Legal battle could stall Winslow Way, waste water projects

A lawsuit from the Bainbridge Ratepayers Alliance is holding up the city’s plans to secure bonds for both the Winslow Way reconstruction and Waste Water Treatment Plant projects.

City Finance Director Elray Konkel said the longer the lawsuit progresses the more in danger these projects become.

“I think everything has the potential to stop,” he said.

Deputy Planning Director Chris Wierzbicki said there is no alternative plan for the Winslow Way reconstruction project if it doesn’t receive the bonds. If bonds don’t come through, he said, the general fund is obligated to pay back the utilities. But that won’t be easy.

“We don’t really have the funds in the bank right now,” he said.

The city’s plan has been to secure $3.5 million in bonds to repay the utility funds that would help pay for the estimated $11.5 million Winslow Way project. The remainder of the project’s funding would come from grants – from the state Transportation Improvement Board and the Federal Highway Administration – and $1 million in Local Improvement District funds from Winslow Way property owners.

Konkel said the deadline for securing the bonds is the end of the calendar year.

Currently, the budget for Winslow Way reconstruction calls for more than $1.2 million from the water fund, and $1.7 million each from the sewer and storm-water funds. Konkel said the water fund currently has $2.9 million, but the sewer and storm funds are nearly depleted.

And in May, after funding sources said they wouldn’t loan money to the city because of the lawsuit, the council approved a $3 million interfund loan that gave Konkel the authority to borrow money from the water utility to keep the upgrade of the city’s treatment plant moving forward. For that purpose, $825,000 was moved last week from the water fund to the sewer fund.

Konkel said the city has not started searching for bonding sources for the Winslow project. The search should begin around the time construction bids are sought for the project.

So far, of the $1.4 million budget for 2009, most of which is for contracts and studies, approximately $1.1 million has been spent.

Konkel said the city is still looking for $6 million in bonds for the WWTP upgrade. He said $9.5 million has been spent on the project, some of which was drawn from the sewer and water funds. Wierzbicki said the project has a completion date of the end of the year or the beginning of 2010.

The lawsuit the city says is holding up these projects alleges, among other things, that the city is unfairly raising rates on Winslow customers without completing a rate study to judge how affordable the raises will be, and also failing to consult the newly formed Utility Advisory Committee.

The lawsuit also claims that the city is looking for $6 million in bonds for the WWTP when it only needs between $4.2 and $4.6 million. Ratepayers also accused the city of using utility funds for other purposes, an act they claim to be illegal.

The Ratepayers Alliance updated the initial complaint on July 6, adding three new allegations. The first says that because there was no Utility Advisory Committee to consult on sewer pipe contracts, ratepayers should not be charged for costs incurred during the May 30 Eagle Harbor sewage spill.

The second claims that the city’s charging of a groundwater study to the water fund was illegal. Because it benefitted more than just the water utility, it should have been taken from the general fund, according to the lawsuit. The third new complaint says the city’s storm and surface water management fees constitute an illegal tax.

Sally Adams, a retired attorney and secretary for the Ratepayers Alliance, said the lawsuit is still in motion because the city has been unable to find an attorney to judge the claims to be without merit. She said the city has reached out to the Ratepayers Alliance, presumably to look for settlement options, but the ratepayers group isn’t seeking a deal.

“We have clearly stated exactly what we want in the complaint,” she said. “These are requests that are related to complying with state and local law, therefore, they’re not negotiable – they’re required.”

Ratepayers believe the construction of the WWTP and the Winslow Way reconstruction will inflate already high utility rates.

Wierzbicki said the rates probably won’t increase drastically as a result of these projects.

Bainbridge Island’s utility rates are higher than state and county averages.

For 700 cubic feet of flow through a sewer system, ratepayers dole out roughly $66 per month. In Bremerton the cost is $60; in Poulsbo, $50; and across the county it is $51.70.

Sewer District 7, located on the south end of Bainbridge Island, has approximately 265 connections and 255 connections that are provided to the city for customers in the Lynwood neighborhood. Their rates are $40 per month per household.

At Tuesday’s City Council Finance Committee meeting, city staff presented 60 percent design plans for the Winslow Way reconstruction, which included an updated budget asking for approximately $500,000 less than the project’s original estimate.

Wierzbicki said the next update will come sometime in August, when the staff completes 90 percent of the design plans.

Councilors Bill Knobloch and Kjell Stoknes took issue with the lack of involvement with the 3-week-old Utility Advisory Committee. Stoknes requested that the city meet with the committee before the council decides to approve the 60 percent design plans July 22. Knobloch said the project should be slowed until the committee becomes more involved.

“I think we have to hear from the committee that’s been formed to deal with this issue before we move forward,” he said.

The city is pursuing the reconstruction because it judged the sewer, water and storm drainage to be inadequate. The project will require reconstruction of the sidewalks and roads after the underground utilities are replaced.

Stoknes added that the project is well-overdue.

“This is a project we should have gotten in the 1990s,” he said.

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