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 first reading, and forward to second reading, the Ordinance adopting the 2026 utility rates and general facilities charges.
Report
Issue:
Whether to approve on first reading, and forward to second reading, the Ordinance adopting the 2026 utility rates and general facilities charges.
Staff Contacts:
Gary Franks, Water Resources Director, Public Works Department, 360.753.8780
Mike Vessey, Drinking Water Utility Director, Public Works Department, 360.753.8318
Ron Jones, Interim Waste ReSources Director, Public Works Department, 360.753.8509
Presenters:
None - Consent Calendar Item.
Background and Analysis:
Utility Rates
The overall rate increase for 2026 City utilities is approximately 3.74%. For 2026, staff recommends:
• Drinking Water 3% Rate Increase
• Wastewater 3% Rate Increase
• Stormwater 7.5% Rate Increase
• Waste Resources 4% Rate Increase
• LOTT Alliance 3% Rate Increase
General Facilities Charges (GFCs)
GFCs are one-time fees charged to new development to reflect the cost and value of existing utility infrastructure. For 2026 staff recommends the following increases:
• Drinking Water GFCs: 5%
• Wastewater GFCs: 5%
• Storm and Surface Water GFCs: 5%
• LOTT Clean Water Alliance 5%
These GFCs will be included in an upcoming financial study. Proposed GFC increases are nominal for 2026 and will be updated with more information in 2027. 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.
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. To mitigate affordability concerns, the City offers two Utility Assistance Programs. 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.
Neighborhood/Community Interests (if known):
City utilities are fundamental to Olympia’s public health, environmental stewardship, and overall livability. Ensuring long term infrastructure sustainability aligns with a broader community values and goals.
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. Move to approve on first reading, and forward to second reading, the Ordinance adopting the 2026 utility rates and general facilities charges.
2. Modify the proposed 2026 rate increases and general facilities charges and related items in the ordinance and forward to second reading. 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.
Attachment:
Ordinance