cutting 500,000 of the one-time planning and activation for OPCD's North Aurora planning work.

Can you tell me more about that?

Because we got a lot of stuff going on in North Aurora, so I just want to figure that out.

Like, what's the justification in light of the small businesses and what we're struggling with?

And I understand that some of the DEI programs are also being cut?

So the North Aurora planning work, I believe, was added as one time.

And so that work, while it may be continuing, I don't believe that OPCD is slated to be the lead on it indefinitely because of being interdepartmental.

But we can get some more information for you outside of the meeting.

Well, OK, so let's go back to one time.

And I know people have said this.

I do understand the difference between one time and continuing.

But a lot of times, one time means that once we've done it, we realize that it works.

and then we continue or we add more or we take out.

So I guess sweeping, we're just taking out 500,000 because it was one time.

I'm not going along with the label.

And what about the DEI piece?

Are you referring to the EDI Equitable Development Initiative?

So that program is continuing and is funded in the budget.

The one-time ads that council appropriated last year were for two EDI grantees to receive additional funding beyond what they received through the competitive process.

And so the competitive process is slated to continue, but those one-time ads by council are what are proposed to be removed.

And because the EDI program funds capital investments, it's particularly appropriate for those to be one-time ads rather than ongoing.

So the third question, I had the question on the $500,000 being, I know it was one time, but it's not going to be there again, which we absolutely need, the removal of the $30,100 one-time EDI.

And then there was the $200,000 one-time jumpstart tax for planning activities related to housing reparations.

Can you share a little bit about that with me?

Yes, so the reparations work crossed, again, several departments, and in the year end, I also noticed that the 200,000 that was slated for OPCD one time has actually been slated to be transferred to the Office of Civil Rights, and that's because that work needed to proceed the rest of the work.

So I think that there was an initial conception of the reparations work that involved multiple departments, but figuring out the sequencing.

has sort of happened since then, and so what you're seeing with the $200,000 reduction is the one-time money still has not been spent and is being slated to be transferred to the Office of Civil Rights.

After that work is complete, at that point it may be possible that there is a role for OPCD, but I think at this juncture it seemed that OPCD's work was not what needed to happen first.

First, Office of Civil Rights had actions they needed to take, and we can get more information for you on that or another central staffer can speak with a little bit more detail to the OCR piece.

So the one-time addition is being proposed to be cut at this point because at this point there's nothing for OPCD to do since the work is being led by another department.

Okay, so I guess for me, I just want to disabuse people that are watching this and kind of cut the snark.

We do understand the difference between one time and ongoing, and a lot of these programs, and I can list at least 15 off the top of my head that started off as one time, one of them being lead and co-lead, So I am gonna come back to you on the 500,000, cause that does concern me.

And I think I shared some of this with the budget chair as well.

So thank you for that.

Thank you, Mr. Chair.

Thank you, Council Member Juarez.

And last year, it was very clear that one time work did need to occur from OPCD on North Aurora.

And we also know that more work needs to be done.

So both statements are true.

And one of the questions that I'd like us to follow up with OPCD is was that $500,000 used?

Were those outcomes achieved?

Or was it one-time funding that was never implemented?

Because those answers are just very different.

So thank you, Council Member Waters for flagging that.

Council President, I see you've got your hand.

Thank you, Chair, and I'll be quick.

I just wanted to clarify something, and thank you, Council Member Juarez, for bringing that up.

Thank you for the presentation, HB as well.

You know, you saying Ketel and Lish, you've been running with them?

Very exciting, very exciting, guys.

HB is very exciting.

Okay, but...

but super quick because I think it's worth noting because I've been fielding a lot of questions about the 200,000 that's been transferred to Office of Civil Rights.

We received a memo.

I know Council Member Foster has been working really hard on this because it was in Office of Housing Committee regarding the reparations piece that the previous mayor had promised that can has been kicked down the road a little bit for studies.

And so now and I'm going to be providing a memo and working with central staff as well.

There's been promises made since 2020 to communities regarding funding, whether it was 100 million, participatory budget, reparations, we can go down the line that I think the implementation of it from our city's perspective hasn't had the impact that it should.

And now we're saying we're gonna do a study, we're gonna do a study, we're gonna do a study.

So I think it's well worth noted in the memo that we'll be releasing from our office because there's just a ton of people that have asked questions regarding, hey, what are the investments done that people have made promises about and how they've impacted the community?

And I think it's worth noting that this transfer of money in the memo that we received saying that we will do another study is a problem for me. because we have made promises to people and we have made commitments and some of the one-time funding that the city has made and chosen not to continue those, and some have been cherry-picked or not, whether it's the food money the investment that the council has made or other different things that we've had one time have been decided by the executive to continue some of those within the budget.

And some things have been said, hey, well, these were only one time.

for the public, I think that's kind of the wrong perception.

Say, well, these were only one time, or so were some of the other things as well, but those were chosen to continue because those have been priorities.

And I support all of those, but I also support some of the promises that have been made to community this year with meetings that have happened, that have been brought to my attention, that said that promises, that certain stuff was not going to be touched, or certain things were going to continue, and now they're not.

and now council is left holding the bag.

So we're gonna be providing a memo, especially to my colleagues in the next week regarding some of those promises that were made, some of the stuff that has not been continuing down the line because I think it's important for us to know what has been promised and what has not and what people are gonna come down here and ask for and expect us as council members to be able to deliver on those promises that were made.

I just wanted to highlight that because I think that's important to know and I'm looking forward to us navigating that.

No one's blaming anyone here, but we're gonna have to figure out how we prioritize certain things and figure out what promises are gonna be kept and how we can really deliver for some community members.

Thank you.

Thank you Council President Hollingsworth.

I see we've got Council Member Foster and then Council Member Rivera.

Thank you so much, Chair.

I appreciate that.

I just wanted to quickly follow up on the thank you, Council President, for the comments about the reparations study.

What my current understanding is, is there was, as we already said, the fund transfer into Office of Civil Rights.

and maybe this will come up at a different time during budget.

I'm not sure if this is the right central staff at the table, but it's my understanding that in order to make any future allocations, we needed to first have a study documenting harm and to have the harm study in place.

And so we had this in my committee a few times.

I think we had a committee maybe once this year in terms of looking at what the state had done with their process.

And so looking at that state process, they had a specific harm study that they completed, and then following the results of that harm study, they were able to allocate those resources.

So that's my current understanding of the use of the funds for the study, but I look forward to engaging more on this.

I know I wasn't here when this was appropriated last year, but it's my current understanding that we still need that research in order to allocate.

I'm happy to be wrong, because love to go faster there.

So I look forward to that conversation.

That's my understanding as well.

Fantastic.

Anything else?

That's it.

All right.

Thank you, Council Member Foster.

We've got Council Member Rivera, and then we've got Council President again.

Thank you.

Thanks for being here.

I just want to confirm, it says on the Planning and Community Development Division, 1.5 vacancies.

So that's a person and a half are going to get cut from this budget.

and as I've said in the past about OPCD in terms of the planning around comprehensive, the comprehensive plan and the community engagement, OPCD constituents have felt not reached out to by OPCD in a proper manner when or at all, quite frankly, when comprehensive plan was getting put together and now we have continuing pieces.

Obviously, we're actually always working on a piece of comprehensive plan in one way or another.

So I'm concerned about reduction to this particular division and what impacts this will have.

When it says vacant, how long have they actually been vacant?

And how is the department going to be absorbing this work?

Because at the end of the day, we need to make sure that this department is doing better engagement with constituents across the city, not just to the constituents that they care about, quite frankly, but to everyone.

Because when people don't feel like they have the information, they feel like they were purposefully excluded.

And so I think this department has a long way in work to do to make sure that they are communicating with the constituents writ large.

Yeah, I can speak to how these roles engaged with the broader public.

So one of the positions, the full-time position was dedicated to the downtown activation plan and it has been vacant for, I believe most of 2026 and was scheduled to sunset in January, 2028. So I think with shifting priorities that work had already sort of quieted down.

And so I don't believe that you would see any impacts to the broader kind of citywide engagement that you're discussing from the removal of that position.

The halftime position did provide sort of front desk support, which could impact the public in some ways.

That position sort of helped field phone calls and sort of was a general phone line into the department for the public.

and it's likely to be replaced with like a voice message.

And so you could see some amount of impacts to people's ability to access the information that they're wanting if they are the type who would pick up the phone to call versus for instance, looking on a website or finding other contacts.

So you could see some impact from that position.

However, neither of the positions was focused on comprehensive plan implementation.

That team has not been cut at all and no outreach budget has been cut and council's addition, as I mentioned last year for outreach was continued.

So I think in general, the department is still well resourced for outreach as compared to previous years.

Thank you.

Thank you, HB.

Are there other folks besides this 0.5 front desk person answering the phone or does this mean nobody's gonna be answering the phone?

I believe they have other administrative positions, but I don't know exactly if they have what the phone line situation is, but I can look into that.

Thank you, HB.

Thank you, Councilmember Strauss.

Thank you, Vice Chair Rivera.

Council President.

I just had a follow-up and I really appreciate Councilmember Foster bringing that because it is my understanding that there needs to be a study to find out the harms and so forth and then there's also there are studies at King County and the state that have done and from my understanding we were going to continue to make investments in community while we're waiting on the study and there were some promises made to community members and there's some one-time fundings that were not continued.

And yes, I would love it to go faster.

And so that's the other thing.

So I'm not blaming anyone.

I think it's just for us to have a clear is a clear understanding about how we're moving forward very intentionally so we can be able to have the impacts on communities and looking forward to the study as well.

However, you can make a decision and say there are studies out there that are within King County and the state that we could utilize to move some programming forward based on some studies out there.

But I understand that the city has to make it and do one to be able to have some more impact.

Fully support that and really very grateful for Councilmember Foster's leadership on this because I know it's been a priority since you've come in and wanted to make sure that I said that on the record as well.

So thank you.

Thank you, Council President.

Anything else from the committee table right now?

I'm going to turn it over to Councilmember Lynn as chair of the committee overseeing the department.

Just one comment, just on the North Aurora.

I know that there's, I was chatting with Senator Valdez, who's been fighting for funding for North Aurora.

And so I just, I have questions about, you know, what we need to do on our end.

And, you know, I was just looking at the North Aurora timeline.

It looks like, at least on the OPCD planning, it's a multi-year timeline there.

And so I do just have similar questions about how this work can proceed if there's not the funding for it.

Because I do especially want to make use when we have state partners stepping up to include funding for this critical work that we match it if possible.

That's all.

Well said.

Thank you, Chair.

With that, we're going to move on to the next item of business.

Clerk, will you read the fifth item of business into the record?

Agenda item five, Seattle Department of Construction and Inspections for briefing and discussion.

Wonderful.

Now from HB to Mr. Freeman.

Kittle?

Thank you, Eric.

Always good to see you.

Thank you.

Kittle, Freeman, Council Central Staff.

I'll be walking through SDCI's budget and identifying a couple of issues here for you.

For those folks who may be watching and don't know, SDCI is the city's building department.

It's the department that issues...

Hang on, Mr. Freeman, if you could really bring your microphone close to you.

It's like you're writing.

We have to listen closely.

Exactly.

So SDCI is the city's building department.

It's the department that a person would go to to get permits to develop their property, add to their home, renovate their house.

Since about the early 2010s, it's also been a department that regulates rental housing, starting with a rental registration and inspection ordinance that has increasingly become a body of work for SDCI.

and the 2027-2028 proposed budget would reduce SDCI's overall operating budget by about 5.2%.

Most of those reductions come through abrogations.

There are a couple of additions that are made, and those would be made in the compliance budget summary level.

That is SDCI's line of business that, among other things, responds to complaints about land use or building code violations sort of after something has been built, when something's not being operated according to the city's law.

a compliance person would do an investigation.

It's also importantly where most of the tenant protection and rental regulation work at SDCI is housed and the additions there have to do with four new positions that are proposed by the mayor which I'll go through here in just a minute.

So what you see across the board there is largely cuts to city services due to declining permit volumes and values except for an increase in the compliance line of business.

Next slide.

All right.

So SDCI's budget would decrease by 30 staff.

There are 34 proposed abrogations, so 34 positions that would be abrogated.

Seven of those positions have people in them.

There are also four proposed additions of staff to SDCI, three to stand up.

The requirements of Ordinance 127497, which the Council passed very recently, related to disclosure of fees and rental agreements.

Those would be fee-funded positions, and also a housing ombud position, and that housing ombud position would be supported by a Jumpstart payroll expense tax.

That position is intended to help facilitate project-specific applications, but also development of policies sort of broadly across the city.

It's appropriate that it be paid for out of payroll expense tax revenue, at least now, in the future some portion of that position may be able to be fee funded.

Oh, there's a shift.

There's a shift that I want to make sure you all understand.

In looking at the revenues there, SDCI, less than 10% of SDCI's budget comes from the general fund.

The SDCI has received some JumpStart funding in the past.

That has largely been used to fund tenant services contracts.

Some of those tenant services contracts were funded out of the general fund.

and the 2027-2028 proposed budget, all of those tenant services contracts would be funded out of the Jumpstart Fund.

It's about $900,000 that would shift from the general fund to the Jumpstart Fund.

There are other sources of revenue there, and I'm mostly going to be talking about the implications of those other sources of revenue declining here with the first issue.

But those other sources of revenue are, of course, the Construction Inspections Fund.

Most of SDCI is fee-funded.

and a lot of that revenue, that revenue is of course going down.

There is a little bit of other money there too, specifically real estate excise tax.

Licensees who receive a tenant relocation assistance license, the city's portion of that relocation is paid for out of real estate excise tax.

Next slide, HB, thank you.

So putting this up here, again, you've seen this before, this was an SDCI's presentation.

This sort of illustrates some of the ongoing problems with the Construction and Inspections Fund.

This is fund balance with some proposed fee increases for 2027. You can see that SDCI's fund balance, including its core staffing reserve for building permit and land use reviewers, peaked in about 2021-2022 and has since been on the decline as permit volumes and values have decreased.

In 2026, the building core staffing reserve will be largely depleted, as will the land use core staffing reserve.

You can see that the construction inspections fund, the fund balance, would remain relatively flat over the biennium and is expected to tick up a little bit in 2029. And that leads me to my first issue here for you all to consider, which is the health of the construction and inspections fund.

So, as you all will recall, last year you requested a statement of legislative intent, which STCI has provided so far this year.

Another one should be forthcoming here in October.

that reported on permitting volumes and revenue to different cost centers in SDCI so that the Council could more actively track the health of the Construction and Inspections Fund.

To maintain core staffing at SDCI, this year there are two things that are being employed.

One is layoffs.

So there's about $6 million worth of salary savings associated with layoffs in the proposed budget.

and the other is fee increases.

There's about $6 million also for each year of the biennium associated with fee increases for different review functions that SDCI provides.

So I think it's worth the Council considering continuing regular reporting by SDCI.

That's option number A.

Option number two would be reporting, essentially, plus some affirmative policy work by the Council to establish, through resolution, probably some kind of fund policies for the Construction and Inspections Fund that addresses the core staffing levels by function.

levels of appropriate reserves and identifies when fee increases would be considered as well as possibly supplementation of those core reserves by other revenue sources such as the general fund.

The council could, of course, choose to do both or the council could make no change.

Is that everything you got, Keitel?

That's everything I have for number one.

with, sorry, you didn't flip to the question slide.

That's why I was waiting with bated breath.

With that, council member Lynn is chair of the committee overseeing the department.

You are recognized.

Sorry.

There's a second issue if you want to move.

So then let's keep rolling.

All right.

There's one more issue.

Okay.

Thank you for that.

This is also similar to something that you all have seen before.

Both OPCD and SDCI share responsibilities for complying with state mandates, and those state mandates have been coming fast and furious in the last five years.

In the past, the Council has not met statutorily required deadlines for meeting those mandates.

In 2025, famously, the Council was supposed to consider comprehensive plan changes and did not receive the comprehensive plan amendment packet until the very end of 2025. There was also a SEPA appeal associated with that, and that has played out in other contexts as well.

So there are some statutorily established deadlines that the city has not been able to meet because of SEPA appeals and other friction that keeps legislative proposals from getting in front of the council.

Last year the council included a statement of legislative intent with the budget with a request to SDCI and OPCD to tell the council essentially how state mandates would be met and how they would be prioritized.

The council didn't receive that statement of legislative intent and it makes a difference when the state deadlines aren't met.

Many departments have a competitive disadvantage.

and applying to the state for certain grants and loans when we have not met these deadlines.

And so there are a few options here for the Council to consider.

One is renew the SLI requesting reporting from SDCI and OPCD on how they'll prioritize things.

There are a couple of environmental regulations, largely environmental regulations that the Council that the City has missed its deadline on.

Those are the Shoreline Master Program and the Critical Areas Ordinance.

One thing the Council may want to consider doing is moving responsibility for completing those updates to departments that apply for grants and loans that are sort of contingent on those bodies of work being complete.

That could include moving a body of work to OBCD, for example, for the Shoreline Master Program or to SPU for the critical areas ordinance update.

The council could do both, move positions and appropriation authority, and also request a statement of legislative intent.

And then of course the council could make no change to the budget.

Great.

And now the question slide.

Thank you.

Sorry.

I thought I was becoming delirious.

It's only on day one of the second step of our budget process.

Over to you, council member Nguyen, as chair of the committee overseeing the department.

Thank you chair and just to have a few comments again we'll keep it relatively short obviously as has been discussed you know the fees have been coming in low because of the ongoing turn slowdown in construction and as many people have mentioned hopefully there are things that we can do to change that and get things going again and not only good for the department, good for the employees, that hopefully we could hire a few back.

Couple other things, just on the non-compliance with state mandates, certainly a problem that needs to be addressed.

Don't think there are any excuses from the department.

I do, just a few things we've heard.

you know there has been a fair amount of turnover at the director position at SDCI and as I mentioned earlier I think some key employees who were doing this work for a long time departed so sort of a brain drain and as was mentioned some of the SEPA appeals you know potentially as you know a lot of our planning level work is on delay because of the growth management hearings board decision I do think that potentially opens up some capacity to for some of our departments to focus on some of this other work that they've been delayed and or haven't been able to get across the finish line so we will be monitoring these state mandates closely I think it's important to get this work done and we will be encouraging them to do so next year finally I just want to mention you know as part of the budget was talked about compliance and just one thing that for me as a in district 2 you know we have certain properties one has been in the news a lot a vacant property that kind of gotten taken over with encampments became a real public safety concern.

And I'm not sure there's anything to do here, but I'm just highlighting that, you know, I think there is some work to be done with SDCI and compliance, whether it's with vacant buildings.

I know that that's always been a hot issue especially with concerns around fires, but also even just a vacant land, which sometimes can be problematic and cause a public safety issue for the neighborhood.

So I just mentioned it's something that our office is continuing to look into.

Again, nothing with the current budget proposal, but if anyone has any great ideas on how to address some of those issues, happy to work with you.

That's all, Chair.

Thank you so much, Council Member Lin.

Colleagues, Council President Emeritus Juarez, I see you've got your hand, and then Council Member Sokka.

Tin foil hats over there.

People don't need to be knowing what I'm saying down here.

If I can just take a little bit longer, just because I want to make sure.

First of all, thank you, Ketel.

Always a pleasure.

Exciting to have your presentations.

I'm looking back at my notes from Tuesday, September 29th, when the mayor's office folks came down.

and the notes that we had put together on the proposed budget for SDCI.

So just, let me just say this and you tell me if I'm right, because then I have a question to make, I want to make sure I have my numbers right.

So in 2026 to 2027, they were talking about 30 FTE decreases, which 34 FTE positions would be eliminated, but, and that was including seven FTE layoffs.

and so then I jumped down to reductions and I have in my notes 34 FTE positions eliminated, including the seven FTE layoffs, two land use planners, four strategic advisors, one administrative assistant.

So those are the notes that I got, including the increase adds were three FTEs for the rental regulation for the rental junk fees, and another FTE to help low-income housing permit applicants, the housing ombudsman.

Okay.

So I want to make sure I got my facts right, because I like to deal in facts, not slogans.

So when I look at this and I go back, and again, and Council Member Foster, if I'm wrong, please correct me.

Now that a lot has happened since September 29th and today October 13th, how will all these proposed changes affect MHA and SDI's capacity with 34 FTEs being cut?

So many of those positions were unfilled, right?

Only seven of the cuts are to filled positions.

The position authority that SDCI was hanging on, SDCI still has some position authority for vacant positions.

and that allows SDCI to staff up when things do turn around.

But the vacant positions don't represent any loss of capacity because they weren't performing a function anyway.

The seven?

You're talking about the seven layoffs?

No, the vacant ones.

The 34?

The seven do represent a loss of capacity, but it's also a loss of capacity that can't be sustained with current revenues.

Okay.

In terms of, I'm trying to bring this back to MHA, right?

You all are familiar with Councilmember Foster's proposal for the MHA, the Housing Accelerator.

There are sort of two categories of eligibility there.

One has to do with folks who are already vested and have building permit applications in the door.

It's not likely that there will be any new revenue coming from those projects, or maybe a very small amount of revenue if they do a permit revision or something like that.

The second category of projects has to do with folks who don't currently have a building permit application in but could apply within a window of time.

The accelerator could induce some amount of permit applications.

We don't know how much.

It really would be speculative just to guess about how much they may induce.

And that could have an effect on on operating revenue, so permit fees flowing into the Construction and Inspections Fund.

The window of time in which people could apply tends to favor smaller projects, so it's about a year, and that tends to favor smaller projects, not the bigger projects that will really make a difference in the health of the Construction and Inspections Fund.

at the SDCI finance managers mentioned the types of projects that will really make a difference, and those are very large things.

So when sound transit begins construction, that'll generate a fair amount of permanent revenue.

When King County does its Harborview renovation, that'll generate a fair amount of revenue to the Construction Inspections Fund.

But absent things like that, or a very big office or residential towers, just an increasing volume of smaller projects will make a difference, but it's not going to make a tremendous difference.

So I won't be here, but in 2028, you may be having this conversation that will remedy if you need more FTEs for MHA.

Right, and the position authority exists when the volume, when the permit volumes and values increase, right?

Because there are two mechanisms that you're all familiar with that STCI uses to kind of balance the fact that the real estate cycle is cyclical.

but one is the core staffing reserve which is being depleted and is a serious problem and could become worse.

The other is a contingent budget authority which SDCI has and actually SDOT has a little bit as well for street use permits and that allows SDCI when the revenue comes in to quickly staff up so they don't have to come back for additional appropriation authority from the council as long as they have up to the limit of their contingent budget authority and it's provided that they have positions they can fill.

Okay.

So people will be maybe back for those additional FTEs for MHA ongoing or one time, however that however that deems.

Just a quick follow-up if I may, Mr. Chair.

Please, floor is yours.

You brought up Sound Transit.

Are you anticipating on the West Seattle link?

Is that what you're talking about?

Yeah, I guess West Seattle link is where most of it will start.

We have, and SDCI has one Sound Transit funded position.

We have more detail here that we can provide all of you about a work that the executive is doing to staff up for the other departments that have sound transit funded positions.

But you'll recall that, and you may have a better handle on this than I do, Lesh, but there is 2025, the city added a bunch of positions to help deliver sound transit.

Right, I remember that because I know we've got to do Pinehurst.

So I'm just wondering how that computed in here, not only West Seattle, but Pinehurst as well.

which has been a criticism, which I think is unfounded and fair and kind of stupid, but that's just me.

But go ahead.

Filling those positions relies on funding agreements with Sound Transit, some of which have been executed, some of which haven't, and also on an agreed-upon permit schedule for, I think it would start with the West Seattle link.

and some of that stuff has not been established yet either.

So when those are established, the authority, the revenue to fill the positions which have been authorized will be available to the city and those positions can be fully staffed up.

Yeah, you got to the meat of what I was saying besides just West Seattle and the FTEs and MHA, but also how that connects with the land use and planning that we're going to do with SDCI and OPCD up at Pinehurst on 1 30th.

So that's what I'm anticipating and not locked in, obviously, that looks like in 2028, those are the questions you're gonna be struggling with and I think in 2028, correct?

Correct.

Okay, thank you, Liz.

Thank you, Mr. Chair.

Fantastic, thank you, Council Member Juarez.

Council Member Sacco followed by Rivera.

Thank you, Chair.

Thank you for the presentation here today.

Really appreciate it.

I want to double click for just a moment on the issue two or policy consideration number two as reflected in slide five and then page four of the central staff analysis memo.

So looking back on this slide, reminded that I'm one of the the co-sponsors here and I think Councilmember Land's predecessor chair of the then Land Use Committee was the prime sponsor of this.

Do we know what were the stated reasons, the purported reasons the executive did not comply with this?

What were the purported reasons for the executive's deficiency in reverting with the requested SLI?

I can't say for sure.

We can certainly put the question to the executive.

I know that they considered some options.

I have heard anecdotally that there were back and forth between the department and CBO about compliance with the SLI, and I think that they had developed a work product.

It just may not have been developed to the point where they thought it was ready for council consumption.

Thank you.

And then I look back at the exact slide and see the requested due date is March 31, 2026, and here we are.

Jeez, three quarters later almost.

And no paperwork and no plan to get the paperwork.

I don't, that's concerning to me and I don't see these slides as an optional thing.

And just to emphasize what's written on the last sentence of the slide and in the middle of the most recent Central Staff analysis on page four.

Not meeting these deadlines may carry legal or financial risks to the city.

When we do slides and we request these reports, it's not just we're just trying to spin up a bunch of unnecessary work streams or paperwork.

This is a really important reason for these requirements.

And I want to emphasize and underscore requirements.

And here we are.

six, seven plus months later, still no requested paperwork or plan to get the paperwork.

I don't know how simply doing A alone would help get us there, but I do appreciate that that is one of the options that we have before us.

So thank you for the presentation here, teeing up some of these options and policy considerations.

I am concerned of still no defined path to compliance with the slide.

Thank you, Chair.

Thank you, Council Member Saka.

Anything from the table?

Not at this time.

Council Member Rivera.

Thank you.

Thank you, Ketel, for the presentation, plus one to my colleague, Council Member Saka's comments about how worrisome it is that the department, beyond not responding to this lie, that they have not addressed the outstanding mandates and that we may be leaving money on the table is of great concern.

Because of course, when we leave state and federal dollars on the table for that matter, it just, all it does is transfer more obligation or more pressure, I should say, on the city.

so being able to for departments to comply is really important and this is really troublesome and I guess what I will add to my colleague is that I was unaware until right this second that SDCI is not in compliance with a mandate that they have so actually this goes to my this morning's comments about you know We as council, because we are not in charge of operations of departments, don't always get information timely such as this.

And this is something that we should have had more timely and we would have had the sly response probably been provided back in March or at any point before today.

So I'll just say that about that.

I have a question about the fees.

The first policy consideration, Ketel, you pointed out, just beyond requiring of quarterly reporting, it's just this issue that fee increases at the moment, the only projects that really are moving forward are these smaller projects.

So I'm concerned with an increase in fees we're just passing on these costs to these smaller projects versus as my colleague council member Strauss said this morning, we don't have those big projects coming online at the moment.

And so in the absence of that, I feel like we're shifting more burden onto these smaller projects.

and that too is of concern because I don't think those are gonna yield the kind of revenue that we actually need at the city.

So for starters, and more importantly, it just puts burden on folks that are already probably struggling to really pay for these fees.

If you're a homeowner and you're doing a smaller project, for instance, that those fees do make a difference.

I would think even if you're doing things like adding a mother-in-law or something of that nature I mean these are the smaller projects so I just do you have any thoughts about the increase of fees and what impacts they may have you know am I in the ballpark or is this a different type of smaller project that isn't gonna burden our you know our constituents who might be doing these smaller projects?

I mean, there will be increased costs, right?

The trade-off here is between increasing costs now and maintaining a staffing reserve so that when things do turn around, sufficient capacity with experience that can help deliver quick permit turnaround times.

There was some information that SDCI provided about how much the fee changes would add to the costs of sort of prototypical projects.

So for an ADU, a 500-square-foot ADU, that's about a 10.7 percent increase in the applicable fees, which adds about $369 to the overall permit cost.

Similarly, with a four-pack townhouse, they use that as an example as well, a similar percentage increase, and the fees would be about an additional $372 per townhouse unit, so about $1,300 or $1,400 for the entire development.

So they are big percentage increases in fees, but in terms of the total amount that people pay, it makes a difference, right?

But it's not if that cost is translated into a sales price, it's not making a huge difference in that sales price.

Do you mean in instances where they're improving their home to sell their home versus stay in their home because they have a relative moving in and that kind of thing?

Yeah, I was just sort of thinking of the ADU example.

It looks like it adds about $369 to the cost of that ADU.

over time, over many years.

We have seen legislation increasing fees not just last year, but the year before that.

We could look at that in aggregate, and it probably is more significant there, but it is still, we're talking about thousands of dollars, not tens of thousands of dollars for something like an ADU.

I think I was thinking more on the aggregate because I know also SDOT is had in SDOT's presentation they talk about possible fee increases as well so taken altogether I think it's it's it can have a significant challenge as opposed to just the one increase for the SDCI piece so what I'm really talking about is just all of the fee increases taken together could have a big impact on whether or not the smaller projects even move forward.

Yeah, we can look at, say, the last three years' worth of fee increases, both for SDCI fees and for SDOT fees, and look at these prototypes and give you a sense about what, give the Council a sense about how those, what that looks like in the aggregate over the past several years.

Thank you.

Thank you, Ketel.

Thank you.

Thank you, Council Member Rivera, Council Member Rink, followed by Foster.

Thank you, Chair Strauss, and thank you, Lish, Ketel, and HB for the presentation.

I'm wondering if you can put into perspective for us when the last time the core staffing reserve was depleted and what was the result of that depletion?

Yeah, I don't know, but it was probably 2008 or 2009. We can go back and take a look at the extent to which the core staffing reserve was depleted then.

A lot of, there have been some policy changes since then that are reflected in sort of how STCI manages its budget now.

I think there is, there have been increases in different established levels of the core staffing reserve depending on lines of business, but the extent, the last time there was a significant downturn was 2008 or 2009, so that was probably the last time it was, and there were significant layoffs at STCI then too.

Understood, thank you for that.

It's helpful to understand kind of the historical perspective on this as we talked about and as you noted, the development cycles can be cyclical and so understanding how we coped through the last cycle when there was that downturn would be helpful as we navigate this.

Do we know about how much general fund support could be needed on an ongoing way to keep SDCI in a more stable place through these more economically difficult years?

I don't know that we know in an ongoing way, but for example, the salary savings associated with the abrogations are about $6 million over both years of the biennium, so $6 million in 2027 and in 2028. So to maintain the current level of staffing, the 2026 level of staffing would require $12 million over the biennium.

I don't think that totally answers your question, which is sort of why I suggested option B as well here for the Council.

There may be different levels of reserves that are needed depending on line of business at SDCI.

And some of those, there may be, for some, there may be more of a case for general fund support than others.

Certainly.

And my final question on this point, in your opinion, would a one-time infusion of general funding to that core staffing reserve be helpful in terms of sustainability over the next couple of years?

Probably.

There are competing priorities.

But, yeah, it would probably be helpful.

I mean, there are a lot of unknowns, right?

So what I think you will have the benefit of the revenue forecast here very soon.

And among the factors that are spelled out in the revenue forecast are when the different forecasters see construction returning, and in the past that has been 2029. That's the year when folks seem to think things will turn around.

So we may know more here with the construction forecast about what the likelihood is of needing some kind of general subfund support in either 2027 or 2028. Director?

I'd like to point out that in addition to the real estate cycle and the drop-in permits, The City has also made moves that may reduce the need for some of our permit reviewers in terms of removing design review requirements and other land use and SEPA review requirements for projects.

So if we're not requiring those reviews, then we don't need the people doing those reviews.

additional information and something to consider in this chair I'll just close with a comment broadly and I know we we had part of this discussion last year where I raised up my concerns just structurally how we're funding SDCI and the congruence within the cycles of development in this city and so hoping that we can work towards a more structural fix on how we do this to support sustainability in the department particularly I have concern about the raising of fees and then the impact then on subsequent development.

It feels like at times a snake eating itself.

So hoping we can work towards a more structural fix.

Thank you, Chair.

Thank you.

Council Member Foster.

Thank you so much chair and thank you central staff as always really appreciate you I first before I get into my questions I just wanted to turn to something I want to say it was you Ketel that said but I just didn't quite get it earlier you were mentioning a shift in our approach to grants and loans in one of your comments previously can you can you revisit and restate that for me I just didn't capture it when you were speaking

Yeah, I think I was probably referring to a shift from general fund to payroll expense tax to jumpstart payroll expense tax to pay for tenant services grants and loans.

In the past, that has been a largely a general fund funded thing with some payroll expense tax added often on a one-time basis depending on how much payroll expense tax is available.

So the proposed budget would shift those grants and loans entirely to jumpstart payroll expense tax, so no more general funds.

Thank you for that clarification.

That is, I think that is what you were talking about and now I've got your comment.

So thank you for that.

Okay, so I appreciate the comments that were coming from folks before about the increase fees and something that we heard at the table when, it was actually when SDOT was here, was around the making progress towards recouping our total costs.

And I believe one of the SDOT staff sort of said, Well, we are increasing our fees, but this increase in fees doesn't represent 100% of our total cost.

Is that a comparable issue in SDCI?

Or maybe another way to say that is how do our fees compare to our costs of permit processing?

Yeah, it's the same thing.

So the same requirement that SDOT has, SDCI has as well.

So the fees have to be designed around cost recovery, They're not fungible, the revenue doesn't, extra revenue doesn't flow to the general fund, and it can't actually be, internally there are also firewalls as well.

So that's why you see different changes.

It's not just an across-the-board 10% increase to fees proposed by SDCI.

Instead, there are variable fees based on different cost centers, and those percentage changes reflect SDCI's cost of doing business.

So the cost recovery changes depending on permit volumes.

Thank you for that.

And then the other question I wanted to ask, and this is a little bit of a, I hope it's not redundant to Council Member Rink's question in terms of the core staffing funding, but so Maya, I just want to say this.

So as is with the increased fee, with the staffing changes, we would be down to 1 million in 2028 for that reserve.

And then there's no proposed action as is to get that reserve back up.

Is that correct?

There's a new planning reserve that shows up in the construction inspections, the finance plan, the fund plan.

Sorry, can you repeat that?

You were a little muffled there.

There's a planning reserve that shows up in 2028 that presumably stands in for some core staffing reserve.

The core staffing reserve is not a monolith.

There are different reserves depending on different lines of business that SDCI has.

I mean, the staffing reserve for land use is not something that can be swapped out for the staffing reserve for inspections, for example, or something like that.

That's why I sort of, if the Council were to adopt a policy, you'd be looking at staffing reserves by line of business.

And now I'm thinking that I've lost the second part of your question there, Council Member Foster.

I think I was asking, was there anything in place to get the reserves back?

And I think your response is there is the planning reserve that starts in 2028, but maybe there's more work to do to understand line by line if those are comparable, if one can be a stand-in for the other?

Yeah, there's more work to be done to understand how that planning reserve would either supplement a core staffing reserve or replace a core staffing reserve.

Yeah.

Okay, and so today we don't know how the two compare side by side, is that accurate?

That's correct.

Okay, and so that's one of the actions that we can take, and I think that's somewhat represented by B, but maybe what you've just said out loud now is a more detailed sort of version of requesting information about how those two compare side by side, what one covers if the other doesn't, et cetera, et cetera.

Correct.

Okay, fantastic.

Thank you so much.

Thank you, Chair.

Thank you, Councilmember Foster.

And just tagging onto this, in the 2024 budget that was before us in 2023, I see our core staffing fund for the 2023 adopted budget was 22 million.

The 22 actuals for the core staffing fund were 34 million.

even in just last year's budget, we were projecting $12 million for 2026, with $7 million for 27, 28, and $12 million for 29. However, in the budget that we have before us, this year's $12 million, the actuals were, we still have the 20 adopted, It puts it at $8 million for 2027, whereas just last year we had $7 million allocated.

So that's a good point.

But in 2028, this year, we went from having $7 million to $1 million.

Granted, there is another planning reserve in there.

but in 29 we have this year zero dollars in the core staffing fund and just last year in 2029 we thought we would have 12 million.

If I'm hearing that the burn rate for just six employees is $12 million over two years, it is clear how quickly we are burning through this reserve cash.

And just something stated, we had 10 years of high growth, low inflation, high growth.

We are six years through a building slump where we haven't had any building going on, especially at the rate which we were experiencing before.

but I want to clarify a question.

I think it was Council Member Rink that asked about what happened with the core staffing fund in the past.

It was my understanding that the core staffing fund was a product of the 2008 recession.

Is that not the case?

That might be the case.

I will have to go back and look at those budgets to understand.

But there were definitely some changes that were made post-recession to strengthen the core staffing reserve because of the problem that the city experienced after the Great Recession in 2028-29, which was that a lot of institutional knowledge was laid off.

And when permit volumes increased and they increased fast with Amazon and others, it was hard for the city to staff up and to staff up with folks who It just takes a while to learn how to issue a permit.

You know, it's not something that you are competent at doing just walking in.

It takes a year or more to be sort of fully, you know, fully capable of your review functions.

So it took a while for the city to regain the institutional knowledge that it lost in 2028-29.

Yeah, and the reason I bring that up is it was my understanding that the fund was in response to the 2008 recession as well as the contingent budget authority to hire staff quickly if we started seeing that rebounding of permit activity.

And I just bring this up because these are ways in which we have insulated this fee-based service within the City of Seattle.

If we didn't have this core staffing fund, we would have had to make these layoffs in 2021. Is that an accurate understanding?

Yeah, I think if we had not had the reserves, layoffs would have come sooner.

I think Contention Budget Authority precedes the Great Recession, because that's something that SDCI or predecessor departments like DCLU had available to them.

Yeah.

I just say this because we have done everything other than add some general fund into this, which is we've laid people off a couple of years ago.

We've increased these fees.

We've burned through the core staffing fund.

we're raising fees and laying folks off again.

The real answer to this is that we need to get our city building again.

We need to get that sales tax.

We need to get that 1% or the property tax on top of 1%.

We need to get these fees coming into our city.

So I guess that's not a question for you.

That's more of a statement that to really turn this situation around, we need to get our city building again, and we need to get our unions working on these construction jobs.

As I have done in the past, one of the things that I will be looking to do in my chair's balancing package is ensure that any employee that is laid off through this budget has an additional six months of time with the City of Seattle because laying off employees in the middle of winter is not something doesn't feel good to me.

I would rather give them a little extra time to find a new job, hopefully within the city of Seattle.

And so we'll see how the revenue forecast goes this week because that's gonna really determine how much I can or cannot do if we have a negative forecast this week.

As I said earlier today, it's gonna be a rough next couple weeks.

It's not a question for the team.

With that, Councilmember Foster, old hand, new hand?

Old hand.

Old hand.

Colleagues, any other questions for SDCI, for central staff regarding the SDCI analysis?

Seeing none, Councilmember Lynn as chair of the committee overseeing the department.

You are recognized to close us out.

Thank you, Chair.

Thank you, colleagues.

Just wanted to respond to a couple of comments, just to Council Member Rivera's comments.

The increase in fees is a concern for me as well.

Even if it's not a huge increase, all of these things do add up.

And to Chair, to your points, getting construction going again is incredibly important in so many different ways.

to get housing built, to do small business TIs, to get the sales tax, to get the real estate excise tax, to get jobs going, to get sidewalks built, to get utility infrastructure in place, and on and on.

And there are just so many benefits that come in.

when we just make it harder and harder, whether it's through raising fees or new requirements.

So I'm open to working with any and all of you on ways to make it more feasible for projects of all types to get built, to add to our property base.

And again, increasing the fees at this time while maybe necessary is uncomfortable.

Council Member Ring to your point like I would love to find a better way again especially when these projects are bringing in so many benefits and revenues to our city to then sort of you know make it more difficult for them with increased fees or other requirements certainly look forward to things if there are things that we can do to reduce requirements like SEPA reviews that are not a real value add but are adding cost and expense if we can do more things like pre-approved plans, that's another way that we could make it easier to build and to reduce those permitting costs, open to those as well.

Thank you, Chair.

Thank you, Council Member Lin.

With that, we have concluded today's agenda.

We will be back tomorrow and the next day and potentially the next day.

Tomorrow morning, we have Office of Housing The Department of Parks and Recreation, Seattle Center.

And in the afternoon, we have SDOT.

On Thursday, we have Seattle Police Department, Seattle Fire Department, CARE, HSD, and Unified Care Team.

And on Friday morning, we will have the Revenue Forecast Council, which other than Council President and myself, you are not members of.

You're welcome to adjoin as guests.

as guests, and we will give you more information about Friday afternoon as we get closer to that date.

Colleagues, are there any questions at this time?

I want to thank you for your attention.

It is 2.30 in the afternoon, and unless there's further business to come before the committee, we will be adjourned.

Hearing no further business, we are adjourned.

Thank you.