Form revised February 12, 2004

FISCAL NOTE FOR CAPITAL PROJECTS ONLY

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle Public Utilities	Bob Hennessey / 5-0740	Cameron Keyes / 4-8048

Legislation Title: AN ORDINANCE relating to real property and facilities in or near the Kent Highlands Landfill in Kent, Washington; declaring certain property adjacent to the Landfill surplus to the City's needs and not required for providing continued public utility services; authorizing the sale of such property and easements to the City of Kent; authorizing acquisition of, and acceptance of the deed for, property located within the Landfill from the City of Kent; authorizing execution of an agreement for these conveyances and for the related decommissioning or relocation of facilities used in connection with the Landfill; authorizing amendment of a 1977 agreement with the City of Kent with respect to such facilities; adding a project for work related to the Landfill gas monitoring and leachate conveyance systems to the Capital Improvement Program for the Solid Waste Fund; and increasing the appropriation to Seattle Public Utilities with respect to that project.

Summary of the Legislation:

This legislation provides authority for Seattle Public Utilities (SPU) to enter into an agreement with the City of Kent for the purchase and sale of multiple properties (or easements in such properties) in and near the Kent Highlands Landfill and for the decommissioning or relocation of landfill-related facilities on these properties. The legislation authorizes amendment of a 1977 agreement allowing for the transport of leachate from the Kent Highlands Landfill through the City of Kent. The legislation also adds a project to the Capital Improvement Program for the Solid Waste Fund for work related to the Landfill gas monitoring and leachate conveyance systems (including design work for a leachate force main to be constructed at Kent’s expense pursuant to the agreement), and increases the appropriation to SPU with respect to that project.

Background

The S. 228^th Street Extension Project would construct a new five-lane arterial section in the City of Kent as part of the Freight Action Strategy for Everett-Seattle-Tacoma (FAST) effort to improve freight mobility in the region. To build the project, the City of Kent must acquire property owned by the City of Seattle that serves as a buffer around the Kent Highlands Landfill. The landfill, which accepted municipal waste from 1968 until 1986, is on the federal government’s National Priorities (Superfund) List.

On October 24, 2003, Kent filed a petition in King County Superior Court to condemn 1,101,811 square feet of Seattle property immediately north of the landfill and asked Seattle to grant Kent immediate possession and use of the property. SPU staff advised Kent that Seattle would oppose a condemnation and offered, instead, to negotiate a master agreement.

The proposed master agreement has six primary elements: 1) Seattle’s receipt of fair market value for property and easements; 2) Seattle’s retention of easements for environmental monitoring and potential remediation in all property transferred; 3) Kent’s indemnification of Seattle for incremental costs of future remediation attributable to Kent’s purchase and improvement of the property; 4) Kent’s decommissioning or relocation of SPU facilities impacted by the project; 5) Seattle’s payment in lieu of a Local Improvement District (LID) assessment for remaining Seattle parcels; and 6) exchange of property and Seattle’s grant of a public utility and access easement, all in the immediate area, enabling Seattle to obtain ownership of all property within the landfill and to reduce potential liability for Frager Road, currently a pedestrian/bicycle trail with limited vehicle access.

Initially, Kent’s appraisers valued the Seattle property to be taken for the project at approximately $1 million and indicated there would be a LID assessment of $879,000 on Seattle’s remaining property. City staff had questions regarding both figures and hired an appraiser to review Kent’s methodology. Concurrent with that, SPU determined it would be advantageous to transfer to Kent certain additional adjacent property, while retaining environmental easements. Kent agreed to purchase both the original project take and the added properties, increasing the total value of the Seattle real estate sold to $1.3 million and decreasing the payment in lieu of LID assessment on Seattle’s remaining parcels to $395,000, for a net purchase price of $935,186.

Under the agreement, Kent would also decommission/relocate 18 SPU environmental monitoring facilities located in the property conveyed to Kent. Kent also agreed to replace SPU’s existing leachate pipeline under the Green River with a new pipeline to be hung from a bridge over the river and to relocate portions of the pipeline east of the river. The cost of this work is estimated at $300,000 and would be borne by Kent, except for the leachate forcemain design and the decommissioning of two monitoring facilities (estimated at $25,000 and $28,000, respectively). This SPU cost of $53,000 in 2004 would be funded through a new project which the proposed legislation adds to the 2004 Adopted Solid Waste CIP. Future elements of that SPU project include evaluation of the capacity of the existing leachate pump station and other work related to modification and improvement of the Landfill gas monitoring and leachate conveyance systems.

Project Name:	Project I.D.	Project Location:	Start Date:	End Date
Kent Highlands Landfill Gas Monitoring and Leachate Conveyance	C204003	Kent Highlands Landfill	Q1 2004	Q4 2007

· Please check any of the following that apply:

__X_ This legislation creates, funds, or anticipates a new CIP Project. (Please note whether the current CIP is being amended through this ordinance, or provide the Ordinance or Council Bill number of the separate legislation that has amended/is amending the CIP.)

____ This legislation does not have any financial implications. (Stop here and delete the remainder of this document prior to saving and printing.)

__X_ This legislation has financial implications. (Please complete all relevant sections that follow.)

Appropriations: This table should reflect appropriations that are a direct result of this legislation. In the event that the projects associated with this ordinance have appropriations that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below. Finally, if this legislation does not directly change an appropriation, but results in budget authority being moved within a Budget Control Level, or to a Budget Control Level (up to 10%), please explain in the Notes section below.

Fund Name and Number	Department	Budget Control Level*	2004 Appropriation	2005 Anticipated Appropriation
Solid Waste Fund (45010)	Seattle Public Utilities	Rehabilitation & Heavy Equipment (C240B)	$53,000	$100,000
TOTAL			$53,000	$100,000

*See budget book to obtain the appropriate Budget Control Level for your department.

Notes: The 2004 appropriation requested in this legislation funds required design work associated with the City of Kent agreement to relocate the existing Kent Highlands Landfill leachate force main (estimated at $25,000) and the decommissioning of two gas monitoring facilities (estimated at $28,000). SPU has agreed in principal to complete the force main relocation design at SPU’s expense and Kent will fund the construction. This relocation is necessitated by Kent’s 228^th street road construction project. Additional future elements of this new SPU CIP project (to be funded by SPU, and reflected in the Spending Plan table below) will include evaluation of the capacity of the existing leachate pump station, possible rehabilitation or replacement of the aging structure, and the abandonment of two existing gas extraction wells on property being transferred to the City of Kent.

This legislation requests appropriation in the amount of $53,000 in the 2004 Rehabilitation & Heavy Equipment budget control level for the new CIP project. Appropriation for 2005-2007 expenditures is not being requested at this time. SPU will request this funding in its 2005-2010 CIP Budget Proposal.

Spending Plan and Future Appropriations for Capital Projects: Please list the timing of anticipated appropriation authority requests and expected spending plan. In addition, please identify your cost estimate methodology including inflation assumptions, the projected costs of meeting applicable LEED standards, and the percent for art and design as appropriate.

Spending Plan and Budget	2004	2005	2006	2007	2008	Total
Spending Plan	53,000	100,000	200,000	20,000	0	373,000
Current Year Appropriation	0	0	0	0	0	0
Future Appropriations		100,000	200,000	20,000	0	320,000

Notes: The total estimated cost of the new CIP project (total spending plan) is $373,000. This Council Bill requests appropriation in the amount of $53,000 for 2004. Appropriation for 2005-2007 expenditures will be requested in SPU’s 2005-2010 CIP Budget Proposal.

Funding source: Identify funding sources including revenue generated from the project and the expected level of funding from each source.

Funding Source (Fund Name and Number, if applicable)	2004	2005	2006	2007	2008	Total
Proceeds from sale of property to City of Kent, to be deposited in the Solid Waste Fund (45010)	$935,186					$935,186
TOTAL	$935,186					$935,186

Notes: The sale of property to Kent authorized by the proposed legislation will generate $935,186 in revenue, which will be deposited in the Solid Waste Fund. SPU expects to fund the 2004-2007 expenditures for the new CIP project (these expenditures are shown above under Spending Plan and Budget) with the proceeds from the property sale.

Bond Financing Required: If the project or program requires financing, please list type of financing, amount, interest rate, term and annual debt service or payment amount. Please include issuance costs of 3% in listed amount.

Type	Amount	Assumed Interest Rate	Term	Timing	Expected Annual Debt Service/Payment
TOTAL

Notes: See notes above regarding Funding Source. A separate revenue bond issue to fund this project is not required

Uses and Sources for Operation and Maintenance Costs for the Project: Estimate cost of one-time startup, operating and maintaining the project over a six year period and identify each fund source available. Estimate the annual savings of implementing the LEED Silver standard. Identify key assumptions such as staffing required, assumed utility usage and rates and other potential drivers of the facility’s cost.

O&M	2004	2005	2006	2007	2008	2009	Total
Uses
Start Up
On-going
Sources (itemize)

Notes: There will be minimal ongoing maintenance costs associated with the relocation of the leachate force main. O&M estimates are still to be determined.

Periodic Major Maintenance costs for the project: Estimate capital cost of performing periodic maintenance over life of facility. Please identify major work items, frequency.

Major Maintenance Item	Frequency	Cost	Likely Funding Source
TOTAL

Notes: Major maintenance costs associated with the new CIP project are still to be determined.

Funding sources for replacement of project: Identify possible and/or recommended method of financing the project replacement costs.

Total Regular Positions Created Or Abrogated Through This Legislation, Including FTE Impact: This table should only reflect the actual number of positions created by this legislation In the event that positions have been, or will be, created as a result of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Position Title and Department*		Fund Name	Fund Number	Part-Time/ Full Time	2004 Positions	2004 FTE	2005 Positions**	2005 FTE**
	TOTAL

* List each position separately

** 2005 positions and FTE are total 2005 position changes resulting from this legislation, not incremental changes. Therefore, under 2005, please be sure to include any continuing positions from 2004.

Notes: There are no position requirements.

· Do positions sunset in the future? (If yes, identify sunset date):

N/A

· What is the financial cost of not implementing the legislation: (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented):

This Master Agreement and voluntary sale was negotiated in lieu of condemnation proceedings. A hostile condemnation would involve substantial legal effort, lasting as long as a year, and would result in a shifting of significant capital costs to Seattle Public Utilities.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives (Include any potential alternatives to the proposed legislation, including using an existing facility to fulfill the uses envisioned by the proposed project, adding components to or subtracting components from the total proposed project, contracting with an outside organization to provide the services the proposed project would fill, or other alternatives):

The City of Seattle could refuse to sell the property and litigate Kent’s assertion of the “public use and necessity’ in condemnation proceedings.

· Is the legislation subject to public hearing requirements: (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future?)

Yes, this legislation is subject to a public hearing.

· Other Issues (including long-term implications of the legislation):

The property in question was acquired by the City of Seattle to serve as a buffer around the Kent Highlands Landfill but is no longer needed. Portions of the property had elevated landfill gas concentrations prior to initial remedial action. Since 1995, all probes on these parcels have shown readings well below compliance standards. Potential remedial actions, if required at some later date, would likely occur on landfill property that Seattle retains. With respect to groundwater, it is considered very unlikely the landfill will impact groundwater under the properties transferred to Kent. Similarly, the roadway project is not expected to have negative effects on groundwater migration to the landfill.

Please list attachments to the fiscal note below: None.