ASSUMPTION STUDY. City of Bellevue Water & Sewer Area in the City of Issaquah City Limits August Prepared for: City of Issaquah

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1 ASSUMPTION STUDY City of Bellevue Water & Sewer Area in the City of Issaquah City Limits August 2013 Prepared for: City of Issaquah Prepared by: RH2 Engineering, Inc th Drive SE, Suite 210 Bothell, WA (425)

2 ASSUMPTION STUDY City of Bellevue Water & Sewer Area in the City of Issaquah City Limits August 2013 Prepared for: City of Issaquah Prepared By: RH2 Engineering, Inc. Bothell, WA 8/15/2013 8/15/2013 8/15/2013 8/15/2013

3 Table of Contents Section 1 - Executive Summary Service Areas Water System Consumption Sewer System Discharge Single-family Residential Monthly Billing Impact... 2 Section 2 - Boundary Review Board Objectives RCW 36.70A Growth Management Act King County Comprehensive Plan/Countywide Policies Issaquah RCW Objectives of Boundary Review Board... 4 Section 3 - Assumption Summary Statistics... 6 Section 4 - Water Assets to be Assumed Storage Facilities Pump Stations Well and Well Pump Stations Pressure Reducing Station Interties Water Source of Supply Water Main... 7 Section 5 - Water Cost Components Existing Storage Facilities Valuation Existing Water Main Valuation System Separation Cost Using Shared Facilities and Supply (preferred approach) System Separation Cost Without Shared Facilities or Supply (not preferred) Bellevue s Water Comprehensive Plan Deficiency Cost Section 6 - Sewer Assets to be Assumed Gravity Sewer System Section 7 - Sewer Cost Components Sewer Main Costs System Separation Cost Using Shared Facilities (preferred approach) Physical System Separation Cost Without Shared Facilities (not preferred) Bellevue s Sewer Comprehensive Plan Deficiency Cost Section 8 Level of Service Section 9 - Financial Analysis and Rate Impact Current Bill Impact Separation Cost Impact Operating Impact Financial Impacts Financial Viability Summary References and Data Utilized in Analyses i P a g e

4 List of Tables Table 3-1: Service Areas... 6 Table 3-2: Assessed Values... 6 Table 3-3: Water Consumption and Sewer Discharge... 7 Table 4-1: Water Main Size, Material, and Length Summary... 8 Table 4-2: Water Main Date of Installation Summary... 8 Table 5-1: Storage Facilities Valuation... 9 Table 5-2: Water Main Valuation... 9 Table 5-3: Water System Separation Project Costs Table 6-1: Sewer Main Size, Material, and Length Summary Table 6-2: Sewer Main Date of Installation Summary Table 7-1: Sewer Main Valuation Table 8-1: Policies Comparison Table 9-1: Billing Rates Table 9-2: Average 1-Month Utility Bill Table 9-3: Seperation Cost to Issaquah Appendices Appendix A - Revised Code of Washington Sections Appendix B - King County Countywide Planning Policies Appendix C - City of Issaquah Comprehensive Plan - Utilities and Public Services Element Appendix D - Pipe Cost Estimates Appendix E - Programs in Bellevue s 2006 Water Comprehensive Plan Appendix F - Sample Shared Use Agreements Appendix G - Operation and Maintenance FTE Analysis Appendix H - Legal Boundary Description ii P a g e

5 Section 1 - Executive Summary The City of Issaquah (Issaquah) owns, operates, and maintains water and sewer systems within its incorporated city limits. However, not all Issaquah residents are served by the city's water and sewer systems, some customers are served by the City of Bellevue (Bellevue). Consistent with its Comprehensive Plan Policy, Issaquah desires to serve all residents within the incorporated city limits utilizing city-owned water and sewer systems. The process by which this would occur is called assumption of jurisdiction or simply assumption. Through this process, Issaquah would assume jurisdiction for water and sewer service responsibilities, property, facilities, and equipment held by Bellevue that are located within the Issaquah city limits. The assumption of jurisidction for water and sewer from Bellevue to Issaquah will follow the procedures of the Revised Code of Washington (RCW) 35.13A, which is consistent with RCW (see Appendix A for RCWs). This assumption would provide a uniform and efficient level of service to all Issaquah residents and allow them reasonable and efficient access to their water and sewer policymakers and, therefore, rate setting and control. The citizens in the proposed assumption area currently must go to the City of Bellevue for matters related to water and sewer service, yet they do not have the ability to vote on policies and policy makers for Bellevue because they do not reside within Bellevue city limits. The proposed assumption would increase efficiency by reducing the fragmentation and overlapping jurisdictions that currently exist. In addition, the proposed assumption is consistent with a number of existing statutes, including the State Growth Management Act, and City and County policies related to land use and the provision of urban services. These are detailed in Section 2 of this report. Service Areas 1.8% There are a number of important details related to this proposed assumption which are discussed further in the body of this report but which are summarized here. 98.2% Issaquah Assumption Area Remaining Bellevue Service Area 1.1 Service Areas If the assumption is implemented, Issaquah will assume jurisdiction over 380 acres or 1.8 percent of Bellevue s current water and sewer service area. Bellevue will retain jurisdiction over the remaining 20,488 acres or 98.2 percent of its current water service area. 1.2 Water System Consumption Water consumption in millions of gallons of water per day (mgd) was also reviewed to help identify the magnitude of the assumption. Based 1 P a g e

6 M G D Water System Consumption M G D 5 0 Pre- Assumption Post Assumption Sewer System Discharge Pre- Assumption Post Assumption on available Bellevue data, Bellevue s water consumption was 15.7 mgd and is expected to be mgd post-assumption, a reduction of 1.4 percent. Bellevue would continue to consume 98.6 percent of the pre-assumption total. Issaquah s consumption is expected to increase 14.0 percent from 1.52 mgd to 1.73 mgd. 1.3 Sewer System Discharge Based on available Bellevue data, Bellevue s sewer discharge was mgd and is expected to be mgd post-assumption, a reduction of 1.4 percent. Bellevue would continue to consume 98.6 percent of the pre-assumption total. Issaquah s consumption is expected to increase 11.2 percent from mgd to mgd. 1.4 Single-family Residential Monthly Billing Impact In evaluating the impact to a typical single-family customer, it is projected that after assumption a single-family customer using 190 gpd (the City of Issaquah average from , per Issaquah Draft 2012 Water System Plan Update) will have a combined water and sewer bill of $95.57 per month with Issaquah, versus $ per month with Bellevue (without assumption). See Section 9 of this report for more information. The trend over time has been toward greater water conservation. Issaquah s 2012 single family average water consumption is just 150 gpd. Monthly W+S Bill Monthly Billing Comparison $110 $ $100 $95.57 $90 $80 Bellevue Issaquah Section 2 - Boundary Review Board Objectives Chapter RCW establishes the Boundary Review Board (Board) for King County (County). The Board provides independent, quasi-judicial review of proposals for creation of or changes to boundaries by cities and by special purpose districts. Through this review process, the Board ensures logical growth in the communities of the County. The Board s role is to implement existing laws; the Board does not have the authority to make law or policy. State law provides in RCW that Board decisions must be consistent with three sections of the Growth Management Act: RCW 36.70A.020 Planning Goals RCW 36.70A.110 Urban Growth Areas RCW 36.70A.210 Countywide Planning Policies Following is a brief discussion of these areas and associated documents. 2 P a g e

7 2.1 RCW 36.70A Growth Management Act The Growth Management Act encourages development in urban areas with cities being the unit of local government most appropriate to provide urban governmental services. RCW citations supporting this development are as follows. RCW 36.70A.020 (12) intends to ensure that adequate public services and facilities are available to serve land use developments. RCW 36.70A.110 (4) states, in general, cities are the units of local government most appropriate to provide urban governmental services. Bellevue staff have indicated they support this assumption. RCW 36.70A.210 (1) states, RCW 36.70A.210 (1) states, cities are primary providers of urban governmental services within urban growth areas. For this particular assumption, the citizens of Issaquah are provided water and sewer services by a different city than the one in which they reside. The assumption would allow Issaquah to provide water and sewer service to its residents. Bellevue staff have indicated they support this proposed change. 2.2 King County Comprehensive Plan/Countywide Policies The County's Comprehensive Plan/Countywide Policies FW-29 and FW- 30 address the need for jurisdictions to plan for and coordinate services. Numerous County/Countywide Policies are also relevant, including, but not limited to those policies that address requirements for urban services for growth (e.g., CO-1, CO-3); support for conservation, efficiency, cost effectiveness, new technologies and responsible growth (e.g., CO-2, CO-4 through CO-9). Again, water and sewer services are provide to the assumption area by a city; however, it is not the same city in which those residents reside and vote. This assumption of jurisdiction will correct that, allowing Issaquah residents to be served by the City of Issaquah. See Appendix B for King County Countywide Planning Policies. 2.3 Issaquah According to Issaquah s Comprehensive Plan Utilities and Public Services Element, the Vision and Values of the Utilities and Public Services Element include the statement that, the City of Issaquah is committed to providing high quality and efficient public services and utilities to its residents. As part of Issaquah s values, the community s utility and public service vision identify the City s commitment to providing all residents with the efficient and equitable services and facilities. Included with Issaquah s Visions and Values is, maintaining and improving public services required by the community. 3 P a g e

8 See Appendix C for Issaquah s Comprehensive Plan Utilities and Public Services Element. The assumption of jurisdiction by Issaquah from Bellevue for the Issaquah citizens is consistent with Issaquah s Comprehensive Plan. These objectives primarily apply to incorporations of or annexations to cities and districts, but also must be considered for assumptions of jurisdiction. Not all of the objectives shown in this study must be met for a proposal to be approved. 2.4 RCW Objectives of Boundary Review Board The decisions of the Board shall attempt to achieve the following objectives from RCW , as well as consider other statutes and goals. The following are summary responses to assist the reader with understanding the proposed assumption of jurisdiction by Issaquah. Not all of the objectives shown in this section must be met for a proposal to be approved. Factors to be considered by the Board are outlined in RCW and include, but are not necessarily limited to: land area and land uses; comprehensive plans; topography and natural boundaries and drainage basins; municipal services; costs and adequacy of services, future needs/controls for services; effect on financial operations; effects on mutual economic and social interests; and effects on local governmental structures. (1) Preservation of natural neighborhoods and communities Response: One-hundred percent of the service area to be assumed is within Issaquah s city limits. The existing neighborhoods and communities will be preserved and Issaquah has already established zoning for the undeveloped areas via its Comprehensive Plan. The proposed utility assumption will not change these designations. Issaquah has made a commitment to the constituents in the assumption area to provide consolidated local services. Assumption by Issaquah would provide uniform services from a sole provider. This will enhance citizens relationships with their community and government, as well as provide more convenient service. (2) Use of physical boundaries, including but not limited to bodies of water, highways, and land contours Response: The existing city limits were established through proper annexations which provided review of physical boundaries at that time. The proposed utility assumption will not change the established limits and is identified by a legal boundary. (3) Creation and preservation of logical service areas Response: The proposed utility assumption will revise service areas for water and sewer to match Issaquah and Bellevue city limits. Constituents that reside in Issaquah and receive water and sewer 4 P a g e

9 service from Bellevue currently have a the ability to vote on policies and policy makers for Issaquah water and sewer service because they reside in Issaquah city limit. It is logical for constituents to have their voting power in Issaquah aligned with the services they control with their votes. Therefore, revisions of Issaquah s water and sewer service areas to match its city limits provides the most logical service area. Additionally, Bellevue staff have agreed that the proposed assumption is the preferred approach. Issaquah has a regulatory authority and responsibility to provide public services to all of its citizens, and the consolidation of service within Issaquah s city limits provides the logical service area. Issaquah has sufficient facilities and financial resources to provide water and sewer services to its citizens within the assumption area. Following the assumption, Bellevue would continue to retain a logical service area contiguous with its city limits. Bellevue will also retain sufficient facilities and financial resources to provide water and sewer services to Bellevue s citizens. No abnormal or irregular boundaries are proposed for the assumption. The boundaries are consistent with the existing Issaquah city limits. (4) Prevention of abnormally irregular boundaries Response: No abnormal or irregular boundaries are proposed for the assumption. The boundaries are consistent with the existing Issaquah city limits and Bellevue city limits. (5) Discouragement of multiple incorporations of small cities and encouragement of incorporation of cities in excess of ten thousand population in heavily populated urban areas Response: Assumption would eliminate an overlapping layer of government in the incorporated area of Issaquah. Assumption will not change incorporated boundaries. (6) Dissolution of inactive special purpose districts Response: This objective does not apply as the assumption does not involve special purpose districts, and Bellevue s water and sewer utilities will not become inactive as a result of partial assumption. (7) Adjustment of impractical boundaries Response: The existing water and sewer service boundaries are considered impractical because they do not match Bellevue and Issaquah city limits. The assumption will adjust the boundaries so they match and are most practical. 5 P a g e

10 (8) Incorporation as cities or towns or annexation to cities or towns of unincorporated areas which are urban in character; and Response: The proposed assumption will not change the current designations of urban and rural lands. The levels of service (LOS) will continue to be consistent with the character and density as designated in the Issaquah Comprehensive Plan. (9) Protection of agricultural and rural lands which are designated for long term productive agricultural and resource use by a comprehensive plan adopted by the county legislative authority. Response: Agricultural and rural lands are located outside the proposed area of assumption and are generally protected by the King County Comprehensive Plan. These lands will not be affected by this assumption % Service Areas 1.80% Issaquah Assumption Area Remaining Bellevue Service Area Section 3 - Assumption Summary Statistics Based on information available to RH2 Engineering, Inc., (RH2), the following tables summarize statistics for the assumption. Jurisdiction Table 3-1: Service Areas Area (acres) Percentage of Area Issaquah Assumption Area % Remaining Bellevue Service Area 20, % Total Bellevue Service Area 20, % Assessed Values 1.30% Issaquah Assumption Area Remaining Bellevue Jurisdiction Table 3-2: Assessed Values Assessed Value Percentage of Value Issaquah Assumption Area $ 358,775, % Remaining Bellevue $ 27,138,948, % TOTAL $ 27,497,724,037 Note: From Since the assessed values of properties in the services areas are less than 60 percent, RCW 35.13A.030 does not apply. 6 P a g e

11 Table 3-3: Water Consumption and Sewer Discharge Jurisdiction Water (mgd) Sewer (mgd) Issaquah Assumption Area Remaining Bellevue Service Area Total Section 4 - Water Assets to be Assumed The facilities to be assumed from Bellevue by Issaquah are necessary to permanently serve the Issaquah constituents in the assumption area. Figure 4-1: Existing System to be Assumed contains a map showing the water facilities to be assumed by Issaquah. 4.1 Storage Facilities Under the proposed assumption, Bellevue s 270 Zone storage reservoir would be assumed by Issaquah. The reservoir is a 1.0-million-gallon (MG) concrete reservoir constructed in Pump Stations No pump stations will be assumed. 4.3 Well and Well Pump Stations No well and well pump stations will be assumed. 4.4 Pressure Reducing Station No pressure reducing stations will be assumed. 4.5 Interties No water system interties will be assumed. 4.6 Water Source of Supply No water supply sources will be assumed. The source of water supply for the assumption is water purchased by Bellevue from the Cascade Water Alliance (CWA). CWA purchases water from Seattle and provides it to Bellevue and other CWA members. 4.7 Water Main Under the proposed assumption, Issaquah would assume the following water mains shown in Table 4-1. Table 4-2 summarizes the years the pipes were installed. 7 P a g e

12 Table 4-1: Water Main Size, Material, and Length Summary Water Main Size (diameter) AC (feet) CI (feet) DI (feet) PVC (feet) Total Length % of Total 4" and Smaller 317 6, ,433 12% 6" 6, ,702 11% 8" 19,229 20, ,997 65% 10" % 12" 4,736 2,847 7,583 12% TOTAL 30, , , % % of TOTAL 49% 0% 50% 1% 100% Table 4-2: Water Main Date of Installation Summary Water Main Year and Length (feet) Water Main (diameter) After s 1980s 1970s 1960s 1950s Total Length % of Total 4" and Smaller 250 1,421 5, ,433 12% 6" 68 5,547 1,087 6,702 11% 8" 3,461 1,004 4,683 27,287 3, ,997 65% 10" % 12" ,888 1,055 4,515 7,583 12% TOTAL 3,725 1,114 8,060 39,472 9,256 61, % % of TOTAL 6% 2% 13% 64% 15% 100% Section 5 - Water Cost Components This section provides an engineering basis for determining the value of the existing physical facilities which serve the area to be assumed, costs for separating the systems, and costs from Bellevue s Capital Improvement Plan. The costs provided are consistent with the Board s need to consider valuations; however, in accordance with RCW 35.13A monetary transfers do not occur for the facilities. The cost components include: Existing system valuation; o Replacement cost using present day costs; o Replacement cost less depreciation (using straight line depreciation through year 2012); System Separation Cost Using Shared Facilities and Supply; System Separation Cost Without Shared Facilities or Supply; and Bellevue s Capital Improvement Plan cost. 8 P a g e

13 The physical facilities that were analyzed under these cost components include only those facilities which will be assumed. Refer to Section 9 of this report for discussions regarding financial analysis. 5.1 Existing Storage Facilities Valuation Valuation costs for the existing 270 Zone reservoir in the assumption area are presented in Table 5-1. Reservoir Table 5-1: Storage Facilities Valuation Replacement Cost Replacement Cost Less Depreciation 270 Zone $1,900,000 $700,000 1 Based on assumed service life of 50 years. 2 Year constructed is Existing Water Main Valuation Valuation costs for the existing water main in the assumption area are presented in Table 5-2. Replacement costs were based on an average cost per linear foot according to estimates shown in Appendix D. Water Main Size (Diameter) Table 5-2: Water Main Valuation Replacement Cost Replacement Cost Less Depreciation 1 4" and Smaller $1,656,000 $964,000 6" $1,696,000 $891,000 8" $11,159,000 $6,509,000 10" $14,000 $8,000 12" $2,116,000 $1,064,000 TOTAL $16,641,000 $9,436,000 1 Based on a service life of 75 years per Bellevue s 2006 Water Comprehensive Plan Chapter System Separation Cost Using Shared Facilities and Supply (preferred approach) Table 5-3 lists projects and costs that are anticipated to be needed to allow the systems to function separately using shared facilities while maintaining existing hydraulic capabilities and LOS to customers. These projects are shown in Figure 5-1: Proposed Improvements Shared System Operation Option. These projects are anticipated to separate operational elements of the systems and, therefore it is assumed they will be implemented with assumption; no phasing is shown. Descriptions of the projects follow. Planning-level total project costs are shown in Table 5-3 and should be refined as project details evolve. Planning-level cost estimates in Table 5-3 were developed using bid tabs and/or historical pricing of similar 9 P a g e

14 Project Description facilities and projects. These projects could be paid for using water rates, a bond and/or wholesale or other agreed rates between jurisdictions. Hydraulic modeling performed on the system indicated an area of low pressure and inadequate fire flow per Issaquah standards. The area has been identified and is shown in Figure 5-1. These areas of low pressure and fire flow deficiency exist prior to assumption and would continue to remain after assumption. Table 5-3: Water System Separation Project Costs Approx. Cost Restrictions W-S1 270 Zone Interties (two-way, 2 each) $188,000 Traffic impact W-S2 Transfer Water Services (3 Each) $15,000 Temp easement req d W-S3 Telemetry/SCADA $25, TOTAL $228, Zone Interties This project would include construction of two interties, as shown in Figure 5-1, each with two meters for each direction of flow and the 270 Zone Sammamish Reservoir would become a shared use facility. Water supply for the assumption area in Issaquah (customers and the 270 Reservoir) would be provided by Bellevue, creating the need for the first direction in metering. Then water from the 270 Reservoir could be provided through intertie locations back to the Bellevue customers, if desired, which would require the need for the second direction. Bellevue has modeled its water system and indicated that Bellevue may not need storage in the Sammamish Reservoir after assumption to provide water to Bellevue customers. This could eliminate the need for the second direction meter; however, elimination of the second meter would not substantially reduce project costs and, therefore, the project cost shown for the interties is sufficient for this planning analysis. Transfer Water Services (3 each) Based on available mapping, it is anticipated that three water services will need to be transferred so that Issaquah and Bellevue residents will be served by their corresponding city s water system. These properties are shown in Figure 5-1. Telemetry Telemetry improvements are required to integrate the water system to be assumed, particularly the reservoir, into Issaquah s existing telemetry system. 10 P a g e

15 Project Description 5.4 System Separation Cost Without Shared Facilities or Supply (not preferred) It is possible for Issaquah and Bellevue to have their water systems physically separated with no connection or intertie between them. Issaquah could utilize its own sources of supply independent from Bellevue. Water system improvements are anticipated to be needed to provide complete physical separation of the two water systems and allow the systems to function separately while maintaining the existing hydraulic capabilities and LOS to customers. These projects are shown in Figure 5-2: Proposed Improvements System Separation without Share Facilities and listed below. These projects are anticipated to be implemented with assumption, therefore, no phasing is shown. Descriptions of the projects follow. Planning-level total project costs are shown below and should be refined as project details evolve. Prices for water main projects were based on estimated costs per linear-foot of water main, which are shown in Appendix D. Planning-level cost estimates for facilities and other water projects, not including water mains, were developed using bid tabs and/or historical pricing of similar facilities and projects. These projects could be paid for using water rates and/or a bond. Similar to the situation described in Section 5.3, the results of these separation projects include areas of low pressure and inadequate fire flow as shown in Figure 5-2, and these areas of low pressure and fire flow deficiency appear to exist within Bellevue s systems even under existing conditions prior to separation. Approx. Cost Restrictions W-P1 Lakemont Triangle Regional Main Tie-in* $0 Traffic impact W-P2 Newport Way NW 12-inch Water Main $377,000 Traffic impact W-P 3 Newport Way NW PRV (520 => 270) $100,000 Traffic impact W-P 4 Construct 12-inch Fill Line for Reservoir $363,000 Easement may be Req'd W-P 5 Emergency Interties $30, W-P 6 Telemetry $25, TOTAL $895,000 *Already funded per Issaquah staff as of August 2013, so no cost to assumption Lakemont Triangle Regional Main Tie-in This project is the same as the one proposed in the Issaquah s DRAFT 2012 Water System Plan Update and will provide a regional connection for Issaquah to the CWA 24-inch water main (CWA main). According to 11 P a g e

16 Issaquah staff, the project is already funded (as of report writing in August 2013), hence the project cost has not been included for assumption. Issaquah s Lakemont 520 Zone is currently supplied by Bellevue through an intertie meter. This project would eliminate Issaquah s connection to Bellevue s system in the Lakemont area and provide water supply direct from the CWA main to the Lakemont 520 Zone. Newport Way NW 12-inch Water Main This project would include construction of approximately 1,350 linear feet of 12-inch water main to provide water supply to the assumption area water mains and reservoir. Newport Way NW PRV (520 Zone to 270 Zone) This project would include construction of a pressure reducing valve (PRV) station to reduce pressure from the 520 Lakemont Zone to the assumption area s 270 Zone. Construct 12-inch Fill Line for Reservoir This project would include construction of a dedicated fill line to the Sammamish Reservoir (to be assumed by Issaquah). The dedicated fill line is required so that the connection to the CWA main (described in the Lakemont Triangle Regional Main Tie-In project) does not supply all demand in the 270 Zone, leaving the water in the Sammamish Reservoir stagnant without level fluctuation. Emergency Interties This project includes construction of three emergency interties between Issaquah and Bellevue at existing locations. The emergency interties will consist of closed valves and function only when manually opened during an emergency. Telemetry Telemetry improvements are required to integrate the water system to be assumed, particularly the reservoir, into Issaquah s existing telemetry system. 5.5 Bellevue s Water Comprehensive Plan Deficiency Cost Bellevue s 2006 Water Comprehensive Plan identifies the following recommended system improvements which impact the proposed assumption area: Service line and saddle replacement; Fire hydrant improvements; Small-diameter pipe replacement; and Reservoir evaluation and structural/seismic rehabilitation. 12 P a g e

17 The descriptions of these programs as shown in Bellevue s 2006 Water Comprehensive Plan are included in Appendix E. Service Line and Saddle Replacement: Based on available data, there are 1,164 water service lines in the assumption area. Water main material was used as a guide to help determine age of the water service lines, with the assumption that asbestos cement (AC) pipe has older water service lines connected to it. With approximately 49 percent of the water system listed as AC pipe (see Table 4-1), an estimated 570 water service lines are aged. RH2 estimated the cost to replace the water service lines and saddles at $1,100 each, yielding a total cost of $627,000. Fire Hydrant Improvements: Based on information in Bellevue s 2006 Comprehensive Plan, the fire hydrant program was to be completed in 7 years, or by Bellevue staff has confirmed that there are no remaining fire hydrants in the assumption area to be replaced. Small-diameter Pipe Replacement: This program will include replacement of 4-inch and 6-inch distribution mains in order to improve fire flow. This program also includes replacement of older 4-inch AC pipe due to their vulnerability to failure. Issaquah must make a policy decision whether to carry this program forward. Reservoir Evaluation and Structural/Seismic Rehabilitation: This program includes modification to existing water reservoirs to mitigate potential earthquake damage and to maintain reservoir function during seismic events. Bellevue s Capital Investment Program Plan does not identify any water capital projects specific to the assumption area. Section 6 - Sewer Assets to be Assumed The sewer facilities to be assumed from Bellevue by Issaquah are shown in Figure 6-1: Existing System to be Assumed and are further described in this section. 6.1 Gravity Sewer System Under the proposed assumption, Issaquah would assume the following sewer mains shown in Table 6-1. Table 6-2 summarizes the years the pipes were installed. 13 P a g e

18 Sewer Main (diameter) Table 6-1: Sewer Main Size, Material, and Length Summary CON (feet) PVC (feet) AC (feet) CI (feet) HDPE (feet) DI (feet) Unknown (feet) Total Length % of Total 6" % 8" 29,613 10,068 8,861 1, ,067 52,226 89% 10" ,724 2,132 4% 12" ,097 2% 15" % 18" 2,592 2,592 4% TOTAL 29,613 13,679 8,861 2, ,791 58, % % of TOTAL 50% 23% 15% 4% 2% 1% 5% 100% Table 6-2: Sewer Main Date of Installation Summary Sewer Main Year and Length (feet) Sewer Main (diameter) After s 1980s 1970s 1960s Unknown Total Length % of Total 6'' % 8'' 448 7,040 40,442 3, ,226 89% 10'' 1, ,132 4% 12'' ,097 2% 15'' % 18'' 2,592 2,592 4% TOTAL 3,475 7,385 42,268 4,057 1,585 58, % % of TOTAL 0% 6% 13% 72% 7% 3% 100% Other additional items that will need to be obtained include sewer service records, property acquisition records, if applicable, and other appurtenances associated with the O&M of the sewer system. Section 7 - Sewer Cost Components This section was developed using similar methodology as Section 5 - Water Cost Components. The physical facilities to be assumed include the gravity sewer mains and associated manholes. 14 P a g e

19 7.1 Sewer Main Costs Valuation costs for the sewer mains and manholes in the assumption area are presented in Table 7-1. Table 7-1: Sewer Main Valuation Sewer Main (diameter) Replacement Cost Replacement Cost Less Depreciation 1 6'' $90,000 $61,000 8'' $13,370,000 $7,340,000 10'' $571,000 $264,000 12'' $309,000 $228,000 15'' $102,000 $75,000 18'' $832,000 $632,000 TOTAL $15,274,000 $8,600,000 1 Based on a service life of 75 years. 7.2 System Separation Cost Using Shared Facilities (preferred approach) It is possible to serve the area to be assumed by Issaquah with no capital improvements by relying on joint-use facilities. The only joint-use facilities needed would be some gravity sewer main in and around 181 st Avenue SE within Bellevue city limits. It is anticipated that Issaquah and Bellevue could negotiate an agreement for shared use of the gravity sewers that would convey sewage flows from Issaquah via Bellevue to discharge to the County sewer main interceptor. A simple approach to dividing costs would be to: 1) Isolate the costs associated with the shared facilities; 2) Estimate the number of Equivalent Residential Units (ERU) served by the shared facilities; and 3) Allocate the costs to the Bellevue and Issaquah on a per ERU basis. A sample of a shared use agreement between two municipalities is included Appendix F for guidance, should Issaquah and Bellevue desire to establish a shared use agreement. Both Issaquah and Bellevue have contracts with King County to discharge sewage to the County interceptor, so the cost per ERU for customers within the assumption area would be paid by Issaquah instead of Bellevue following assumption. No capital improvements projects are required in this option. 15 P a g e

20 Project Description 7.3 Physical System Separation Cost Without Shared Facilities (not preferred) The sewer system improvements in Table 7-2 are anticipated to be needed to provide complete physical separation of the two sewer systems and allow the systems to function separately while maintaining the existing level of service to customers. These projects are shown in Figure 7-1: Proposed Improvements System Separation without Shared Facilities Option. Planning-level total project costs are shown in Table 7-2 and should be refined as project details evolve. Prices for sewer main projects were based on estimated costs per linear foot of sewer main, which are shown in Appendix D. These projects could be paid for using sewer rates and/or a bond. Table 7-2: System Separation Project Costs Approx. Cost Restrictions 1 Construct 8-inch Gravity Sewer $359,000 Easement req'd 2 Transfer Side Sewer Services (5 each) $33,000 Easement req'd Total $392, Bellevue s Sewer Comprehensive Plan Deficiency Cost No capital sewer projects were specifically identified for the assumption area in Bellevue s 2002 Comprehensive Wastewater Plan, nor Bellevue s Capital Investment Program Plan. Bellevue does have an ongoing Pipeline Renewal and Replacement Program, which was identified in 2002 Comprehensive Wastewater Plan and Bellevue may have collected funds for this program as it is associated with the assumption area, but the specifics are not detailed. The 2002 Comprehensive Wastewater Plan indicates that Bellevue was collecting approximately $400,000 annually for the program system wide. Section 8 Level of Service Both Issaquah and Bellevue provide water and sewer service. Below, in Table 8-1, is a comparison of policies and level of service that will apply to customers within the assumption area if their water and sewer service is provided by Issaquah or by Bellevue. Following the table is additional discussion of the key elements following assumption. Generally, following assumption, Issaquah will be able to provide a coordinated and consolidated approach to service provision and emergency response, since the municipal services will be provided by one municipality. Prior to assumption, municipal services are provided 16 P a g e

21 via two separate entities in two separate locations, which can lead to fragmentation for the municipal services. Table 8-1: Policies Comparison Element Issaquah Bellevue Police Department Internal to Issaquah External (Issaquah) Fire Department Emergency Management Program Eastside Fire and Rescue - Contracted to work regularly with Issaquah. Dedicated and updated website, phone information hotline, alerts, radio station, and television station External (Eastside Fire and Rescue through Issaquah) Dedicated and updated website, and text alerts, training by fire department, reverse 911 calls Land Use Authority Control Internal to City of Issaquah External City of Issaquah Minimum sewer pipe cover 3 feet Unknown Sewer Manholes Maximum 400 feet 400 feet Spacing Sewer Manhole Depth None specified. Minimums specified (Eng Standards pg S3-6) Side Sewer Ownership/Maintenance Sewer Enforcement Water Fluoridation Property owner to maintain. (Policy U3.4, pg 24) Terminate domestic water service if property owner fails to meet connection policy or pay utility charges. Fluoridation will be maintained in the assumption area. Bellevue owns and maintains side sewer in right-of-way and public easements. Property owner maintains from property line to structure. Unknown Fluoridation in assumption area Water Disinfection Chlorination via Bellevue or CWA Chlorination via CWA in assumption area Water Storage Volume DOH Minimum, plus two storage facilities per water operating area, in single-family residential service areas a maximum of three pressure zones can be served by a storage facility, and a storage facility is required for each operating area. (Policy 7.3.1) DOH Minimum Water Pressure Minimum DOH Minimum plus a minimum of 40 psi at the second floor elevation with storage at lowest operational level. (Policy 7.3.2) DOH Minimum - 30 psi for maximum day and 20 psi with maximum day demand plus fire (Ch 2 - Pg 2-4, Ch 4 - Pg 4-17 P a g e

22 Element Issaquah Bellevue 17) Water Pressure Maximum Water Main Velocity Hydrant Spacing Maximum of 100 psi at lowest elevation. In difficult terrain (hills) a maximum of 150 psi is allowable with individual PRVs to 80 psi. (Policy 7.3.2) Maximum of 7 feet per second at Maximum Day Demand plus WAC feet in residential, 300 feet in all other areas. Maximum of 80 psi Maximum of 10 feet per second. (Ch 4 - pg 4-17) 500 feet in residential, to be determine by fire marshal all other areas. (Eng Standards pg W3-5) Police and Fire Department: The assumption area lies within the Issaquah city limits and therefore police and fire service are provided by Issaquah s departments, not Bellevue s. Issaquah contracts with Eastside Fire and Rescue (EFR) for fire and safety services within the city. EFR have regular, dedicated staff for Issaquah, so although it is contracted for Issaquah, the staff members function similar to city employees. Both EFR and Issaquah Police staff attend the regular executive staff meetings with all other city staff. This affords Issaquah the ability to use in-house staff that are acquainted with each other and are accustomed to working together to respond to emergency situations, natural disasters (e.g., floods, fire, etc.) or an unexpected attack on Issaquah s system. To respond to emergencies in the assumption area, Bellevue would have to contact Issaquah s police and/or fire agency to respond to similar events. Emergency management: Although there are minor differences, Issaquah and Bellevue have reasonably comparable emergency management programs. Land Use Authority: Issaquah maintains land use authority and control, which provides local control and a coordinated effort under one municipality with regard to land use control. Controlling land use is an important function to help ensure full protection of water and sewer systems, and a coordinated approach via one entity will reduce fragmentation. 18 P a g e

23 Permit Authority: Issaquah retains permitting authority and can properly process permits with expediency based on the need and level of urgency. Bellevue must coordinate efforts with Issaquah to obtain permits (right-of-way, site development, etc.) Spill Response: Issaquah is responsible for streets and storm drainage systems in the assumption area, so Issaquah is able to respond as a coordinated team with water and sewer O&M staff in the event of a spill that affects the water/sewer systems. Bellevue would need to coordinate outside their agency (i.e., with Issaquah) to respond to a spill in the assumption area. Water Fluoridation: Bellevue customers in the assumption area currently receive fluoridated water. Issaquah will maintain fluoridation to the area assumed. Issaquah currently does not fluoridate water from its existing city wells, however, Issaquah does receive fluoridated water from CWA and Bellevue via wholesale purchase. Issaquah operates and maintains the fluoridated water system separate from the nonfluoridated system, and would propose to do the same with the assumption area. Emergency interties between the systems allow for water transmission in the event of an emergency. Additionally, Issaquah may fluoridate the entire water system in the future. Section 9 - Financial Analysis and Rate Impact 9.1 Current Bill Impact Water and sewer rates used in this section are posted 2013 rates for all parties (Bellevue, Issaquah, and King County). Sewer bills for both Bellevue and Issaquah include 1) city charges, and 2) King County charges, which are pass-through charges collected by the city and paid to King County. The King County monthly base charge for single family residences increased in 2013 from $36.10 to $ Non-residential customers are charged $39.79 for each 750 cubic feet of water used. King County rates affect all customers, without regard to assumption. Issaquah has announced that its 2013 rates for both sewer and water will remain the same as 2012 rates. In 2013 Bellevue raised water rates by 12 percent and sewer rates by 7-10 percent (increase varies between customer classes and base/volume rates). Customer Demographics Bellevue indicates approximately 995 metered customers reside within the assumption area, nearly all of which are residential customers. Approximately 950 are single-family residential customers and approximately 45 are multi-family residential buildings, each containing 19 P a g e

24 between two and seven household units (water meters are generally installed at each building, rather that each household unit within that building, therefore the number of multifamily customers listed in Bellevue reports likely reflect the number of multifamily buildings rather than the number of households within). Typical single-family lot sizes within the assumption area average about 0.2 acres each. In addition, there are several larger single family residential properties in the southwestern portion of the assumption area with lots as large as 1.5 acres. Several properties include duplexes. Multi-family units are located in the southwest portion of the assumption area, just north of I-90 near East Lake Sammamish Parkway. Single-family Residential Bill Impacts A typical single-family customer will see a reduction in their combined water and sewer bill as a result of the assumption. Bill Impact Summary for Single-family Residential Customers Bellevue Issaquah Water $42.25 $ Sewer $63.18 $54.59 Total $ $95.57 Savings $9.86 (9.4%) A single-family customer using 190 gpd (historically typical of Issaquah residents from ) will have a lower average bill (9.5 percent or $9.86 lower) as a result of the assumption. Water Sewer Table 9-1: Billing Rates Single Family Residential Bellevue Issaquah Fixed 1-mo. Base $16.62 $12.78 Block 1 Rate (per ccf) $3.32 $1.65 Rate notes 0-20 ccf/2 mo. 0-4 ccf/2 mo. Block 2 Rate (per ccf) $4.58 $3.93 Rate notes ccf/2 mo ccf/2 mo. Block 3 Rate (per ccf) $5.87 $7.30 Rate notes > 30 ccf/2 mo ccf/2 mo. Block 4 Rate (per ccf) N/A $11.89 Rate notes ccf/2 mo. King Co. Base (incl. 7.5 ccf/mo.) $39.79 $39.79 City/Dist 1-mo. Base $1.73 City/Dist Volume Rate (per ccf) $3.03 $2.17 Alt. Min. Mo. $ P a g e

25 Table 9-2: Calculated Bill Water Sewer Single Family Residential using 190 gpd Before Assumption (Bellevue) After Assumption (Issaquah) Average Monthly Water Consumption (ccf/mo) Fixed 1-mo. Base $16.62 $12.78 Block 1 Rate (per ccf) $3.32 $1.65 Rate notes 0-20 ccf/2 mo. 0-4 ccf/2 mo. Block 1 Total $25.63 $3.30 Block 2 Rate (per ccf) $4.58 $3.93 Rate notes ccf/2 mo ccf/2 mo. Block 2 Total $0.00 $19.65 Block 3 Rate (per ccf) $5.87 $7.30 Rate notes ccf/2 mo ccf/2 mo. Block 3 Total $0.00 $5.26 Total Water Bill $42.25 $40.99 King Co. Base (incl. 7.5 ccf/mo.) $39.79 $39.79 City/Dist 1-mo. Base $1.73 City/Dist Volume Rate (per ccf) $3.03 $2.17 City/Dist Volume $23.39 $13.07 Calculated Total $63.18 $54.59 Alt. Min. Mo. $46.51 Total Sewer Bill $63.18 $54.59 Total Water + Sewer $ $95.57 Multi-family Residential Bill Impact A typical multi-family residential household is expected to have lower average utility bills as a result of the assumption. A multi-family residential household with consumption typical of Issaquah s multifamily residences will save approximately 5% as a result of assumption. Some customers with greater water consumption could have higher bills following assumption. 21 P a g e

26 Water Conservation Incentives in Billing Rates Both Bellevue and Issaquah have inverted water billing rate structures to encourage water conservation. Each includes a fixed fee and utilizes a block rate structure for consumption, with low rates for initial water use and increasingly higher rates for each additional block of water used. Issaquah s fixed monthly fee is lower than Bellevue s ($12.78 for Issaquah versus $16.62 for Bellevue). Block 1 rates are higher for Bellevue ($1.65 for Issaquah versus $3.32 for Bellevue), but Bellevue s Block 1 includes a larger allowable consumption volume. Issaquah s rates increase more than Bellevue s rates with increased water consumption. Therefore, households with the smallest water use will see the greatest savings under Issaquah s rate structure, and households with higher water use may have an increased bill as a result of the assumption. 9.2 Separation Cost Impact Two alternatives were considered for separating Bellevue s water and sewer systems from Issaquah s water and sewer systems. The first, referred to as the cooperative capital improvements approach, would utilize existing facilities and facility sharing to the largest extent possible to minimize costs to customers. With the shared-facility approach, Bellevue and Issaquah would continue to serve customers using the existing facilities already serving those customers. Cost adjustments to Bellevue and Issaquah would be made via water and sewer interlocal, wheeling or wholesale agreements between the two parties, and meters would be installed at selected locations. Implementation of the shared-facility alternative would cost about 11 cents per month per single-family residential customer, and could be implemented by Issaquah without increasing Issaquah s utility rates. The other approach, referred to as the system separation without shared facilities approach, would employ complete system separation so that Bellevue s and Issaquah s systems would be operated completely independently of each other. Thus, no Bellevue facilities would be used to serve Issaquah customers and no Issaquah facilities would be used to serve Bellevue customers. It is not anticipated that Bellevue will pursue adversarial capital improvements. Implementation of the adversarial capital improvements approach would be more costly a cost of about 65 cents per month per single-family residential customer, but could be implemented by Issaquah without increasing Issaquah s utility rates. 22 P a g e

27 Table 9-3 Separation Cost to Issaquah WATER SEWER TOTAL Cooperative Capital Improvements Adversarial Capital Improvements $230,000 $0 $230,000 $900,000 $400,000 $1,300, Operating Impact Proportionate Staffing Change Information from Bellevue was analyzed to review the number of fulltime employees (FTEs) employed by Bellevue and their assignment to water and sewer utilities. Based on the proportion of Bellevue to be assumed by Issaquah for water (1.4%) and sewer (1.4%), FTEs were reduced by those respective percentages. The result was a reduction of one Bellevue FTE. Refer to Appendix G for the results of the analysis. The proposed reduced staffing at Bellevue from 65 FTEs to 64 FTEs is anticipated to provide a level of service to Bellevue customers comparable to the service levels prior to assumption. The 1 FTE reduced by Bellevue would be offered employment by Issaquah, according to RCW 35.13A.090. Alternatively, Bellevue could elect to retain this employee with no significant effect on billable rates. Interlocal Wheeling/Wholesale Agreements Agreements will be designed to reflect the true cost of service, including operating and maintaining facilities that will serve the other party. Issaquah and Bellevue already have a cooperative agreement for service within the Lakemont triangle. Water Facilities Changes With cooperative capital improvements approach, ownership and operation of the 1.0 MG 270-zone reservoir would transfer from Bellevue to Issaquah in the assumption and the reservoir, following assumption, would be used to serve only Issaquah customers and will no longer be needed to serve any Bellevue customers. Issaquah would take full responsibility for maintenance and operation of the reservoir following assumption. 23 P a g e

28 Sewer Facilities Changes No significant sewer facilities except the collection system would be impacted by the assumption. 9.4 Financial Impacts Capital Costs Capital costs discussed in this section include only capital costs directly related to the assumption. Operation and Maintenance costs within the assumption area will be assessed by Issaquah as part of ongoing service following assumption. Operating Costs Operating costs identified in this section include employee costs, equipment, and power, as well as other variable costs of operating water and sewer facilities. It is assumed that operating costs will be reduced in proportion to the customer base assumed. General and Administrative costs, including management costs, are assumed to remain unchanged as a result of the assumption. Debt At the end of 2011, Bellevue s outstanding debt (both water and sewer) totaled only $60,000. Within 2 years, Bellevue will have retired all of its water and sewer debt. With assumption, a proportionate share of any remaining Bellevue utility debt would be defeased or paid annually by Issaquah. Charges New customers intending to develop or redevelop within the assumption area can expect to pay similar sewer connection charges but higher water connection charges with Issaquah following assumption than they otherwise would have paid to Bellevue. The following information reflects pricing included in Bellevue s posted CRC rates and 2012 Fee Schedule For Utility Permits and Issaquah s Permit Fee Worksheet. New Water Connection Charges Total approximate single-family residential water connection charge: Bellevue: $10,892 Issaquah: $13, P a g e

29 New Sewer Connection Charges Total approximate single-family residential sewer connection charge: Bellevue: $11,205 Issaquah: $11, Financial Viability Summary After assumption, Bellevue s revenue base is expected to be adequate to support Bellevue s expenses without requiring rate increases as a result of the assumption. Note that future rate increases not related to assumption are anticipated at Bellevue. The following charts indicate the cost impact to Bellevue, by major expense category, as a direct result of the assumption. Revenues included are rate based revenues only and do not include growthrelated revenue, taxes, or pass-through costs to King County for sewage treatment. This analysis assumes that management staffing and costs will remain unchanged as a result of the assumption, but that operation and maintenance costs and debt will be reduced by the same proportion as reduced customer base, with Issaquah resuming responsibility for O&M of assumed facilities, offering employment to staff reduced by Bellevue as a result of the assumption, and defeasance or shared payment of a portion of Bellevue s debt in proportion with the revenue base assumed. Capital costs associated with assumption are assumed to be borne by Issaquah. Interlocal, wheeling or wholesale agreements are expected to have a net neutral revenue effect on both parties. Bellevue s remaining customers are not anticipated to incur an increase in average monthly bill as a result of the assumption. 25 P a g e

30 Issaquah is expected to be able to accommodate the assumption, with cooperative capital improvements, without requiring rate increases as a result. 26 P a g e