Item No. 8b supp Meeting Date: October 9, 2018 Marine Stormwater Utility Rates for 2019 Commission Review October 9, 2018 1 Highlights of Utility Work • Utility formed 2014 to protect water quality of Puget Sound • 75% system assessments will be complete by end of 2018 • 15 urgent repairs completed at Terminals 30, 46, 25, 5, 115 & 104 reducing operational hazards • 6 tide gates installed • Additional repairs and capital projects on the horizon to improve system • Tenant fees average of 17% lower compared to City's fees • Tenants expressed positive feedback on our efforts Highlights of work accomplished 2 Stormwater System Layout Stormwater Pipe System 3 100% Pipe Assessment Goals & Progress 80% 60% Goal 40% Progress 20% 0% 2017 2018 2019 * Progress data as of 9/10/18 Progress on track to complete system assessment by end of 2019 4 System Structural Integrity Structural Scores from Assessments 3.08% 0.82% Good (0-29) 16.71% 5.64% Satisfactory (30-49) 73.74% Fair (50-74) Monitor (75-94) Needs addressed (95-100) Structural integrity of pipes of completed assessments (66% of system) 5 Utility Supports Innovative Water Quality Improvements Oyster shell barrels treat stormwater roof runoff - Average 50% reduction in copper & zinc 6 2019 Proposed Budget Summary Capital budget of $1.4M (Planned and Proposed) - T18 Outfall Renewal and Replacement - T91 drainage improvement - T25 Treatment - Small pipe replacements Maintenance budget of $2.2M - Assessments to 100% • Complete final 25% of system • Parks, Lower Duwamish properties, Piers 66 & 69 - Dock & plaza cleaning (SBM, FT, P66, etc.) - Utility Inspection - Sweeping Municipal properties Expense and capital budget for 2019 7 Rate Criteria and Considerations • • Recommend 8.2% rate increase in 2019 guided by Steering Committee Rate criteria include: - Maintain adequate budget to meet Port's Long Range Plan and Utility Charter responsibilities - Complete progress on Century Agenda goal to complete pipe assessments - Continue investment to maintain and improve a high functioning stormwater system to protect water quality - Build toward a 6-month operations and maintenance reserve by 2023 for financial prudence consistent with Port policy and best practices • Projected increase of 8.20% annually between 2020 to 2023 Build financially independent program 8 Revenue Growth $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Expense + Capital Revenue Fund Reserve 2018 2019 2020 2021 2022 2023 Invest in water quality 9 "Very Heavy" Rate per 1000 sq ft. Port Rates Continue Below City Rates $220.00 $200.00 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 20% 16% 20% 18% 17% City Port * Port rates in 2019 & future years are proposed pending Commission review and approval Rate comparison between City & Port 10 Tenant Monthly Impact examples • Commercial Tenant - Suite within FT Center Building (2,260 sq. ft.) - Increase of $1.80 per month on a $22 bill • Industrial Tenant - Majority of facility (2 million sq. ft.) - Increase of $1,625 per month on a $19,825 bill Increases vary by size of tenant and stormwater rate category 11 2019 Proposed Annual Rates Stormwater Rate Category City 2019 Port 2019 Rates are shown as $ per 1000 sq. ft. Port rate % lower than City Undeveloped (0 - 15% Impervious) Regular Impact $42.35 $34.98 19.73% Low Impact $25.18 $20.48 21.59% Regular Impact $64.69 $54.09 18.27% Low Impact $51.04 $42.54 18.64% Regular Impact $93.31 $78.56 17.46% Low Impact $75.65 $63.19 18.39% Heavy (66 - 85% Impervious) $122.93 $105.41 15.33% Very Heavy (86 - 100% Impervious) $147.26 $124.68 16.80% Light (16 - 35% Impervious) Medium (36 - 65% Impervious) Rate proposal based on Steering Committee recommendation of 8.2% 12 Marine Stormwater Utility 2019 Rates Appendix Additional 2019 rate materials 13 System Rehabilitation Goals & Progress 35% 30% 25% 20% Goal 15% Progress 10% 5% 0% 2017 2018 2019 2020 2021 * Progress data as of 9/10/18 Century Agenda goal of 75% rehabilitation by 2035 14 Current Annual Rates City Rates ($ per 1000 sq. ft.) Stormwater Rate Category Port Rates ($ per 1000 sq. ft) 2017 2018 2017 2018 Regular Impact $34.76 $38.78 $30.34 $32.69 Low Impact $20.67 $23.06 $17.76 $19.14 Regular Impact $53.54 $59.24 $46.91 $50.55 Low Impact $42.26 $46.74 $36.90 $39.76 Regular Impact $77.60 $85.45 $68.14 $73.42 Low Impact $62.86 $69.28 $54.81 $59.06 Heavy (66 - 85% Impervious) $102.48 $112.57 $91.42 $98.51 Very Heavy (86 - 100% Impervious) $122.94 $134.85 $108.14 $116.52 Undeveloped (0 - 15% Impervious) Light (16 - 35% Impervious) Medium (36 - 65% Impervious) 2017 Port rates approved by Commission in 2014; 2018 rates approved in 2017 15 Steering Committee Guides Utility Rate Development • Members: - CFO - Managing Directors of Maritime and EDD - Deputy CEO of Northwest Seaport Alliance - Senior Director Environment and Sustainability - Directors of Corporate and Maritime Finance • Met 8/20 and 9/6 to discuss rate scenarios and recommend rate Steering Committee provides guidance on Utility policies and rates 16 2019 Proposed Rate and 5-year Forecast Budget forecast through 2023 17 Revenue Summary Revenue Breakdown Total Projected Revenue in 2019: $5,809,105 23% Port Port Tenants 47% 9% Alliance Alliance Tenants 21% Total revenue breakdown for all facilities 18