It all comes down to lineal feet.

Or the type of lineal feet.

Or maybe it’s because when Kirkland annexed some parts of what had been unincorporated King County last summer, it didn’t dig up all the water pipes and put in new ones.

Instead, customers there continued to get their water from the Northshore Utility District.

That would seem pretty simple.

Instead, it’s become something of a financial quagmire.

To Kingsgate resident Toby Nixon, who’s running for Kirkland City Council, it’s an ethical issue, with him arguing the money matters have become unfair.

To Margaret Wiggins, a utility-district commissioner, the questions partly seem to involve a mistake — about lineal feet.

To the utility district itself, in a Sept. 28 letter to its customers, the questions seem to involve the discovery that much of the annexation area consists of single-family homes, not buildings like hospitals.

And to the City of Kirkland, summarizing the situation in a Sept. 14 memo, the issue also seemed a surprise, with Kirkland officials not learning of the fiscal difficulties until June, when the utility district told the city about the money problems.

“We’re a little frustrated with the district at the moment,” said Kirkland City Manager Kurt Triplett.

“We have been dragged into the middle of a budget battle,” said Wiggins.

The root of the dispute centers on how customers in the annexation area got their water from the utility district, and continue to do so.

The city estimates that, with annexation, about 45 percent of Kirkland customers are served by the district. Wiggins estimates 8,000 of the district’s roughly 20,000 customers now are in the City of Kirkland.

It’s not enough, however, simply to provide water and other services. As part of the relationship between the district and the city, something called a “franchise fee” has been negotiated between the governmental units.

Wiggins compares that to a cable-television or phone bill. In effect, it means the district has to pay the city for having its pipes in the ground.

That’s true, says Triplett, but the reasons really go back to the 1990 state Growth Management Act, which would have allowed the city to take over district operations in the city during annexation, radically cutting district size and staff.

Instead, the district pays the franchise fee and remains intact, he said. The most recent agreement on the fee was negotiated in 2008 and became effective in 2009. The deal called for the district to pay the city $3.21 cents for every lineal foot of right-of-way within the district service area, city documents explain.

Both city and district officials stress the figure is based on street right-of-way, not pipes. That means, in effect, that the bill is calculated on how many miles of streets are involved, not miles of buried pipe.

The result of the agreements was that before annexation, the district could make its payment to the city by imposing a 7.5 percent fee on customers.

Then came annexation, which was discussed for years before taking place June 1 this year. Much of the talk involved things like whether utility bills would be affected, with estimates made that the fee would be raised to 10.5 percent.

Now Nixon and others say they were misled during all that talk, that they were assured their utility bills wouldn’t change much.

“Now we hear that the effective tax rate is not going to be 10.5 percent, but almost 13 percent,” Nixon complained to the Kirkland City Council. “This isn’t fair. This isn’t right. It isn’t how we build trust.”

Exactly how such a change came about, however, remains in dispute.

In his Sept. 14 memo explaining the changes, Rob Jammerman, city development engineering manager, described how the new fees were set.

“In March of this year, a letter was sent to the Northshore Utility District to formally notify them that the right-of-way subject to the franchise fee would be increasing to 531,752 feet on June 1, 2011, due to the annexation,” Jammerman wrote.

Jammerman didn’t say what the 531,752-foot figure was increasing from; the utility district says the old figure was 125,668 lineal feet. The annexation added 531,752 feet, bringing the total to 657,420 lineal feet, said Jack Broyles, district finance director.

The March 3 letter from the city to the district actually said:”The franchise fee for the annexation area shall be based on the listed right-of-way length of 531,752 feet.”

Jammerman added that the figure was calculated by doing GIS, or Geographic Information Systems, measurements.

In any case, Jammerman told the Kirkland City Council in his Sept. 14 memo, in June the district contacted the city about the money matters. The difficulty, Jammerman explained, was that the increase in right-of-way had bumped up the district’s costs.

The new measurements meant the district — and its customers — had to pay the city $2.11 million a year. The result was that while the district had been paying the city 7.5 percent of its annual revenue, and thought that might go to 10.5 percent, the discovery of the added feet of right-of-way meant the payment would go up to about 12.84 percent of the district’s annual revenue.

“Although both the city and the Northshore Utility District had known what the calculated franchise fee was going to be for quite sometime, the city was not made aware of this percentage increase in relation to their annual revenue until the Northshore Utility District contacted us about the issue,” Jammerman told the council.

Jammerman added that the district hadn’t anticipated “this large of an increase in the fee,” and was asking the city to drop the fee to about 10.5 percent of its annual revenue.

The city calculated that would drop the payment from $2.11 million a year to $1.77 million. That would mean the city would lose about $340,000 a year.

At its Sept. 20 meeting, the council said no deal.

Instead, the council adopted a staff recommendation to leave the fee as it is, but not make any future changes to adjust for inflation, which would lead to the fee eventually becoming roughly equal to the costs paid by other city customers.

All the negotiations still leave the questions of what’s going to happen next, or even why the questions came up in the first place.

Wiggins says the immediate result is simple, that most people will just pay the bills and shrug, unless someone gets incensed enough to file a lawsuit or take other action.

Wiggins estimated that with a typical two-month utility bill running about $150, the added cost of the 12.84 percent charge might come to about $7.50 more than at the earlier rates. She questioned whether that’s enough money — roughly $3.50 or so per month — to get people upset.

Wiggins herself says she finds the entire matter very upsetting, questioning the basic concept of charging a fee to provide people with water. “It’s like a tax on food,” she said. “I want my $2.1 million back.”

That’s unlikely to happen, of course, which leaves the question of why the matter of the lineal feet came up in the first place.

Wiggins says the city miscalculated.

“We didn’t realize they were setting the new footage or the total footage,” she said. “At that point, I got really excited.”

In Jammerman’s Sept. 14 memo, he explained that “after applying the cost per foot to the total feet in the new neighborhoods, the franchise-fee total was more than the district had expected.”

Jammerman then added the right-of-way would be increasing “to” the 531,752 lineal feet.

But while the March 3 letter said the lineal feet in the annexation area would be put at the 531,752-foot total, it didn’t mention the entire district bill would be based on adding the old and new figures for a 657,420-foot total.

Nobody agrees on when that discovery was made.

“What it appears is, they guessed low the first time,” said Triplett. “They’ve had the ability to have this information for sometime.”

Wiggins said the discovery came when the district learned the city expected the $2.11 million payment.

“That’s where the numbers got off,” she said.

In its Sept. 28 letter to customers, the district explained that the higher rate wasn’t needed so much because of the lineal feet themselves, but rather the type of lineal feet. While the district had served customers in Kirkland before, the letter explained, those areas were in such places as Evergreen Hospital, the Totem Lake Malls and apartments and businesses.

But the new Juanita-Finn Hill-Kingsgate area has “many more streets” and is mainly single-family houses, which use less water, the letter added.

“These two factors combine to produce lower service revenue per lineal foot of right-of-way,” the letter continued, meaning customers would have to pay the 12.84 percent fee, rather than the 10.5 percent shown on earlier bills, to make the $2.11 million payment.

“I’m just going to pay it, because I don’t want them coming and shutting off my water,” said Wiggins.