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Ordinance 18403 Update

KING COUNTY TO LEVY CHARGES FOR ROADWAY RENT

King County Ordinance 18403. Ordinance 18403 (enacted in November 2016) allows the County to negotiate rent with water, sewer, gas, and power utilities for being in the roadways (rights-of-way) pursuant to a franchise. The rent does not provide value or benefit to the utilities, instead it will go into the County’s General Fund. Cedar River Water & Sewer District along with several other districts took legal action to overturn Ordinance 18403, but unfortunately the Washington Supreme Court ruled in favor of the County in December, 2019. The amount of rent is still subject to litigation and ultimately, negotiation of a new franchise.

Water & Sewer Bills to Increase. In order to fund a contingent liability for rent, the District has no recourse but to charge District customers a new ongoing charge of $1.21 per month for water customers ($2.42 per billing cycle) and $3.85 per month for sewer customers ($7.70 per billing cycle) which will be on your next bill. These charges are estimates based on information from King County and may change as the District is not conceding to these amounts. Contingent rent collected will be banked by the District until final amounts are negotiated.

The County has also recently confirmed its intention to charge the District retroactive rent that could go back to 2018, a cost that has not been passed on to District customers. The monthly, ongoing charges outlined above do not cover the alleged retroactive obligation. This amount is also subject to litigation and negotiation, and liability is not conceded. Additional information can be found on the District’s website home page at www.crwsd.com.

What You Can Do. If you have concerns about the County’s Ordinance and Rules and the impact on your utility rates, please contact the King County councilmembers who have constituents living in unincorporated King County. Listed below are the email addresses and telephone numbers for the councilmembers representing unincorporated areas of the County:

District 1. rod.dembowski@kingcountry.gov; 206-477-1001 (A sponsor of the Ordinance)
District 3. kathy.lambert@kingcounty.gov; 206-477-1003 (A sponsor of the Ordinance)
District 4. jeanne.kohl-welles@kingcounty.gov; 206-477-1004 (Supported the Ordinance)
District 5. dave.upthegrove@kingcounty.gov; 206-477-1005 (A sponsor of the Ordinance)
District 7. peter.vonReichbauer@kingcounty.gov; 206-477-1007 (Opposed the Ordinance)
District 8. joe.mcdermott@kingcounty.gov; 206-477-1008 (Supported the Ordinance)
District 9. reagan.dunn@kingcounty.gov; 206-477-1009 (Opposed the Ordinance)

Note: CRWSD is located in District 9.

Board of Commissioners
Cedar River Water & Sewer District
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 KING COUNTY PROCEEDS WITH ORDINANCE 18403

Washington Supreme Court rules that King County can charge “rent” to utilities using County rights-of-way; increased utility rates expected.

On December 5, 2019, the Washington Supreme Court issued its decision reversing the trial court’s order in favor of the utilities, ruling that King County has the authority to charge “rent” to water, sewer, gas and electric utilities as a condition of using County rights-of-way. The Court’s ruling will result in increases in your utility rates to cover the rent amounts being sought by the County. The Court’s decision can be reviewed at: http://www.courts.wa.gov/opinions (King County v. King County Water Dists., Case No. 96360-6). The specific impact to your water and sewer rates is not known at this time because the amount of the rent required to be paid to the County is still undetermined and will be the subject of future legal proceedings and/or negotiations.

Background. On November 7, 2016, King County enacted Ordinance 18403 authorizing its Facilities Management Division (FMD) to charge water, sewer, gas and electric utilities a rental fee for the use of County rights-of-way. On December 29, 2017, FMD issued Rules RPM 9-2 (Rules) (effective January 29, 2018) that provide a methodology to determine the rent utilities are required to pay the County as a condition of being allowed to use County rights-of-way. The Rules may be reviewed at: https://www.kingcounty.gov/about/policies/rules/property/rpm92pr.aspx. Over 20 water-sewer districts located throughout King County joined forces and objected to the County’s efforts to impose rent on the utilities. The districts provided verbal and written comments to the County objecting to the Ordinance and the Rules for a variety of legal grounds, including: the rent was an illegal tax, and the districts were already authorized by statute to locate their water and sewer facilities in public rights-of-way without payment of rent.

The districts’ objections to the County’s actions resulted in the County filing a lawsuit against the districts in January 2018 in King County Superior Court seeking a declaratory judgment that the County has the authority to charge rent for the utilities’ use of County rights-of-way. The districts asserted and filed their counter-claims against the County seeking to invalidate the Ordinance and the Rules. Pursuant to cross motions for summary judgment, on September 4, 2018, the trial court ruled in favor of the districts and an order was entered invalidating portions of the County’s Ordinance and the entirety of the Rules. King County appealed the decision directly to the Washington Supreme Court which accepted review. On December 9, 2019, the Supreme Court issued its decision reversing the trial court’s order in favor of the utilities and ruled that the County has the authority to charge rent to water, sewer, gas and electric utilities as a condition of using County rights-of-way. The District is extremely disappointed that its efforts to prevent the County from imposing rent were unsuccessful because it will lead to increased utility rates for its customers. The County has acknowledged that rent revenue will be deposited into the County’s general fund and will be used to fund the County’s general governmental services and programs. It should be noted that the County only implemented this revenue scheme after years of unsuccessful efforts to obtain specific utility tax authority from the Legislature.

Based on a written compensation notice issued by King County to the District, the County seeks to require the District to pay approximately $434,954 per year in rent for the use of County rights-of-way. Whatever the final rent amount is, it will have to be passed through to the District’s customers. Based on the County’s compensation notice, your water bill could increase by as much as $3.80 per bill and sewer increase as much as $9.48 per bill.

What you can do. The districts are currently evaluating their options. In the meantime, if you have concerns about the County’s Ordinance and Rules and the impact on your utility rates, you may want to contact the King County councilmembers who have constituents located in unincorporated King County. Listed below are the email addresses and telephone numbers for the councilmembers representing unincorporated areas of the County:

District 1. rod.dembowski@kingcountry.gov; 206-477-1001 (A sponsor of the Ordinance)
District 3. kathy.lambert@kingcounty.gov; 206-477-1003 (A sponsor of the Ordinance)
District 4. jeanne.kohl-welles@kingcounty.gov; 206-477-1004 (Supported the Ordinance)
District 5. dave.upthegrove@kingcounty.gov; 206-477-1005 (A sponsor of the Ordinance)
District 7. peter.vonReichbauer@kingcounty.gov; 206-477-1007 (Opposed the Ordinance)
District 8. joe.mcdermott@kingcounty.gov; 206-477-1008 (Supported the Ordinance)
District 9. reagan.dunn@kingcounty.gov; 206-477-1009 (Opposed the Ordinance)

A map showing King County Districts can be viewed at: https://kingcounty.gov/council/councilmembers/find_district.aspx.

If you have any questions, you may contact the District’s General Manager, Mike Amburgey, at
425-255-6370 or mamburgey@crwsd.com.

Board of Commissioners
Cedar River Water & Sewer District

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NOVEMBER 2018 UPDATE to King County Franchise Ordinance 18403

Superior Court Rules Against the Ordinance:

Multiple King County water and sewer districts, including Cedar River Water & Sewer District, successfully defended a lawsuit filed by King County in which the County sought confirmation that it had the right to charge rent for the use of public highways, roads and streets. Specifically, Superior Court Judge Samuel Chung’s ruling declared as invalid King County Ordinance 18403 that would have charged rent to utility providers that install and operate electric, water, sewer, and gas in public rights of way in unincorporated parts of the county.

King County Appeals the Ruling:

King County has filed a Notice of Appeal challenging Judge Chung’s Superior Court ruling and has petitioned the Washington State Supreme Court for direct review. It is anticipated the appeal process will extend well into next year. The District will continue monitoring the situation and keep our customers apprised with periodic website updates.

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MARCH 26, 2018 UPDATE to King County Unlawful Tax

King County has proceeded to implement its franchise rental value fee through the adoption of a rule (RPM 9-2) by the Facilities Management Division that provides for charging rent to water, sewer, gas and electrical utilities for the use of public right of way. Information regarding the new rule can be found on the internet at this web link: https://www.kingcounty.gov/about/policies/aep/propertyaep/rpm92dp.aspx.

In January of this year, just prior to the rule taking effect, the County filed suit against water and sewer districts in King County Superior Court seeking an order confirming its power to charge utilities with rent for the use of public right of way.  The districts have joined together to defend the suit and have counterclaimed by seeking an order declaring that the County’s rule and underlying ordinance are invalid. The assigned trial date is January 22, 2019.  Our attorneys anticipate that this case will be decided by motions which will be filed in the next several months.  After the trial court rules, appeals will likely follow and it may be several years before we have a final legal ruling as to whether the County has the legal authority to impose the rental charge.

The District has received a Compensation Notice from King County outlining the 2018 monthly rental charge for water ($15,456.62) and sewer ($20,789.58) which are subject to periodic increases at the discretion of the County.  The result is an estimated charge to CRWSD customers in the range of $4-$5 per month for sewer and $1.50-$2.50 for water.  The notice provides that rent is to begin accruing in mid-September of 2018 but our present intention is to not pay it unless and until a final court ruling is issued requiring the District to do so.   If the County prevails in the litigation, the District may be forced to pay back rent along with amounts going forward.  The District’s Board of Commissioners will monitor the situation and determine whether surcharges will be necessary if the County prevails in court.

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November 30, 2017  State law gives utilities use of rights-of-way, however King County wants to tax you for it!

Contact your King County Council!  On November 7, 2016, the King County Council quietly adopted an ordinance imposing an unlawful tax. Nearly a year later, on October 23, 2017, King County Facilities Management Division finally issued the draft rule to implement Ordinance 18403, providing some context as to how the County intends to impose the unlawful tax, but also exposing other troubling issues.

Download the details:  What’s Wrong, Who Gets Hurt & What’s Next

What the Public Can Do Now:

Contact King County! Email comments to King County by 5 pm PST, Thursday December 7th, 2017.
For more information and the online comment form go to http://www.kingcounty.gov/franchise

Talk to Talk Radio! The Washington Association of Sewer & Water Districts is presenting the story to talk radio hosts Dori Monson and John Curley of KIRO Radio. Dori Monson especially rails against King County and Seattle for unfair taxes. We want the radio hosts to know their listeners care about this. You are encouraged to tweet the hosts below and convince them they need to talk about the unlawful County tax on utilities.

Tweet Dori Monson:  @dorimonsonshow
Tweet John Curley:  @tomandcurley

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