The Tacoma City Council has approved updates to the City’s utility funding model designed to help ensure that new development covers its fair share of infrastructure costs. With the passage of Ordinance 29084 and Ordinance 29085, the City has established System Development Charges (SDCs) for wastewater and stormwater utilities, effective July 1, 2026.
As Tacoma anticipates increased housing density and population growth, the Environmental Services Department identified a need for a sustainable funding source for capital projects that expand system capacity.
The primary benefit of these ordinances is the protection of existing utility customers. Without these new charges, the capital funding gap created by rapid development would likely have been addressed through incremental rate increases for existing residential and commercial ratepayers.
This approach aligns with community sentiment; a recent survey indicated that 78 percent of Tacoma respondents believe developers should bear the costs of upgrading the wastewater system to accommodate growth.
For Existing Homeowners and Businesses: There are no new fees for current customers who are not expanding their service. These ordinances are designed to prevent their monthly rates from rising solely to subsidize new construction and expanding system capacity.
For Developers and New Construction: This is a new fee structure. The SDC is a one-time charge imposed as a condition of receiving a new connection or upsizing an existing connection.
Wastewater:Â The fee is based on meter size. For example, a standard single-family residential 5/8-inch meter will incur a charge of $3,339.
Stormwater:Â The fee is calculated at $0.53 per square foot of net increased impervious surface.
While establishing new revenue sources, these ordinances also perform necessary housekeeping by repealing the outdated “Connection Charge-in-Lieu-of-Assessment” program in the wastewater utility. The new SDC program supersedes this older model, creating a simpler, system-wide cost basis that is easier to administer and more equitable.
Despite the introduction of these charges, Tacoma remains a competitive place to build with SDCs generally lower than those of neighboring jurisdictions. Most jurisdictions in the Puget Sound region—including Gig Harbor, Puyallup, Federal Way, and Pierce County—already assess similar capacity-based charges.
Revenue generated by these charges—estimated between $2 million and $8 million annually depending on growth rates—must be spent specifically on capital projects or debt service to expand system capacity. This supports the City’s infrastructure as population densifies.