Title
Approval of an Ordinance Relating to Utility Rates, Fees, and Charges
Recommended Action
Committee Recommendation:
The proposed rates and charges reflect recommendations from the Finance Committee and the Utility Advisory Committee.
City Manager Recommendation:
Move to approve on second reading the ordinance adopting the 2025 utility rates and general facilities charges.
Report
Issue:
Whether Move to approve on second reading the ordinance adopting the 2025 utility rates and general facilities charges.
Staff Contact:
Jesse Barham, Water Resources Director, Public Works Department, 360.753.8164
Mike Vessey, Drinking Water Utility Director, Public Works Department, 360.753.8318
Gary Franks, Waste ReSources Director, Public Works Department, 360.753.8780
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
Background and analysis did not change from first to second reading.
Utility Rates
City of Olympia provides vital utility services to our community. For 2025, staff is proposing revenue increases (rounded) as follows:
• Drinking Water 3.9%
• Storm and Surface Water 5.2%
• Wastewater 5.3%
• Waste ReSources 7.6%
• LOTT 3.0%
• Combined increase of 4.72% or $14.52 for a typical bi-monthly/single family account.
Key financial drivers for the proposed 2025 rates include:
• Transfer of the Clean Team into Waste ReSources, associated reorganization and increase in staffing.
• Temporary Reduction in Waste ReSources Capital funding for Carpenter Road facility.
• Street sweeping fully funded by the Storm and Surface Water utility.
• Wastewater and Drinking Water support for an affordable housing infrastructure support program.
• Staffing needs in Storm and Surface Water to support street sweeping and vegetation management.
• Cost of living adjustment and increased benefits costs.
• Increased city hall rent, insurance and vehicle related fleet costs.
General Facilities Charges
Consistent with rate consultant financial analyses, staff is proposing increases in general facilities charges (GFCs) for Drinking Water (5.1%) in 2025. Wastewater (2%) and Storm and Surface Water (2%) increases are proposed for 2025. These GFCs will be included in an upcoming financial study. Proposed GFC increases are nominal for 2025 and will be updated with more information in 2026. GFCs are a one-time charge collected from new development. The charges reflect the financial value of the existing utility infrastructure and the benefits the system provides to new development. A 50% GFC reduction for eligible low-income rental housing was implemented in 2024.
LOTT Clean Water Alliance Rate
Lacey, Olympia, Tumwater and the Thurston County (LOTT) Clean Water Alliance Board of Directors approved increases for both monthly wastewater treatment rates and their capacity development charge (CDC). The CDC is similar to the City's GFC. The City collects monthly rates and CDCs for LOTT through the utility billing and development permitting processes. LOTT is also implementing a 2-year pilot program to provide a 50% rebate on CDC charges for eligible low-income housing projects. 2% of their CDC increase offsets the expense of these discounts.
• The LOTT Clean Water Alliance capacity development charge (CDC) is proposed to increase 5.0% ($354) to $7,435.
Climate Analysis:
Utility budgets do not have an immediate impact on greenhouse gas emissions. However, utility budgets and rates allow adaptation to address risk and vulnerability of utility infrastructure to climate impacts. The low-income housing discount of GFCs encourages the development of more high-density housing and reduces urban sprawl as multi-family development is subject to higher costs, as these are calculated on a per unit basis.
Equity Analysis:
Utility budgets and rates have potential impacts on the most vulnerable portions of the Olympia community with those least able to pay. Utility services funded by rates also protect the environmental and human health of these communities. Utility assistance programs and discounts offset these impacts for eligible customers. A GFC discount for low-income housing makes it more cost efficient for property owners to develop their property into housing that is affordable for the City’s low-income residents. Creating more affordable housing is a racial justice issue; black, indigenous, people of color, and other historically marginalized groups are over-represented in Thurston County’s homeless population and homeless crisis response system. Water related utility rate metrics were presented on October 29th to Council and indicate the proposed rates do not pose an undue burden on the community or low-income households.
Neighborhood/Community Interests (if known):
City utilities provide important public health services for Olympia residents. Utility rates are set to ensure reliable, quality levels of service. The Utility Advisory Committee reviewed and recommended these rates and fees on October 3rd, 2024. City Council received a briefing regarding utility rates and related changes on October 29, 2024 and public hearings on the operating budget on October 29th and November 12th.
Financial Impact:
The proposed rates and GFCs will generate revenue to implement Council-adopted utility master plans and ensure financially responsible management of City utilities.
Options:
1. Approve the ordinance adopting the 2025 utility rates and general facilities charges on second reading. This supports essential City public and environmental health service and increases rates for customers and charges for new development.
2. Modify the proposed 2025 rate increases and general facilities charges and related items in the ordinance. This avoids or lessens additional customer costs, but there is a risk of failure in fulfilling City public and environmental health responsibilities.
3. Do not approve the ordinance. Rates and related items would not be updated, making it difficult for the City to meet our public and environmental health responsibilities.
Attachments:
Ordinance