Lynnwood council talks utility rates, $18M development contract amid budget concerns

Key takeaways: 

• The council began a series of meetings to review utility rates and factors considered during the rate setting process.

• The council reviewed a proposed $18 million development contract as part of “The District” redevelopment project planned near the Lynnwood Event Center. 
• The council revisited and reworked an ordinance regarding a proposed city youth council. 

The Lynnwood City Council reviewed the city’s utility rate setting process, a proposed development agreement and a draft youth council ordinance, before moving into discussions on the city’s budget crisis at its Aug. 4 meeting. 

Utility rates

Public Works Director Jared Bond and Sergey Tarasov, principal with consultant FCS,presented an overview of utility rate setting for the city, the first of several planned work sessions on the matter. The city revisits utility rates every three years, per city documents.

• Lynnwood serves approximately 8,800 water customers, 8,300 sewer customers and 8,300 residential units for stormwater, Tarasov said. The current value of the city’s water infrastructure is around $34 million, sewer assets are at about $14 million, and stormwater assets are at roughly $21 million. 
• In 2022, a study forecasted yearly needed rate increases of 5% based on utility cost and demand. This turned out to be a massive underestimate, as rates have increased at around 21% annually since 2023. 

The city’s rate-setting process involves three steps: 

1. Determine the total cost required to cover long- and short-term needs, 
2. Allocate costs depending on customer type (commercial, residential, etc)
3. Developing a rate design, determining fixed and variable charges. 

Current utility rates: The city charges utilities bimonthly, with an additional volume charge for usage over what’s included in the fixed amount. 

Water 

• Single family residential: $65. Volume charge: $3.75 to $5.65/cubit foot. 
• Multi-family and mobile homes: $25.10. Volume charge: $2.74/cubic foot. 
• Commercial: Between $75.97 and $2,929, depending on size. Volume charge: $4.61/per cubic foot. 

Sewer

• Single family: $182.81. Volume charge: $7.45/ cubic foot. 
• Multifamily/mobile: $137.32. Volume charge: $6.43. 
• Commercial: $293.22 to $4,266.61, depending on size. Volume charge: $9.47 to $28.63.

Stormwater

• $32.49 for residential, multi-family and commercial. 

Where does my money go? To avoid cross-subsidization, rates operate on a standalone basis. This means water rates pay for water, sewer pays for sewer, and so on, Tarasov said. 

• Aside from paying for the utilities, rates include funds for system upgrades to ensure service as equipment ages. This policy may be paused as the city undergoes major upgrades at its wastewater treatment if it creates “additional pressure” on utility rates, Tarasov said.
• This city also holds money in reserves to be used in the case of an emergency. Generally, the funds hold enough money to operate utilities between 30 to 90 days. 
• Debt service for utility projects is also factored into rates. 

The council will continue to review city utilities in a series of work sessions through January, before potentially changing the rate. 

Public Facilities District development agreement Lynnwood Public Facilities District Executive Director Janet Pope introduced a potential development agreement regarding its proposed mixed-use city center project, known as “The District.”

• • This agreement is “a significant milestone for the district and our partnership with the city in creating the heart of Lynwood City Center,” Pope said. 
  • If the council approves the agreement, the city would be responsible for construction of an extension of 194th Street Southwest and creation of a new street, 38th Avenue, known as “ring road.” The cost of the new street is estimated at $18 million, city documents say. 
  • In May, the council approved a new property tax funding model – tax increment financing – to help pay for the new street and other construction related to future redevelopment of the city’s core.

Project Vision: The existing Event Center, which opened in 2005, has delivered over $200 million in economic impact but is “still short of its economic impact potential,” Pope told the council. 

• The redevelopment seeks to enhance community benefits through “more arts, more culture, more entertainment, more walkability, sustainability and housing that is affordable,” she continued. 
•  A July 2024 poll showed 70% support among Lynnwood registered voters for the master plan’s vision.

What’s in the agreement? The agreement provides flexibility with three scenarios: the current master plan, a high-density alternative and a multi-family only alternative. 

Financing: The estimated $18 million ring road project anticipates $5 million from state Transportation Improvement Board grants, $10 million from tax increment financing and a placeholder of $3 million from city transportation revenues. The PFD will loan funds for the 30% design phase. 

Timeline: The proposed timeline for development is 15 years, Pope said. 

The agreement includes a baseline phasing plan and a modified plan allowing for partial ring road construction by the PFD or a developer to accelerate multi-family development, with city reimbursement. 

Environmental cleanup of a “brownfield contaminated site” is also required before the city acquires the right-of-way for construction. 

Building height:

• It allows for a maximum building height of 100 feet with a 100-foot setback from residential zones, while maintaining a 60-degree view angle.
• One-story “jewelbox style” retail buildings are also permitted. 

Road and utilities:

• The proposed new “ring road” is a key element of the project.
• A public street, designed and constructed by the city, would feature new traffic signals and sidewalks. The city would install public stormwater and water mains and a public sewer system. 

What’s next?

• Schematic design for the project is slated to begin around January 2026.
• Public hearings for the agreement are scheduled for the city’s Planning Commission on Sept. 11, and the City Council on Sept. 22. A PFD board vote in and council vote on the agreement are targeted for October.

Youth council ordinance: After months of delays, Councilmember Derica Escamilla presented a draft ordinance to form a city youth council. 

• If approved, the ordinance would establish the youth council as an official city commission, acting as an advisory body to the council. This would subjugate the youth to the strict laws and regulations of a governmental institution – including public records laws.
• The council would consist of 15 members, aged 14 to 19, who reside or attend school within the Edmonds School District and Lynnwood city boundaries.
• The ordinance exempts youth council members from voter registration requirements for other city commissions and allows up to four non-resident members who attend high school or college within Lynnwood city limits.

What’s next? Escamilla will continue to work on revisions to clarify the ordinance, with the goal of presenting it to the council at a later date. 

Other business: Given the city’s projected $10.7 million deficit for 2025-26, Councilmember George Hurst proposed the council forgo its scheduled August recess to dive into the budget crisis. Council President Nick Coelho and Councilmember Escamilla expressed support for this idea. 

The full agenda can be found here. 

A recording of the meeting can be found on the city’s website.

— Contact Ashley at ashley@myedmondsnews.com.