Letter to the Editor: Documentation Disproves City's Claims on SPU Acquisition

To the editor:

In the October 2012 issue of Currents Magazine the City of Shoreline makes several claims in their article “City of Shoreline Proposition No. 1: Acquisition and local control of Seattle water services in Shoreline” that are disproved by publicly available documentation and eye witness accounts.

Claim: Purchase price of $26.6 Million - There is no agreement between the City of Shoreline and the City of Seattle on a purchase price or even that a sale will take place. Repeated requests for such documentation by Shoreline residents have been denied with the reply that none exists. At a July 30th Seattle City Council meeting it was disclosed that Seattle Public Utilities or Seattle City Council has not agreed to the $26.6 million figure. The only agreement is to continue negotiations.

Quote from Seattle City Council discussion on the resolution to allow Shoreline to put the issue of utility purchase to a vote of the citizens of Shoreline:

Councilmember Jean Goddard: “This resolution does not authorize the sale, it is merely a first step in the sales process. The SPU would be required to come back to the council with an ordinance finalizing the terms of the sale.”

Councilmember Bruce Harrell-“ Assuming the resolution is voted in the affirmative and is approved, are we then required to authorize the sale? Or do we still have,..

Councilmember Godden: No, No we are just not required to, we simply say that we are going to be considering this and that it will be no less than $26.6 million dollars for this but it will be negotiated at the time that we take up the sale and it probably will not be for a couple of years yet.

Councilmember Harrell: OK so the dollar amount is just kind of a minimum number

Councilmember Godden: It is a minimum, that is correct.”

Later in the discussion,…

Councilmember Harrell: “There is no legal requirement that we divest ourselves from this kind of infrastructure.”

Councilmember Godden: “Absolutely not, No It simply means that we would consider this,...”

Councilmember Mike O’Brien: My understanding is that Shoreline approached us; this is not part of an SPU strategic planning. “I will speak for me personally, I wanted to have much more analysis before I was ready to commit to any price. That is what a number of folks said.”

Claim: $14.2 million in pre-acquisition improvements (without adjustment for inflation)  - Reality is the costs could potentially equal over $17 Million (without adjustment for inflation) according to the City of Shoreline’s own documentation from the May 23rd report to the steering committee. 

According to CH2M Hill, separation costs are based on recent bids for Tacoma Public Utilities using a “cost curves” method with a “variability of  -15% to -30% on the low side to +20% to +50% on the high side.” 

Why is this a problem?

The cost of construction in Tacoma is always lower than in the Seattle area. This has not been taken into account.  

The variability of -30% to + 50% mentioned by CH2MHill in the May 23rd report means that the estimated $5,938,300 (in 2012 dollars) for separating the Shoreline water system from the rest of Seattle Public Utilities system could drive the City of Shoreline's estimated "pre acquisition" cost of $14.2 Million to over $17 Million.  

Claim: the City Council found the cost to acquire, operate, and maintain the system would result in rates equal to or lower than SPU’s projected charges - The reality is the City Council has no idea if this goal can be met. 

Consider:  The City of Shoreline has underestimated costs and over estimated revenue projections (Budget depends upon an increase in consumption of water from 2020 on when water consumption rates have been falling steadily per capita since 1985). The figures are available on page 33 in the June 11th 2012 Council packet. For statewide water consumption rates see the US Geological Survey. 

Because of underestimating expenses and overestimating revenue the City of Shoreline’s claim that they will deliver service at equal to or less than SPU rates is misleading at best.

Claim:  Shoreline ratepayers would have local control over rates and services, upgrades and investments –Reality is that the City of Shoreline would put emphasis on upgrading water infrastructure for developers at ratepayer expense. This was brought out in a public meeting in which Shoreline City Council member Jesse Salomon confirmed that assessment when asked by a citizen if that was the plan.

Claim: Purchase of SPU by the City of Shoreline would provide local control – 

Reality is we already have local control through Ronald Wastewater District and Shoreline Water District at much more affordable rates.We could have local control of the West side water system as well if we choose to form a North King County Public Utility, or ask the City of Shoreline to allow Shoreline Water District to make the purchase. Under a Public Utility we would have local control, no added utility taxes and better service at equal to or less cost.

Wendy DiPeso

Shoreline Citizens for Good Government