Template revised January 10, 2019.

COMMISSION

AGENDA MEMORANDUM

Item No.

ACTION ITEM

Date of Meeting

October 25, 2022

DATE : October 6, 2022

TO: Stephen P. Metruck, Executive Director

FROM: Stephanie Jones Stebbins, Managing Director, Maritime Division; Director, Marine

Stormwater Utility

Sarah Ogier, Director, Maritime Environment & Sustainability

Jane Dewell, Sr. Manager Environmental Programs/Marine Stormwater Utility

SUBJECT: Adoption of 2023 Marine Stormwater Utility Rates

Amount of this request:

Total estimated project cost:

ACTION REQUESTED

Request Commission authorization for the Executive Director to set 2023 Marine Stormwater

Utility rates with an increase of 4.6% from 2022.

EXECUTIVE SUMMARY

The requested authorization will provide a 2023 rate structure to be adopted by the Marine

Stormwater Utility (Utility), in support of Utility obligations to protect water quality, rehabilitate

Port of Seattle (Port) stormwater assets, and support property managers and tenants in

compliance with stormwater permit conditions. The proposed rate is a 4.6% increase from 2022.

This rate is in line with the previous forecast presented to Commission on September 14, 2021.

JUSTIFICATION

A rate increase at the proposed level of 4.6% allows the Utility to improve water quality to meet

the Port’s Century Agenda environmental goals by:

1. Meeting or exceeding stormwater regulatory requirements;

2. Investing in streamlining processes to improve efficiency and reduce costs of meeting

regulatory obligations; and

3. Maintaining significant level of investment to rehabilitate and increase the performance

of the stormwater 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

COMMISSION AGENDA – Action Item No. 8g Page 2 of 5

Meeting Date: October 25, 2022

Template revised June 27, 2019 (Diversity in Contracting).

tenants, and reinvests that 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 (City) were used to address City priorities and not priority stormwater needs

at Port facilities. Benefits of Utility work include water quality protection in the Puget Sound as

well as stormwater infrastructure that better supports Port 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 Utility operation and maintenance.

The Port Utility rates continue to be on average 24% lower than the City stormwater rates

according to City Resolution 32000 (signed May 13, 2021).

The Utility rates are approved annually by the Commission. The Utility’s internal leadership

advisory committee reviews and approves rate recommendations for Commission consideration

and approval. The advisory committee has recommended a 4.6% increase in 2023. This is

consistent with rate analysis and projections provided to Commission last year.

Scope of Work

The Utility completed a full system assessment to obtain baseline conditions of the existing

stormwater infrastructure at the end of 2019. As of mid-2022, over 70 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-five 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 to create policies that guide Utility work, billing system, and support to

tenants and Port business units to comply with stormwater regulations.

Several capital projects were completed to replace poorly functioning stormwater infrastructure

and to purchase large equipment (e.g., closed-circuit television truck, vacuum truck, grout truck)

that support this work. In 2021, the Utility completed its first strategic plan, which included

feedback from Port, NWSA, and external tenant stakeholders. The Strategic Plan memorializes a

vision and mission for the Utility to prioritize our work for five years (2021-2025). This plan is

intended to help better serve customers and ensure a resilient Utility while supporting the

Maritime industry. There are six goals with strategies and specific tasks to support the guiding

principles defined in the mission and vision statements.

The projected expense and capital budgets in 2023 total approximately $7 million, which will be

necessary to:

COMMISSION AGENDA – Action Item No. 8g Page 3 of 5

Meeting Date: October 25, 2022

Template revised June 27, 2019 (Diversity in Contracting).

• 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 two to three green or innovative stormwater treatment systems;

• Implement technology to support mobile field inspection solutions;

• Implement dashboard for real-time data analysis of Stormwater Infrastructure Asset

Management System;

• Implement scoring matrix including equity, diversity and inclusion considerations to

prioritize infrastructure work;

• Implement year 3 of the strategic plan;

• Initiate planning and research for in-depth climate change/resilience study of stormwater

infrastructure;

• Complete the current capital program portfolio including pipe rehabilitation and drainage

improvements; 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 2023 rate:

1. Maintain adequate budget to meet or exceed stormwater regulatory requirements, 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. Maintain a 6-month fund reserve for financial prudence consistent with Port policy and

best practices.

4. Maintain a consistent rate increase over the 6-year projection.

Schedule

The Utility advisory committee reviewed and approved the rate recommendation in early August

2022. This committee consists of Port and NWSA operations, real estate, property management

and finance leaders. The Utility does not explicitly seek external input, consistent with other

public drainage utilities, but relies on the committee’s expertise to reflect customer needs and

priorities. The public notice for Commission approval seeks public input similar to the City Council

approval process for municipal utilities. If approved by the Commission, the 2023 rates will be

adopted by the Utility effective January 1, 2023. The Utility notifies tenants of the upcoming rate

change following adoption. Tenants can dispute billing fees at any time by contacting Utility staff,

and a decision would be made within 60 days of receipt of the dispute.

COMMISSION AGENDA – Action Item No. 8g Page 4 of 5

Meeting Date: October 25, 2022

Template revised June 27, 2019 (Diversity in Contracting).

ALTERNATIVES AND IMPLICATIONS CONSIDERED

Alternative 1 – Increase rates by 3%

Cost Implications: Projected revenue in 2023 will be $6.97M

Pros:

(1) Lowest 2023 financial impact to tenants, NWSA and Port business units than preferred

alternative.

(2) Continue lower rate to support economic recovery.

Cons:

(1) Higher average rate change compared to preferred alternative, projecting an average

of 4.9% over a 6-year period. This alternative assumes a rate increase of 6.5% in 2024

to 2026 to meet increased capital spending, with a lower rate increase of 3.5% in 2027

and 2028.

(2) Not a consistent annual change, which may make it more difficult for customers to

budget.

This is not the recommended alternative.

Alternative 2 – Increase rates by 4.6%

Cost Implications: Projected revenue in 2023 will be $7.08M

Pros:

(1) Lowest average rate change over the next six years, projecting an average of 4.6%

through 2028 to conduct our project stormwater work and maintain recommended

fund reserve balance.

(2) Steady projected rate change of 4.6% over the next six years allows customers to better

plan for budget changes.

(3) Funds critical capital investments to meet Century Agenda goals and exceed regulatory

requirements.

Cons:

(1) Slightly higher fees for tenants, NWSA and Port business units in 2023 than

alternative.

This is the recommended alternative.

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 fund reserve as sound fiscal policy consistent with standard Port

procedure,

COMMISSION AGENDA – Action Item No. 8g Page 5 of 5

Meeting Date: October 25, 2022

Template revised June 27, 2019 (Diversity in Contracting).

• Reduce operating costs funded by Port business units and tenants by funding stormwater

related maintenance activities, and

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.

The stormwater utility will evaluate whether a periodic 2-to-3-year rate review and approval

cycle would be more efficient than the current annual rate review and approval cycle. Currently

the advisory committee meets annually to review and discuss proposed rate changes, which then

go to Commission for approval. Changing the annual review to every 2 or 3 years, based on a 6-

year rate evaluation, will be evaluated in 2023, and if prudent, be proposed as a change in future.

ATTACHMENTS TO THIS REQUEST

(1) Presentation slides

PREVIOUS COMMISSION ACTIONS OR BRIEFINGS

September 14, 2021 – The Commission approved Marine Stormwater Utility Rates for 2022.

October 27, 2020 – The Commission approved Marine Stormwater Utility Rates for 2021.

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.