Seattle I 5 Public Utilities December 6, 2017 Anthony Wright, Director King County Department of Executive Services Facilities Management Division 500 4th Avenue, Room 820 Seattle. WA 98104 Dear Mr. Wright: I?m writing to provide Seattle Public Utilities? (SPU) comments regarding the Facilities Management Division?s proposed rule implementing Ordinance 18403 to require utilities provide King County reasonable compensation for using the street right-of?way. While I am sensitive to King County?s desire to receive annual compensation for extraordinary use of its rights of way, SPU has significant concerns about the way this rule could be implemented and how it would then impact a small subset of SPU wastewater and water customers who reside in our service areas within unincorporated areas of King County Before getting into specific concerns with the proposed rule, I would like to make two overarching points: i am sensitive to the structural revenue problems King County faces. Demands on local governments throughout Washington State continue to increase compared with inflation. This problem is exacerbated by a lack of revenue options, which i understand this franchise fee is intended to mitigate. In our long, shared history, King County and Seattle have cooperated effectively to the benefit both taxpayers and ratepayers. Our collaboration and mutual dependence in the areas of emergency management, law enforcement, low?income housing, public health, transportation, and wastewater conveyance and treatment are notable examples of how our governments collaborate to deliver cost-effective and high quality services to the public we serve. King County operates mass transit and wastewater systems throughout hundreds of miles of Seattle?s street rights of way. King County Parks operates recreational trails on more than 25 miles of Seattle Public Utilities? Tolt and Cedar River Pipeline rights of way and along Lake Youngs Reservoir and Rattlesnake Lake. SPU offers these properties for the benefit of regional users at no cost, beyond a nominal maintenance fee. Similarly, numerous King County roadways cross Tolt and Cedar River pipeline rights of way at no cost. Interestingly, these are the same pipelines for which King County is proposing to charge franchise ?rent? when the pipelines cross under a county roadway. 700 Fifth Avenue I PO Box 34018 Seattle, WA 98124-4018 206?684?3000 seattle.gov/util Anthony Wright December 6, 2017 Page 2 Seattle?s water distribution and transmission system provides drinking water to approximately 600,000 retail customers and 900,000 wholesale customers served by 21 utilities throughout King County. In all, approximately 4,800 SPU retail water customers reside in unincorporated King County. These customers reside in the North Highline and West Hill Potential Annexation Areas. Consistent with cost allocation policies in other parts of its retail service area, the County?s new franchise fees would be borne entirely by the small number of our customers within the proposed King County franchise area. Similarly, Seattle provides drainage and sanitary sewer services in parts of South Seattle and White Center, serving up to a few hundred customers who could be affected by the proposed new fees. As is the case with water customers outside the city limits, these drainage and sewer customers are in low- to moderate-income areas and can ill-afford the burden of additional costs for basic services. In addition to these equity and intergovernmental partnership issues, SPU has the following questions and comments about the specific content of the proposed rule: 2. Methodology to Estimate Franchise Compensation 2. 1. 2 Rate Adjustment According to the King County Assessor?s website, residential property is ?assessed each year at its full market value, which is defined as the amount a buyer, willing but not obligated to buy, would pay a seller willing but not obligated to sell. The land value of commercial properties is "determined using the market approach, which analyzes sales of comparable bare land.? Given these are each fair market approaches, no rate adjustment is necessary. 2.4.1 -- Financial Impact Protection The proposed rule states the Facilities Management Division will reduce the estimated franchise compensation to an amount equal to or less than ?the financial impact protection amount" when annual franchise compensation is calculated to cost affected residential customers ?more than a reasonable amount per month.? Seattle Public Utilities is keenly interested in rate affordability for its customers, including customers living outside the city, and commends King County for its consideration of the financial impact of this proposed rule on customers within its franchise areas. it is not clear from the information provided: 1) what methodology will be used to calculate a ?reasonable amount,? or; 2) the ?financial impact protection amount.? Given the demographics of the communities in which franchises are located, from an equity standpoint it makes the most sense to make these calculations based on the household income of the King Country Franchise Area in which the franchisee customers reside. As is noted above, the City of Seattle and King County have a long history of collaboration providing cost-effective general government and utility services to the public. Seattle Public Utilities? fee?owned rights of way comprise significant portions of King County?s Cedar River Trail, Lake Youngs Perimeter Trail, Snoqualmie Valley/Rattlesnake Lake Connector Trail and Tolt Pipeline Trail. The utility?s Cedar Seattle ll Public Utilities 700 Fifth Avenue PO Box 34018 Seattle, WA 98124-4018 206-684?3000 seattlegov/util Anthony Wright December 6, 2017 Page 3 River Watershed Education Center near North Bend School offers at no cost - interpretive displays and guided presentations where thousands of school children and other visitors from around King County and the region can learn about forests, wildlife and where their drinking water comes from. In View of these valuable, non-monetary benefits accruing to King County, I would ask that some part of these significant benefits be considered payment in lieu of its franchise fees pursuant to this rulemaking. Thank you for considering this request. or my staff would appreciate the opportunity to discuss this matter with you directly. in the meantime, if you have questions, please feel free to contact me or Bob Hennessey, of my staff at 615-0740. Sincerely, Wk Mami Hara, General Manager/CEO Seattle Public Utilities Seattle Ill? Public Utilities 700 Fifth Avenue PO Box 34018 Seattle, WA 98124?4018 206-684?3000 seattle.gov/util