A first-of-its-kind law imposing "rent" on utilities for operating in county roads went into effect last month. But a lawsuit in King County Superior Court could invalidate the concept all together.
King County wants to charge utilities rent for occupying roads with wires, pipes and other equipment — a first-of-its-kind fee that could mean higher utility bills for hundreds of thousands of customers countywide.
But a King County Superior Court judge will decide if, or to what extent, the rule imposing the payment for electric, gas, water and sewer utilities in unincorporated King County is legal.
A lawsuit filed late last month involving 21 water and sewer districts, from Vashon Island to White Center to Sammamish, is pending and halting the tax.
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The court battle follows public outcry from utilities and customers over months; critics say the Metropolitan King County Council overstepped its authority by passing a measure with the rental fee in fall 2016, and Washington state law already permits water and sewer utilities to use road space, or rights of way.
But county officials, grappling with a long-term budget deficit, argue King County owns and maintains the roads’ property rights, so charging rent there makes sense.
The cost increase for customers, whether a household or business, remains largely unknown; estimates range from less than $1 to $10 per bill monthly.
Neither the Washington Association of Sewer and Water Districts (WASWD) nor the Washington Public Utility District Association are aware of any other county in the state charging utilities this way, according to representatives of the associations.
A sponsor of the measure, Councilmember Dave Upthegrove, touted the rental tax — which applies to some 10,500 acres of road area — as showing fairness and responsible management of public assets, similarly to how “we charge rent for folks using our buildings or other county properties.”
“We are confident that we have the legal authority to implement the program,” he said, before the Council passed the ordinance on Nov. 7, 2016 with a 7-2 vote. “I’m supporting this ordinance with my head held high.”
Via online statements and mailers, utilities spanning Puget Sound have contacted customers and King County officials with fierce opposition to the vote, accusing the Council of passing the measure quickly and without adequate opportunity for feedback, as well as using weak cost data and hitting low-income people the hardest.
“If the ordinance is implemented, it will set a dangerous precedent for counties and cities throughout the state to allow similar taxes on utility right of way users,” says a statement from WASWD Executive Director Jim Kuntz, among others. “This is a regressive tax, hurting the lowest income residents the most.”
David Shurtleff, director of communications for the council, did not make a Council member available for interview, citing restrictions on their ability to comment due to the ongoing litigation.
Where the money will go
Under King County’s ordinance, the rental fee would apply to all “infrastructure under, over, within or across” county rights of ways for utilities. An area’s land value and size would help determine each payment.
Upthegrove, who chairs the council’s budget committee, at the November hearing estimated the tax would cause monthly bill hikes as low as 17 cents to “a few bucks,” while utilities have warned customers of potential bill increases of between $5 to $10 monthly, or $60 to $120 annually, to cover the new charge. Under the ordinance, utilities should not raise monthly bills past $5.
The total would vary greatly across the county based on customers’ services and the utilities providing them.
County staff project the new fee to add about $10 million annually to King County’s general fund, which covers a variety of services and facilities, though predominantly supports criminal justice and public safety services, such as the sheriff’s office. That total is about 1.2 percent of the account’s revenues last year.
“Our roads are an asset — an asset of the general fund of the people of King County,” Councilmember Rod Dembowski said at the hearing, available via video online. “We’ve got to demonstrate that we are putting what we have on the table to take care of our assets and to address our county-budget situation.”
Like counties across Washington, King County is grappling with a widening budget deficit, due in part to a long-term funding scheme that depends almost solely on property and sales taxes, unlike cities’ systems that also incorporate business and utilities taxes. Meanwhile, state-mandated reforms over years have required improved or expanded services on the same dime, or with little help.
According to an email provided by attorney Eric Frimodt, who is representing the water and sewer districts in court, Upthegrove’s chief of staff told media the new tax is one of two main funding streams to help restore jail bookings at the Maleng Regional Justice Center in Kent, after a preliminary budget eliminated its booking and processing abilities. That would have required officers to drive inmates to Seattle’s detention center for booking.
Shurtleff, the council’s communication director, declined to comment on that matter.
What happens now
A lawsuit challenging the measure’s validity loomed even before the council’s approval of it.
The Bellevue-based law firm, Inslee Best, teamed up with King County water and sewer districts to oppose the rental-fee concept in fall 2016, and after months of meetings and discussions with county officials, the group announced its plan to sue after the ordinance’s effective date of Jan. 29, Frimodt said in an emailed interview.
“Frankly, we are surprised that King County would make the claim that it ‘owns the ROW’ (right of way),” writes the attorney in a letter to an employee of King County Facilities Management Division, the department in charge of implementing the rental-fee ordinance. “King County has no legal authority to charge rent for something it does not own.”
Frimodt argues the substantial majority of roads in question are instead “easements” under state law, meaning King County maintains and uses them without the benefits of ownership.
Anthony Wright, director of the facilities department, declined to comment due to the lawsuit.
With the utilities’ threat of a lawsuit, King County filed a request for declaratory judgment in Superior Court days before the ordinance’s start date late last month, asking a judge to make the call on each party’s rights.
“Although the county’s authority to charge rent is well established, the county agreed that the utilities’ legal challenge should be quickly and fairly resolved,” says an emailed statement from county staff, provided by Shurtleff.
The complaint references “an apparent impasse” between the county and utilities over what it calls the utilities’ “obligation to pay.”
Under the ordinance, the terms for negotiating the rental payments are wrapped into contracts over rights of ways between utilities and the county, called franchise agreements. Both parties are discussing the contracts now, but the county has not so far charged rent, according to King County. That will happen when and if they reach agreements, or the judge rules in the county’s favor.
The water and sewer districts responded to the complaint in a 41-page legal answer last week.
A judge could rule on the matter in the coming months, though an exact timeline is unknown.