Form revised February 6, 2008

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle Public Utilities	Ray Hoffman/4-5852	John McCoy/5-0768

Legislation Title:

AN ORDINANCE relating to Seattle Public Utilities; authorizing the Director of Seattle Public Utilities to execute an Amended and Restated 50-Year Declining Block Water Supply Agreement between the City of Seattle and Cascade Water Alliance.

· Summary of the Legislation:

This legislation would authorize Seattle Public Utilities (SPU) to amend an existing contract to supply water to the Cascade Water Alliance.  Under the contract, SPU supplies water up to a contract ceiling for a set annual price.  This proposed amendment would increase the contract ceiling by three million gallons per day (MGD) from 2009 to 2017, and by five MGD from 2018 to 2023.

· Background: (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

Cities and utility districts surrounding Seattle purchase water from SPU under long-term wholesale supply contracts.  In 2003, Seattle signed a 50-year contract with Cascade (which is made up of eight utilities, five of which were formerly direct wholesale customers of Seattle) to supply Cascade with a block of water of a certain size each year.  This contract was authorized by ordinance 121373.  The contract requires Cascade to pay for the full block of water, whether or not all of it is taken.  In addition, the contract provides for significant extra charges to Cascade should it take more water than the contract permits.  The block size is 30.3 MGD until the end of 2024.  It then gradually decreases to 5.3 MGD in 2045 where it remains until the end of the contract term.

Cascade now desires to increase its block size to ensure it has adequate water to meet the needs of its member utilities.  The increase would be three MGD for 2009 to 2017, and five MGD from 2018 to 2023.  After 2023, the block size reverts back to the original amount in the contract.

Seattle’s water system can supply 171 MGD on an average annual basis.  Current demand is approximately 125 MGD, or 73% of the supply.  The 27% of the system supply that is currently excess capacity provides for future growth, obviating the need to develop new supplies.  Cascade would be temporarily purchasing a portion of this capacity during a time when Seattle does not need it.  After 2023, the supply returns to Seattle.     

· Please check one of the following:

____ 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 project/programs associated with this ordinance had, or will have, appropriations in other legislation, please provide details in the Notes section below.

Fund Name and Number	Department	Budget Control Level*	2008 Appropriation	2009 Anticipated Appropriation
TOTAL

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

Notes: The budget for providing water to wholesale and retail customers is provided through the annual budget process.  This legislation will not have an effect on appropriations. 

Anticipated Revenue/Reimbursement: Resulting From This Legislation: This table should reflect revenues/reimbursements that are a direct result of this legislation.  In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Fund Name and Number	Department	Revenue Source	2008 Revenue	2009 Revenue
Water Fund 43000	Seattle Public Utilities	Water Sales	$0	$ 2,133,640
TOTAL			$0	$ 2,133,640

Notes:

The proposed legislation would increase wholesale revenues by $2.1 million in 2009.  This amount would increase over time at the same pace as wholesale rate increases.  Because the 2009-2011 rate proposal was finalized as this contract was still being negotiated, the rates assumed an additional $3.0 million in revenue, rather than $2.1 million.  This will put pressure on expenses and financial performance that we will manage over the rate cycle.

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

Position Title and Department	Position # for Existing Positions	Fund Name & #	PT/FT	2008 Positions	2008 FTE	2009 Positions*	2009 FTE*
TOTAL

* 2009 positions and FTE are total 2009 position changes resulting from this legislation, not incremental changes.  Therefore, under 2009, please be sure to include any continuing positions from 2008.

Notes: This legislation will not affect any positions.

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

Spending/Cash Flow: This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects).  Details surrounding spending that will occur in future years should be provided in the Notes section below the table.

Fund Name & #	Department	Budget Control Level*	2008 Expenditures	2009 Anticipated Expenditures
TOTAL

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

Notes:

· 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.)

The cost of not implementing this legislation is $2.1 million in annual water revenue.    

· What are the possible alternatives to the legislation that could achieve the same or similar objectives? (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

There are no alternatives to this legislation that produce the same objective.

· 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.)

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

Please list attachments to the fiscal note below: