The city of Seattle has been accused in a lawsuit of illegally tapping customers of Seattle Public Utilities to pay for fire hydrants, artwork...

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The city of Seattle has been accused in a lawsuit of illegally tapping customers of Seattle Public Utilities to pay for fire hydrants, artwork and Sound Transit’s light-rail project.

The lawsuit was filed by some of the same utility critics who won an earlier judgment that required the city to refund more than $20 million that had been illegally charged to customers of Seattle City Light to pay for streetlights.

Just as in the streetlight case, the new lawsuit contends the city has been illegally inflating utility bills to pay for frills unrelated to basic utility services. The lawsuit seeks class-action status on behalf of more than 300,000 water, garbage and sewer ratepayers of Seattle Public Utilities.

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“The utility business is by state law supposed to be set up so ratepayers only pay for utility operations,” said David Jurca, an attorney representing the plaintiffs.

The city has conceded some ground due to its defeat in the streetlight case, which it unsuccessfully appealed to the state Supreme Court.

The city’s lawyers had argued in that case that charging electric-utility customers for streetlights, which it did for two years beginning in 2000, was no different than adding the cost of fire hydrants to water bills, which it had done since 1898.

But the courts ruled that streetlights were a general government service and couldn’t be charged to utility customers.

After the streetlight charge was struck down as an illegal tax, the city “saw the writing on the wall,” said Will Patton, utilities section director for the Seattle City Attorney’s Office.

As a result, the $4 million-a-year fire-hydrant expense was shifted to the general city budget starting in January. Jurca said the plaintiffs can seek refunds for hydrant charges back to 2002, though not for previous years because of the statute of limitations.

The other key issues in the lawsuit likely will be determined by rulings pending in the streetlight lawsuit regarding City Light subsidies for artwork and Sound Transit’s light-rail project.

The city is appealing King County Superior Court Judge Sharon Armstrong’s ruling in May that City Light should quit spending money on artwork not closely tied to its mission of providing electrical service. Armstrong said much of the $2.8 million the utility had spent on art in the past four years was impermissible, including a $100,000 installation the utility paid for at the new Seattle opera house, McCaw Hall.

Armstrong also ruled the city’s One Percent for Art ordinance, which requires that 1 percent of capital-projects costs be spent on public art, was invalid for City Light because the money did not benefit electricity ratepayers. The lawsuit filed Tuesday seeks a similar ruling for Seattle Public Utilities.

In June, a trial is scheduled in King County Superior Court over the other remaining issue in the streetlight case: whether it was legal for city officials to require City Light to relocate electrical lines free of charge to Sound Transit as a means of subsidizing its light-rail project through Rainier Valley. That work is worth $17.5 million.

The same issues will apply in the new case of Seattle Public Utilities, which has been tapped to provide $4 million worth of “utility support” work for the light-rail project.

The lawsuit was filed by two retired assistant city attorneys, Arthur Lane and Walter Williams, as well as Kenneth Gorohoff, a former City Light employee who sells audio equipment. Lane and Williams also were plaintiffs in the streetlight case.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com