The City of Kirkland is preparing to enter into a franchise agreement with the Woodinville Water District (WWD) that will bring the city nearly $200,000 during the next two years. But the agreement will come at a cost to 1,800 annexation residents. The rest of the annexation area that is covered by the Northshore Utility District (NUD) will also see a rate increase.
“This will increase the rate that those customers pay,” said Ken Howe, WWD general manager. “But they will continue to receive the excellent service they have had all along.”
The agreement will only affect the customers of the WWD, which is located in the northeast section of the Kingsgate neighborhood. The increase for the average customer will be around 10-10.5 percent, said Howe.
“That could change over time but that is what we are looking at initially,” said Howe.
WWD has a franchise agreement with King County, but they do not pay a fee.
The franchise fees are general-fund revenues for the city and will be used to fund services in the annexation area. The fee in this agreement is $1.73 per foot of right-of-way that is encumbered with WWD facilities. The agreement will bring the city $73,500 during the remainder of 2011 and $126,000 in 2012.
A franchise agreement between the city and WWD is necessary for the utility to continue to provide service in this area after the annexation date of June 1, 2011. A franchise agreement is used to specify the terms and conditions of WWD use of the city right-of-way. The revenues from the franchise agreement were not initially included in the 2011-12 budget as it was not clear when an agreement would be reached.
“(The city) has been outstanding to work with every step of the way,” said Howe.
Kirkland has had a franchise agreement with NUD for many years, covering a small portion of current residents at the north end of the city. The majority of Kirkland residents receive utility service from the City of Kirkland.
“As far as just water service is concerned, the city serves 82 percent of residents, with the Northshore Utility District serving 18 percent,” said Tracey Dunlap, the city’s director of Finance and Administration. “After annexation, those numbers will be about 50-50.”
She added that the city serves 85 percent of Kirkland for all utilities and that city leaders may decide to become the utility provider for the WWD and NUD areas at a later date.
NUD rate increases
NUD customers in the annexation area will also see an increase in their bill as the franchise fee that covers the north end of Kirkland will be extended to cover those customers.
“The water and sewer charges will remain the same, but there will be a franchise fee added to the bill because the city is imposing a franchise fee,” said Fanny Yee, NUD general manager.
The increase for those customers will be 7-7.5 percent, said Yee.
The current NUD franchise fee at $3.24 per foot is more than the WWD franchise fee of $1.73. The difference in cost to the two utilities has to do with development patterns, WWD’s less intensive use of the right-of-way from the water-only service and a smaller service area.
The franchise agreements with the NUD and WWD are also set up to be parallel to streamline the process for the city.
Both agreements will expire on Dec. 31, 2018 and will then automatically renew in five-year increments. Any of the parties can opt out of the agreements prior to the next expiration date.
The extension of the current NUD franchise agreement will also generate $3.4 million for the city. In 2011, the franchise fee for the NUD will increase from $428,000 to $1.3 million. In 2012, the franshise fee will be $2.1 million for the NUD. Those figures are already reflected in the 2011-2012 budget.
The Kirkland City Council plans to bring back the final ordinance at the next council meeting on May 17.
