WHEREAS, pursuant to Ordinances 94296 and 95167, the City acquired an 8.77-acre property located between 146th and 148th Avenues SE around SE 44th Street in Bellevue, Washington and, in 1990 completed construction of a reservoir and associated infrastructure on the property (collectively, the "Eastside Reservoir") to meet the increasing water demands of wholesale water supply customers of Seattle Public Utilities ("SPU") to the east of Lake Washington; and

WHEREAS, although SPU currently uses the Eastside Reservoir as backup storage for water supply to customers to the east of Lake Washington, SPU has determined the Eastside Reservoir is not required for SPU's normal operations to meet the demand of those customers and other storage exists in the system; and

WHEREAS, Cascade Water Alliance ("CWA"), a not-for-profit corporation formed by interlocal agreement between eight cities and water districts to the east and south of Lake Washington and a current wholesale water supply customer of SPU, is developing alternate water supply sources to serve the majority of its water retail customers in the future; and

WHEREAS, CWA desires to acquire the Eastside Reservoir and maintain its operation as a reservoir to serve those retail water customers to the east of Lake Washington with the new water supplies; and TX: WHEREAS, the City circulated notice of potential availability of the Eastside Reservoir to City departments and other public agencies in February 2008, and no City departments or other public agencies expressed an interest in acquiring the Eastside Reservoir or property; and

WHEREAS, by Resolution 30862, the City adopted amended Procedures for the Evaluation of the Reuse and Disposal of the City's Real Property, ("Procedures"), which established a uniform evaluation process for the reuse or disposal of real property the City owns in fee simple, including certain public notice and involvement procedures for decisions classified as complex; and

WHEREAS, Section 5.H of the Procedures recognizes the City Council may adopt alternate procedures that outline a reuse or disposal process for a specific property; and

WHEREAS, it is in the interest of the City and the general public to transfer the surplus Eastside Reservoir property to CWA in an efficient manner; NOW, THEREFORE,

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

Section 1. The City of Seattle adopts the steps taken as documented in the Preliminary Report, Evaluation of Reuse and Disposal Options for PMA No. 1260, Eastside Reservoir and the communications and public involvement activities conducted as documented in the Public Involvement Report, PMA No. 1260, Eastside Reservoir, attached hereto as Attachment 1, as the alternate procedure to evaluate and dispose of the surplus Eastside Reservoir property pursuant to Section 5.H of the Procedures.

Section 2. The Director of Seattle Public Utilities is authorized to negotiate a purchase and sale agreement and any ancillary documents to transfer the Eastside Reservoir to the Cascade Water Alliance, to be submitted to the City Council for approval by future ordinance.

Adopted by the City Council the ____ day of ____________________, 2008, and signed by me in open session in authentication of its adoption this________ day

of ______________________, 2008.

_________________________________

President ___________of the City Council

THE MAYOR CONCURRING:

_________________________________

Gregory J. Nickels, Mayor

Filed by me this ____ day of ________________________, 2008.

____________________________________

City Clerk

(Seal)

Attachment 1: PMA 1260 Preliminary Report Evaluation of Reuse and Disposal Options

AudreyHansen/ah

SPUEastsideReservoirRES

April 29, 2008

Version #2

Form last revised on 12/31/07 1

PRELIMINARY REPORT

EVALUATION OF REUSE AND DISPOSAL OPTIONS FOR

PMA No. 1260

Resolution 29799 directs the Executive to make recommendations on the reuse or disposal of excess property on a case-by-case basis, using the Procedures for Evaluation of the Reuse and Disposal of the City's Real Property adopted by that resolution. Additionally, the Resolution identifies guidelines, to be considered in making a recommendation. This report addresses each of the guidelines outlined in Resolution 29799 in support of the recommendation. This report also follows those provisions of Resolution 30862, adopted May 1, 2006, that amended Resolution 29799.

Property Management Area: PMA No. 1260 Eastside Reservoir

Bellevue, Washington

BACKGROUND INFORMATION

Legal Description:

That portion of Section 15, Township 24 North, Range 5 East, W.M., described as follows:

Beginning at the northeast corner of the southeast 1/4 of said Section 15; thence westerly along the north line of said southeast 1/4, North 89 degrees 20' 48" West, a distance of 883.80 feet; thence South 32 degrees 11' 25" East, a distance of 219.01 feet to a point of curve from which the radial center bears South 57 degrees 48' 35" West, a distance of 528.00 feet; thence southeasterly along said curve to the right, an arc distance of 218.67 feet to a point on the curve from which the radial center bears South 81 degrees 32' 18" West, a distance of 528.00 feet; thence South 69 degrees 43' 12" East, a distance of 741.720 feet to the east line of said southeast 1/4; thence North 00 degrees 22' 04" West along said east line, a distance of 635.95 feet to the point of beginning; Situated in the County of King, State of Washington.

Together with: Portion of Lot 2, Block 9, Eastgate Addition Division "L", according to plat thereof as recorded in Volume 55 of Plats, page 47, Records of King County, Washington, described as follows: Beginning at the northwest corner of Lot 1 in said Block 9; thence south 00 degrees 22' 04" east along the west line of said Lot 1 and along the west line of said Lot 2, a distance of 257.05 feet to the true point of beginning; thence south 17 degrees 37' 28" east a distance of 76.23 feet to the westerly margin of 148th Place Southeast; thence southerly along said westerly margin an arc distance of 131.76 feet to its intersection with the west line of said Lot 2; thence north 00 degrees 22' 04" west along said west line a distance of 201.93 feet to the true point of beginning.

Physical Description and Related Factors:

This Preliminary Report concerns two parcels of land that are the subject of PMA No. 1260, known as the Seattle Public Utilities' Eastside Reservoir. The King County Assessor identifies the SPU property as being comprised of Tax Parcel Nos. 152405-9013 & 2206700579. These two parcels have a total area of 383,396 SF and carry the City of Bellevue zoning designation of R 3.5, meaning single family development with no more than 3.5 residences per acre.

These parcels are located directly south and contiguous to Eastgate Park, owned and operated by the City of Bellevue Parks and Community Services department.

Among the structures on the subject property, the most prominent is the underground reservoir situated directly in the middle of the large five-sided, irregular shaped parcel. The reservoir contains more than 90% of PMA No. 1260's total area. While the reservoir lid forms a grassy expanse, it is fenced off from any use or entry as is the complete perimeter of the water facility. To the east, south and west of the underground reservoir, but within the boundaries of the subject property, are areas of typical Northwest Forest with Douglas fir, alder and vine maple with an under story of salad and other native shrubs and plants.

PMA No. 1260 is nestled in the middle of the Somerset Woods development where the Somerset Community Association is the local neighborhood group. With the exception of its northern boundary, the Eastgate Reservoir is adjacent to quiet streets and cul-de-sacs with single-family residences.

PMA No. 1260 also includes a water supply line that runs north from the reservoir towards SE Newport Way.

GUIDELINE A: CONSISTENCY

The analysis should consider the purpose for which the property was originally acquired, funding sources used to acquire the property, terms and conditions of original acquisition, the title or deed conveying the property, or any other contract or instrument by which the City is bound or to which the property is subject, and City, state or federal ordinances, statutes and regulations.

PMA No. 1260 was acquired in 1965 and 1966 under the authority of City of Seattle Ordinances 94296 and 95167, which accepted deeds for the property in connection with the proposed Eastgate Reservoir, which was planned to improve the municipal water supply system. Funds for the purchase came from the Seattle Municipal Water Revenue Bonds 1963 Construction Fund. The sellers of the property were Evergreen Land Developers, Inc. and Austin Forward and Karin S. Forward, husband and wife, who conveyed the property by Warranty Deeds duly recorded with the King County Recorder.

GUIDELINE B: COMPATIBILITY AND SUITABILITY

The recommendation should reflect an assessment of the potential for use of the property in support of adopted Neighborhood Plans, as or in support of low-income housing, in support of economic development, in support of affordable housing, for park or open space; in support of Sound Transit Link Light Rail station area development; as or in support of child care facilities, and in support of other priorities reflected in adopted City policies.

Context

This property is within the City of Bellevue and therefore not the subject of any Seattle neighborhood plans. It is within the purview of the East Bellevue Community Council whose position is that the undeveloped areas of the reservoir should remain as such and not be considered for sale or development.

The proposed sale of PMA No. 1260 to the Cascade Water Alliance is in accordance with the Cascade Water Alliance's long-range plan to develop alternate water supplies for its member utilities.

Range of Options.

Options for disposition of the property include retention by the City, long-term ground lease, negotiated sale or sale by public bid. Circulation of a notice of the property's availability among City departments and other public entities in February 2008 generated no interest in acquiring PMA No.1260 for a governmental or public purpose. A public bid sale is not feasible as these two parcels are an operational SPU facility. A negotiated sale of the property to the Cascade Water Alliance is the most viable and rational disposition.

GUIDELINE C: OTHER FACTORS

The recommendation should consider the highest and best use of the property, compatibility of the proposed use with the physical characteristics of the property and with surrounding uses,

timing and term of the proposed use, appropriateness of the consideration to be received, unique attributes that make the property hard to replace, potential for consolidation with adjacent public property to accomplish future goals and objectives, conditions in the real estate market, and known environmental factors that may affect the value of the property.

Highest and Best Use:

This property is zoned R 3.5, meaning single family development with no more than 3.5 residences per acre. Because these parcels are currently dedicated to water supply system use and the recommended buyer intends to continue operating the water supply system facilities, the highest and best use as residential development may not be applicable at this time.

Compatibility with the physical characteristics:

Construction of the reservoir on the property was completed in 1990. The proposed purchase and use by Cascade Water Alliance is consistent with the existing use.

Compatibility with surrounding uses:

The surrounding uses are residential and park and open space. Continued use as a water facility is compatible with these uses. By establishing and maintaining a woodland buffer and wooden, rather than chain link fencing, where the reservoir abuts private ownership, the SPU water operations facility has co-existed as a good neighbor to the residential property owners ever since its establishment. Both the open and forested areas of the reservoir have been maintained to enhance and blend in with natural and recreational features of Eastgate Park. The Cascade Water Alliance intends to continue operating the water facility in a way that is compatible with the current and surrounding uses.

Potential for Consolidation with adjacent public property:

There is no Seattle-owned property that lies adjacent to PMA No. 1260. Therefore consolidation with Seattle-owned property is impossible. During the public notice process, the City of Bellevue expressed support for the discussions between Cascade and SPU for the potential sale of the reservoir. Bellevue also indicated that, in the future, it might wish to discuss with SPU, Cascade or another future property owner the possibility of developing uses on the site to enhance recreational activities or open space at Eastgate Park.

Timing and Term of Proposed Use:

SPU intends to sell PMA No. 1260 as part of an effort for regional cooperation with Cascade Water Alliance to support its plans to identify and develop its own water supply.

Appropriateness of the consideration:

The property should be sold or exchanged for fair market value as established by a current appraisal. Sale or disposition of this surplus property originally acquired for public utility purposes and no longer required for providing public utility service is subject to the provisions of RCW 35.94.04. This statute requires the legislative authority to conduct a public hearing and issue a Resolution stating the fair market value or the rent or consideration to be paid and such other terms and conditions for such disposition as the legislative authority deems to be in the best public interest.

Conditions in the real estate market:

The real estate market in the Puget Sound region is generally cooling off. This will not be an open market sale. A negotiated sale between two public agencies will rely on a current analysis and opinion of fair market value.

Known environmental factors:

There are no known environmental problems or factors that affect this site.

GUIDELINE D: SALE

The recommendation should evaluate the potential for selling the property to non-City public entities and to members of the general public.

The potential for selling this property to non-city public entities has been assessed. Other than the Cascade Water Alliance, no public entities have expressed interest in purchasing the property. Since Cascade's membership is composed of the cities of Bellevue, Issaquah, Kirkland, Redmond, and Tukwila, the Covington Water District, and the Sammamish Plateau and Skyway Water and Sewer Districts, these public entities are involved with the proposed sale.

Cascade Water Alliance is interested in maintaining the site as a water facility. It serves the public interest to facilitate the continued operation of the site as a drinking water reservoir that benefits water customers and avoids demolition of a valued public asset. Therefore, it is in the best interest of the City of Seattle to offer the property for sale to Cascade Water Alliance along with the public infrastructure rather than offer the property to the general public.

PUBLIC INVOLVEMENT (Please see "Exhibit C for more details)

In accordance with Resolution No. 30862, in February 2008, a notice soliciting comments about the reuse and disposal of PMA No. 1260 and Seattle Public Utilities' proposition to sell the property to Cascade Water Alliance was sent to all residences and owners within a 1000foot radius of the subject property, to neighborhood organizations and appropriate public agencies. Four hundred ninety notices were mailed. (See Exhibit A)

Two large notice signs were erected in conspicuous locations along the boundary of the property. These signs informed all passersby that the reservoir property has been recommended for sale to Cascade Water Alliance for continued use as a water facility. (See Exhibit B)

Fifteen people submitted comments. Fourteen of these persons expressed no objection to the sale to the Cascade Water Alliance as long as the property continues to be used as a reservoir and the existing greenbelt around the reservoir would be preserved and not sold for some type of private development. One respondent who represented a private interest expressed an interest in opportunities to buy portions of the property.

THRESHOLD DETERMINATION

The Disposition Procedures provide that FFD assesses the complexity of the issues on each excess property following the initial round of public involvement. The purpose of this analysis is to structure the extent of additional public input that should be obtained prior to forwarding a recommendation to the City Council. The Property Threshold Determination Form prepared for PMA No. 1260 is attached at the end of this report. The transaction is rated as being "Complex," based upon the factors considered and the score calculated for disposition of PMA No. 1260.

RECOMMENDATION

The Real Estate Services Division of the Fleets and Facilities Department recommends that PMA No. 1260, the SPU Eastside Reservoir, be sold to the Cascade Water Alliance for continued use as a water facility for a negotiated price which represents the present fair market value.

PROPERTY REVIEW PROCESS DETERMINATION FORM

Property Name: Eastside Reservoir

Address: Bellevue, WA

PMA ID: PMA No. 1260 Subject Parcel # 4533

Dept./Dept ID: Seattle Public Current Use: Water Facility Utilities

Area (Sq. 383,896 SF Zoning: Res.-3.5 Bellevue Ft.):

Est. Value: $ 15,000,000 Assessed Value: $ 10,303,100

PROPOSED USES AND RECOMMENDED USE

Department/Governmental Agencies: Proposed Use: Cascade Water Alliance Continued use as water reservoir

Other Parties wishing to acquire One Proposed Use: None private party

RES'S RECOMMENDED USE: Sell to Cascade Water Alliance

PROPERTY REVIEW PROCESS DETERMINATION (circle appropriate response)

1.) Is more than one City dept/Public Agency wishing to acquire? No / 15 Yes

2.) Are there any pending community proposals for Reuse/ No / 15 Disposal? Yes

3.) Have citizens, community groups and/or other interested No / 15 parties contacted the City regarding Yes any of the proposed options?

4.) Will consideration be other than cash? No / 10 Yes

5.) Is Sale or Trade to a private party being recommended? No / 25 Yes

6.) Will the proposed use require changes in zoning/other No /Yes 20 regulations?

7.) Is the estimated Fair Market Value between No / 10 $250,000-$1,000,000? Yes

8.) Is the estimated Fair Market Value over $1,000,000? No/ Yes 45

Total Number of Points Awarded for 60 "Yes" Responses:

Property Classification for purposes of Disposal review: Simple / Complex (circle one) (a score of 45+ points result results in a "Complex" classification)

Signature: David C. Hemmelgarn Department: FFD Date: 04/22/08

February 1, 2008

Dear Property Owner/Neighbor,

The City of Seattle has been reviewing its inventory of unused real property. The following City-owned vacant or unused property, located in your neighborhood, has been declared excess by Seattle Public Utilities (SPU):

PMA # Location Tax Parcel # Parcel Size Zoning 1260 Between 146th and 148th Avenues SE @ SE 44th St. 1524059013 2206700579 383,896 SF R 3.5 Bellevue

On behalf of SPU, the City's Fleets and Facilities Department (FFD) is contacting City departments and other public entities about potential public uses for these properties. As part of the city's disposition process, we are contacting community groups and property owners/residents within approximately 1000 feet of this City property to obtain input. Alternatives for disposition include reuse by another city department or public entity, leasing, or sale to a private party or public entity. SPU has proposed selling this property to the Cascade Water Alliance. At this time, we would like to know if you have any comments, concerns, suggestions, or recommendations about other uses or the proposed sale to the Cascade Water Alliance.

Comments are requested by March 3, 2008. Failure to participate at this stage of the disposition process may preclude further notice. You may write or send a fax with your comments to the Fleets and Facilities Department, Attn: David Hemmelgarn, PO Box 94689, Seattle, WA 98124-4689; FAX number (206)684-0525. You may call and speak with David Hemmelgarn (206) 684-0701. You may also reach him by email at the following: david.hemmelgarn@seattle.gov

NOTICE OF RECOMMENDATION

* The City of Seattle has determined that the city property, identified as PMA No.1260 -

Eastside Reservoir and shown on the map below, is excess and no longer needed by Seattle Public

Utilities (SPU) for municipal purposes.

* On behalf of SPU, the City's Fleets and Facilities Department is notifying property owner and residents

in the area to obtain input about reuse or disposition options for the property.

* SPU has recommended selling the Eastside Reservoir and its associated components and supply line

to the Cascade Water Alliance for continued use as a water facility.

* If you have comments, concerns, or suggestions about other uses or the proposed sale to the Cascade Water

Alliance, submit them to David Hemmelgarn, Fleets and Facilities Dept., P.O. Box 94689, Seattle WA 98124;

(206) 684-0701; FAX (206) 684-0525; e-mail at david.hemmelgarn@seatlle.gov.

* COMMENTS received by March 21, 2008 will be considered before the City Council makes any final

decision about reuse or disposition of this property.

Exhibit B to Attachment 1 SPU Eastside Reservoir Resolution

Public Involvement Report

PMA No. 1260

Eastgate Reservoir

The following is a report on the public notice provided and the comments received about the proposed reuse and disposal PMA 1260, the Eastside Reservoir.

On February 1, 2008, FFD/RES mailed the notice, attached as Exhibit A, to 465 property owners and residents within a 1000-foot radius of the subject property. The same notice was also sent to the City of Bellevue and several neighborhood groups in the area.

On February 14, 2008, FFD/RES constructed two large notice signs, attached as Exhibit B, on street frontages abutting the property.

Both the letter notices and the signs advised and informed the public that SPU proposed to sell the Eastside Reservoir property to the Cascade Water Alliance and solicited comments, concerns, suggestions, or recommendations about other uses or the proposed sale to Cascade Water Alliance.

Fifteen persons submitted their comments. Fourteen of these persons expressed no objection to the sale to the Cascade Water Alliance as long as the property continues to be used as a reservoir and the existing greenbelt around the reservoir would be preserved and not sold for some type of private development. One of the respondents expressed an interest in opportunities to buy portions of the property if it is put up for sale.

Inquiries about Cascade Water Alliance plans for the property were referred to Eugene Mantchev of SPU. Attached as Exhibit C is a copy of his standard response.

The City of Bellevue, a member of the Cascade Water Alliance, expressed its support of the proposed sale and mentioned several projects using portions of the reservoir property that could enhance recreation and/or open space at adjacent Eastgate Park. These projects include non-motorized trails that would provide neighboring residents access to Eastgate Park over and through the reservoir property.

Exhibit C to SPU Eastside Reservoir Resolution