Form revised April 10, 2006

FISCAL NOTE FOR CAPITAL PROJECTS ONLY

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle Public Utilities	Martin Baker/684-5984	John McCoy  5-0768

Legislation Title:

AN ORDINANCE relating to the acquisition of approximately 4.0 acres of property composed of  uplands, banks and submerged lands of Slip 4 (“the Property”), an arm of the Lower Duwamish Waterway, from Crowley Marine Services, Inc. and its related entities; authorizing a Purchase and Sale Agreement and acceptance of a Special Warranty Deed for the Property; and placing the Property under the jurisdiction of Seattle Public Utilities.

Summary and background of the Legislation:

Summary action:

This action is a necessary step in implementing the EPA-approved alternative for sediment remediation of Slip 4 being done by the City under the Duwamish Superfund cleanup.  The total cost of the remediation, including the required purchase of the property discussed here, is being shared by the City and King County under existing agreements.  SPU and City Light each bear 25% of the cost of implementing the cleanup and King County bears 50% of the cost.  These costs may be partially reimbursed by other potentially responsible parties through future voluntary allocation proceedings or through contribution actions brought by the City and County under the federal or state cleanup laws.

This legislation authorizes the City to acquire a portion of Slip 4, designated by EPA as the total cleanup area, for up to $550,000. The City will hold legal title to the property which will remain under the management of SPU.   

Lower Duwamish Superfund area context

In 2001, the U.S. Environmental Protection Agency (EPA) declared the Lower Duwamish Waterway a Superfund site under the Comprehensive Environmental Response, Compensation, and Liability Act.  The City of Seattle, King County, the Port of Seattle, and the Boeing Company (the Parties) executed an Administrative Order on Consent with EPA and the Washington State Department of Ecology for a remedial investigation and feasibility study to determine the nature and extent of sediment contamination.  The studies will allow EPA and Ecology to determine what cleanup they will require within the site. A Record of Decision is expected from EPA in 2008.  

Slip 4 Early Action site, King County partnership, liability allocation timing

After preliminary studies the Parties identified several sites within the five mile-long Lower Duwamish Superfund site warranting early action clean-up.  The City and King County agreed to undertake the clean-up of one of those sites, Slip 4.  The City, through a Memorandum of Agreement with King County, agreed to manage the cleanup with the County as a 50/50 cost share partner. Allocation proceedings to determine the ultimate liability shares for all potential responsible parties will occur no later than three years from the end of the remediation and EPA’s acceptance of the cleanup.

EPA selected alternative

After completing engineering evaluation and cost analysis that considered four alternatives ranging from a minimal dredge/maximum cap alternative to a full dredge and cap alternative, EPA selected a moderate dredge and extensive cap cleanup alternative to achieve an appropriate level of human and ecological risk reduction and protection.  This alternative also maximized the extent of habitat treatment in the cleanup area. Because the selected cleanup alternative precludes the future use of one of the Crowley Marine Services berthing areas, it requires the purchase of Crowley’s property within the cleanup boundary and specific institutional controls to provide long-term protection of the cap. Eliminating the need to dredge deeply enough to accommodate barges in that area of Slip 4 reduces cleanup costs by approximately $1.5 million. 

The budget authority for this purchase is already included in SPU’s CIP in the Habitat and Sediments BCL and in City Light’s Facilities Environmental Remediation Project.  

King County will reimburse SPU for 50% of the costs and Seattle City Light will reimburse SPU for 25% of the costs, leaving a net cost to SPU of approximately $137,500.

Project Name:	Project I.D.	Project Location:	Start Date:	End Date
Sediment Remediation WW Sediment Remediation DRN	C3502 C3501	Duwamish Waterway	2007	2007

The start and end dates reflect the expectation that the purchase of the property will conclude in 2007, not that the whole CIP project will be done in 2007.

· Please check any of the following that apply:

____ 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*	2006 Appropriation	2007 Anticipated Appropriation
TOTAL

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

Notes: 

The 2007 CIP budget has sufficient authority to cover the costs of this purchase.  In SPU, the authority is in programs C3501 and C3502.  In City Light, it resides in Project 9152 - Facilities Environmental Remediation.

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	2006	2007	2008	2009	2010	2011	Total
Spending Plan		$550,000
Current Year Appropriation
Future Appropriations

Notes: Purchase of this property does not influence the overall spending plan for the Duwamish Superfund as reflected in the 2006/2010 CIP.

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)	2006	2007	2008	2009	2010	2011	Total
SPU Drainage Fund		330,000					330,000
SPU Wastewater Fund		220,000					220,000
TOTAL		550,000					550,000

Notes:

As part of the cost sharing agreement for implementing the EPA preferred alternative for clean-up of Slip 4, King County will reimburse SPU for $275,000 and SCL will reimburse SPU for $137,500 so that the net cost to SPU will be $137,500.

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

No special bond funding will be required for this purchase.

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	2006	2007	2008	2009	2010	2011	Total
Uses
Start Up
On-going
Sources (itemize)

Notes:

The acquisition of the property will not involve O & M. The remediation of the site will require some longer term monitoring which has been accounted for in the estimates for the cleanup itself.

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

No major maintenance is anticipated.

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

No project replacement is anticipated

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	2006 Positions	2006 FTE	2007 Positions**	2007 FTE**
	TOTAL

*   List each position separately

** 2007 positions and FTE are total 2007 position changes resulting from this legislation, not incremental changes. Therefore, under 2007, please be sure to include any continuing positions from 2006.

Notes:

No positions are anticipated or included in this legislation

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

· 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):

Not implementing the legislation would preclude the cleanup being done as ordered by EPA.  This would be followed by a federal compliance order and possible fines for non-compliance with the order and the federal Superfund Law. EPA could bring legal action against the City to proceed with a deeper dredge cleanup that allows for continued use of the berth for barge commerce and potential court action. A deeper dredge cleanup would cost the City substantially more – approximately $1.5 million more than EPA’s chosen alternative with the purchase of the property. 

· 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 only alternative to the legislation is to implement a cleanup alternative that does not require the purchase of the property. The least costly alternative which does not require this purchase is approximately $1.5 million more costly than the selected option with the purchase of the property. However, this option may only be theoretical since EPA has made a decision in their Action Memorandum dated May 6, 2006, and will proceed to issue a regulatory order to the City to carry out this alternative. 

· 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?)

There are no public hearing requirements for the purchase of the property. EPA held public hearings and took public comment on the selection of the cleanup option which includes the purchase of the property. The majority of the testimony supported the selected alternative.

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

Please list attachments to the fiscal note below:

No attachments