Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8a
ACTION ITEM
Date of Meeting
October 27, 2020
DATE: September 24, 2020
TO: Stephen P. Metruck, Executive Director
FROM: Sandra Kilroy, Director, Maritime Environment & Sustainability; Director, Marine
Stormwater Utility
Srini Pendikatla, Program Manager, Marine Stormwater Utility
SUBJECT: Adoption of 2021 Marine Stormwater Utility Rates
ACTION REQUESTED
Request Commission authorization for the Executive Director to set 2021 Marine Stormwater
Utility rates with an increase of 3 percent.
EXECUTIVE SUMMARY
The requested authorization will provide a 2021 rate structure to be adopted by the Marine
Stormwater Utility, in support of utility obligations to protect water quality, rehabilitate Port of
Seattle stormwater assets, and support property managers and tenants in compliance with
stormwater permit conditions. The proposed rate is a 3 percent increase from 2020. This rate is
lower than previously forecasted due to the impact of COVID-19 and adjustments to capital
project work.
JUSTIFICATION
A rate increase at the proposed level of 3 percent allows the utility to improve water quality to
meet the Port’s Century Agenda environmental goals by:
1. meeting all regulatory requirements;
2. investing in streamlining processes to improve efficiency and reduce costs of meeting
obligations; and
3. maintaining significant level of investment to rehabilitate the stormwater system and
increasing the performance of the system to protect water quality in the Puget Sound.
DETAILS
The utility was formed in 2014 to enable the Port to provide services, facilities, systems, and
programs for surface water and stormwater management and pollution control. The utility
collects stormwater fees from the Port of Seattle, Northwest Seaport Alliance (NWSA), and
tenants and reinvests the income into maintaining and upgrading the stormwater
infrastructure. Prior to creating the utility, the stormwater fees paid by the Port and its tenants
to the City of Seattle were used to address city priorities and not stormwater needs at Port
COMMISSION AGENDA – Action Item No. _8a___ Page 2 of 5
Meeting Date: October 27, 2020
Template revised June 27, 2019 (Diversity in Contracting).
facilities. , Benefits of utility work include water quality protection in the Puget Sound as well
as providing stormwater infrastructure that better supports our tenants stormwater
investments.
The utility rates apply to all Port-owned maritime (non-aviation) property, which includes land
managed by the NWSA. Tenants pay stormwater fees based on the area of their leaseholds. The
stormwater fees for the remaining unleased land at a facility are paid by the operating business.
The operating business is either the NWSA or the specific Port business (Economic
Development, Maritime Operations, Cruise, etc.) that oversees the unleased property. Rates
are set to recover the cost of operation and maintenance.
The Port marine stormwater utility rates continue to be on average 16% lower than the City
stormwater rates.
By statute, utility rates need to be approved annually by the Commission. Last year we
projected a need for an 8.2% increase in 2021. Because of work deferred due to COVID-19 and
a capital project delay pending the tenant need, the utility has more in assets than anticipated
and is able to carry out its work with a smaller rate increase than previously anticipated. The
recommendation is for a 3% increase.
Scope of Work
The utility completed a full system assessment to obtain baseline conditions of the existing
stormwater infrastructure at the end of 2019. Over 60 urgent repairs of stormwater
infrastructure have been completed since 2016, reducing hazards and allowing the conveyance
system to function properly, which benefits overall water quality. Twenty-one tide gates have
been installed preventing the flow of tidal waters into the conveyance system, which is both a
safety and an infrastructure improvement. Other completed work includes administrative
efforts for policy creation, billing, and assisting tenants and Port business units to comply with
stormwater regulations.
Several capital projects have been completed to replace poorly functioning stormwater
infrastructure and to purchase large equipment (CCTV truck, vacuum truck) that supports this
work. In 2020, the utility began work on a strategic plan, soliciting feedback from internal Port
and external tenant stakeholders, and hosting a two-day workshop with 20 Port participants.
The strategic plan, to be completed in 2021, will establish a vision and mission for the utility
while guiding the work of the utility over the next five years.
All revenue collected by the utility is separate from the Port’s general funds and must be spent
on or for the benefit of the Port stormwater system. The utility does not generate a profit and
operates on a cost recovery model from the utility fees. To respond to impacts of the COVID-19
pandemic, the utility reduced expense work to the minimum regulatory requirements. In
addition, a change in tenant need for a capital project postponed $2 million in capital work.
These actions increased the cash reserve in 2020 from an original forecast of $700,000 to a
COMMISSION AGENDA – Action Item No. _8a___ Page 3 of 5
Meeting Date: October 27, 2020
Template revised June 27, 2019 (Diversity in Contracting).
revised forecast of $2.5 million. The original forecast provided to Commission in 2019 called for
an annual 8.2% increase through 2023. With these savings, the utility is able to propose a
smaller rate change (as provided in the alternatives section below) while performing a similar
level of work in 2021 as in the original 2020 budget.
The projected expense and capital budgets in 2021 total approximately $7 million, which will be
used to:
• Perform system assessments to monitor known conditions and be proactive in asset
management, i.e. monitor and repair before failure;
• Repair damaged stormwater pipes and infrastructure;
• Perform required regulatory stormwater management activities such as catch basin
inspections and sweeping;
• Perform additional stormwater management activities, that enhance water quality
protection, such as dock cleaning and plaza washing;
• Evaluate and implement innovations such as green stormwater infrastructure;
• Conduct analysis for and develop climate change/stormwater adaptation and resilience
plans;
• Implement technology to support mobile field inspection solutions;
• Implement funding for Illicit Discharge Detection and Elimination investigations, spill
cleanup and reporting, and streamline current procedures;
• Complete the current capital program portfolio including the Terminal 18 outfall
renewal and replacement project (delayed due to COVID-19 and tenant schedule); and
• Cover operational and administrative expenses including staff costs, utility taxes and
Port allocations.
Rate Criteria
The following criteria were used in considering the proposed 2021 rate:
(1) Maintain adequate budget to meet all stormwater regulatory requirements and the
Port’s Environmental Long-Range Plan and Utility Charter responsibilities including
rehabilitation of stormwater infrastructure.
(2) Continue adequate funding to maintain and improve a high functioning stormwater
system to benefit the water quality of the Puget Sound.
(3) Build toward a six-month operations and maintenance expense reserve by 2023 for
financial prudence consistent with Port policy and best practices.
Schedule
Once approved by the Commission, the 2021 rates will be adopted by the utility effective
January 1, 2021. The utility will notify tenants of the upcoming rate change following adoption.
Tenants can dispute billing fees at any time by contacting utility staff. A decision will be made
within 60 days of receipt of the dispute.
COMMISSION AGENDA – Action Item No. _8a___ Page 4 of 5
Meeting Date: October 27, 2020
Template revised June 27, 2019 (Diversity in Contracting).
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Increase rates by 0%
Cost Implications: Projected revenue in 2021 will be $6.3 million.
Pros:
(1) No increased impact to tenants in 2021 alleviating some burden with an uncertain
economic future.
Cons:
(1) Highest average projected rate change path over the next five years, estimated at an
overall rate increase average of 4.88%, with an estimated flat rate 6.1% increase
between 2022 and 2025.
(2) Increased impact to tenants, NWSA and Port business units in future years than
preferred alternative due to anticipated higher rate changes of 6.1% starting in 2022.
This is not the recommended alternative.
Alternative 2 – Increase rates by 4.1%
Cost Implications: Projected revenue in 2021 will be $6.56 million.
Pros:
(1) Lowest average projected rate change path over the next five years, projecting an
average of 4.1% increase, estimated at a flat 4.1% change through 2025.
(2) Consistent projected rate change over the next five years allows customers to better
plan for budget changes.
Cons:
(1) Higher fees in 2021 that can burden tenants, NWSA and Port business units as they
grapple with economic impacts associated with COVID-19 and uncertain recovery.
This is not the recommended alternative.
Alternative 3 – Increase rates by 3%
Cost Implications: Projected revenue in 2021 will be $6.5 million.
Pros:
(1) Limits impact to tenants, NWSA and Port business units in 2021 with modest increase
in rates.
(2) Consistent projected rate change of 4.6% from 2022 to 2025 allows customers to
better plan for budget changes.
Cons:
(1) Second highest average projected rate change path over the next five years, projecting
an average of 4.28%, estimated at a flat 4.6% change between 2022 and 2025.
This is the recommended alternative.
COMMISSION AGENDA – Action Item No. _8a___ Page 5 of 5
Meeting Date: October 27, 2020
Template revised June 27, 2019 (Diversity in Contracting).
FINANCIAL IMPLICATIONS
All revenue collected by the utility is separate from the Port’s general funds and must be spent
on or for the benefit of the Port stormwater system. The proposed rate increase has several
positive implications including:
• Maintain funding for critical stormwater infrastructure improvements,
• Build a six-month reserve as sound fiscal policy consistent with standard Port procedure,
• Reduce operating costs funded by the Port by funding all stormwater related
maintenance activities from business units and select tenants, and
• Keep stormwater utility rates lower than the City of Seattle.
ADDITIONAL BACKGROUND
The utility maintains a separate accounting fund, known as the stormwater utility fund, to
conduct all business. This fund is separate from the Port general funds and cannot be used for
any purpose other than administering, operating, maintaining, and improving the Port’s
stormwater system. The utility may borrow money from the Port funds as needed, provided
that such funds are paid back in full to the originating funds.
ATTACHMENTS TO THIS REQUEST
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
October 8, 2019 – The Commission approved Marine Stormwater Utility Rates for 2020.
October 9, 2018 – The Commission approved Marine Stormwater Utility Rates for 2019.
November 14, 2017 – The Commission approved Marine Stormwater Utility Rates for 2018.
November 18, 2014 – Commission approved Resolution No. 3696, as amended, Authorizing
Stormwater Utility Formation, included utility rates for 2015 through 2017.
