~ Tacoma City Council Approves New Utility Funding Model to Support Growth and Protect Existing Customers

In a move to ensure that new development in Tacoma covers its fair share of infrastructure costs, the City Council has approved updates to the City's utility funding model. The passage of Ordinance 29084 and Ordinance 29085 establishes System Development Charges (SDCs) for wastewater and stormwater utilities, effective July 1, 2026.

The need for a sustainable funding source for capital projects that expand system capacity was identified by the Environmental Services Department as Tacoma anticipates increased housing density and population growth. These ordinances aim to protect existing utility customers from bearing the burden of rapid development through incremental rate increases.

According to a recent survey, 78 percent of Tacoma respondents believe that developers should be responsible for covering the costs of upgrading the wastewater system to accommodate growth. This sentiment aligns with the approach taken by the City Council in implementing these new charges.

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For existing homeowners and businesses who are not expanding their service, there will be no new fees. These ordinances are designed to prevent their monthly rates from rising solely to subsidize new construction and expanding system capacity. However, for developers and new construction, a new fee structure will be in place. The SDC is a one-time charge imposed as a condition of receiving a new connection or upsizing an existing connection.

The fee for wastewater is based on meter size, with a standard single-family residential 5/8-inch meter incurring a charge of $3,339. For stormwater, the fee is calculated at $0.53 per square foot of net increased impervious surface.

In addition to establishing new revenue sources, these ordinances also repeal the outdated "Connection Charge-in-Lieu-of-Assessment" program in the wastewater utility. The new SDC program supersedes this older model, creating a simpler and more equitable cost basis that is easier to administer.

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Despite the introduction of these charges, Tacoma remains a competitive place to build, with SDCs generally lower than those of neighboring jurisdictions. Many other jurisdictions in the Puget Sound region, including Gig Harbor, Puyallup, Federal Way, and Pierce County, already assess similar capacity-based charges.

The revenue generated by these charges is estimated to be between $2 million and $8 million annually, depending on growth rates. This funding must be specifically allocated towards capital projects or debt service to expand system capacity, supporting the City's infrastructure as population densifies.

With the approval of these ordinances, Tacoma is taking proactive steps to ensure that new development contributes its fair share towards the city's infrastructure needs while protecting existing utility customers from bearing the burden. These updates to the utility funding model will support sustainable growth and maintain Tacoma's competitiveness as a desirable place to live and do business.

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