Resolution _________________

A RESOLUTION relating to Seattle Public Utilities; adopting a 2015-2020 Strategic Business Plan for Seattle Public Utilities and endorsing a six-year rate path required to support the Strategic Business Plan.

WHEREAS, the 2013-2014 Seattle City Council Statement of Legislative Intent 27-1-A-1 directed Seattle Public Utilities (SPU) to develop a Strategic Business Plan to guide utility investments, service levels, and rate paths over the next six years; and

WHEREAS, Resolution 31429, adopted by the Council on March 4, 2013, described the goals of SPU's 2015-2020 Strategic Business Plan (the Plan) and established a Customer Review Panel to provide input to the Plan; and

WHEREAS, the primary goal for the Plan is to set a transparent and integrated direction for all of SPU's business lines that reflects customer values, provides rate predictability for utility customers, and results in best value for customer dollars; and

WHEREAS, a Customer Review Panel was created in April 2013, composed of nine members from among SPU's customers, five appointed by the Mayor and four appointed by the Council, and each member confirmed by the Council; and

WHEREAS, the Customer Review Panel has been meeting since April 2013 to review the Plan's assumptions and policy directions, provide suggestions and feedback during Plan development, and ultimately provide to the Mayor and City Council comments on the Plan concurrent with delivery of the final proposed Plan to Council; and

WHEREAS, the strategic planning process included extensive employee in-reach and public outreach, including stakeholder meetings, public meetings, non-English speaking outreach, online surveys, advertising, and direct mail; and

WHEREAS, the resulting 2015-2020 Strategic Business Plan contains a six-year rate path for water, drainage, wastewater and solid waste rates that was developed by identifying, evaluating, and recommending reductions and priority additions to current utility expenditures; and

WHEREAS, the City Council has reviewed the 2015-2020 Strategic Business Plan, the associated six-year rate path, the recommendation of the Customer Review Panel, and the results of the public outreach; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING, THAT:

Section 1. The City Council adopts Seattle Public Utilities' (SPU's) proposed 2015-2020 Strategic Business Plan (the Plan), a copy of which is attached as Attachment A and incorporated by reference, with the following amendments:

A. The Plan's labor efficiency target will be $6.4 million per year in savings by 2020. No labor efficiency target for number of positions will be set. The Council expects SPU to engage and communicate with employees and its labor partners when evaluating labor efficiencies. SPU is requested to evaluate the Plan's labor efficiencies through SPU's labor management committees (including impact negotiations) before implementing the efficiencies. SPU also is requested to establish the 2014 baseline of funding spent on consultants and contracts for outside labor and establish a means of tracking these expenditures during the course of the Plan. The number of positions and spending on consultants and contracts for outside labor will be tracked and reported to evaluate progress toward the labor efficiency goal.

B. Spending in the Plan's Energy Management & Carbon Neutrality Action Plan will be for emission-reduction measures and offsets in the City of Seattle if possible, or King County first and Washington State second if no options are available within the City limits, instead of carbon offsets outside Washington State. A deadline for achieving carbon neutrality should be removed from the Plan.

C. The SPU Director, before reallocating any more positions to SPU human resource functions in 2018, is requested to consult with the Seattle Personnel Department Director and consider any changes made to human resource functions citywide in assessing the need for additional SPU human resource positions. This consultation and assessment should be addressed in the 3-year Plan update. It is the Council's expectation that the departments will work together to ensure efficient and effective human resource functions.

D. The Plan's rate revenue requirement and rate path will be reduced by $1.5 million per year to reflect the lower interest associated with 2014 solid waste and drainage/wastewater bond sales and bond refunding.

E. SPU is requested to assess the role of its Call Center in promoting utility low-income assistance programs and identify related staffing needs.

Section 2. To achieve the goals of the Plan, an average annual system rate increase of 4.6% percent is anticipated over the period of 2015-2020 across all lines of business.

Section 3. The City Council requests that absent justifiable circumstances, the Executive submit budgets for 2015 through 2020 that are in support of, and consistent with the Plan and do not result in rates higher than the Plan's rate path as amended by this resolution.

Section 4. The City Council requests that absent justifiable circumstances the Executive submit rates for 2015 through 2020 that are in support of, and consistent with the Plan and are no higher than the Plan's average annual rate path as amended by this resolution and shown in the lower right corner of the table below.

Section 5. Actual rate changes for each of Seattle Public Utilities' lines of business are subject to approval by the Council via passage of rate ordinances.

Section 6. Seattle Public Utilities will complete an overall review and update the Strategic Business Plan every three years, adding three years to the Strategic Business Plan and re-evaluating the subsequent six-year rate path. The next complete review and adjustment of the Strategic Plan will be finalized in 2017 and will encompass the years 2018-2023.

Section 7. By March 31, 2015, Seattle Public Utilities will propose a reporting framework to the Council to track progress in achieving the goals of the Plan, including efficiency initiatives, programmatic reductions, and action plan goals. The proposal should include milestones and deliverables.

Adopted by the City Council the ____ day of ____________________, 2014, and signed by me in open session in authentication of its adoption this________ day

of ______________________, 2014.

_________________________________

President ___________of the City Council

THE MAYOR CONCURRING:

_________________________________

Edward B. Murray, Mayor

Filed by me this ____ day of ________________________, 2014.

____________________________________

Monica Martinez Simmons, City Clerk

(Seal)

Attachment A: Seattle Public Utilities 2015-2020 Strategic Business Plan

Exhibit 1: Customer Review Panel Comment Letter

Exhibit 2: Frequently Asked Questions

Exhibit 3: Seattle Public Utilities Financial Forecast Overview and 20152020 Financial Baseline

Exhibit 4: Action Plans

Exhibit 5: Benchmarking and Workplace Efficiency Study (See Booklet)

Exhibit 6: Efficiency Savings from Efficiency Initiatives and Programmatic Reductions

Exhibit 7: Customer Outreach Report

Exhibit 8: Seattle Public Utilities Promise

Diane Caviezel Clausen/mm SPU Strategic Business Plan RES August 11, 2014 Version #5