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Lakehaven Utility District and Federal Way near franchise agreement

Federal Way and Lakehaven Utility District are expected to soon finalize a non-exclusive franchise agreement, officially granting Lakehaven authority to operate and maintain water and sewer systems within the city's boundaries.

Though Lakehaven Utility District has served Federal Way since before incorporation in 1990, there has never been any legal documents dictating what is and is not permitted by the utility company, street systems manager Marwan Salloum said. Instead, the two agencies have operated mostly within the parameters of an agreement held between Lakehaven and King County prior to Federal Way's incorporation, he said. Additionally, the franchise agreement will assure the utility company's jurisdiction is not assumed by the City of Federal Way, and the city does not impose a utility tax on Lakehaven, according to the drafted paperwork.

"For the last 20 years, we've been working under an imaginary franchise," Salloum said.

The proposed agreement comes at a time when the city is attempting to establish franchise agreements with other utility companies currently serving the city, he said. Highline Water District and Midway Sewer District, both of which serve northern Federal Way, are the remaining utilities operating without a franchise agreement, Salloum said.

"Any utility company that is working in the City of Federal Way should have a franchise agreement," Salloum said.

Terms of the agreement

The agreement will better outline Lakehaven's duties and what the city expects of Lakehaven, Salloum said. The agreement is not spurred by problems or concerns the city has with Lakehaven, he said. The agreement spans a five-year term.

"This is mainly to regulate them as to what they have to do when they are working in the public right-of-way," Salloum said.

Under the agreement, Lakehaven Utility District will have the rights and duties to install, operate, repair and maintain a water and a sewer system, and all accompanying accessories, located within Federal Way's right-of-ways within the service area, according to the drafted agreement. The utility company will hold the authority to lay, construct, extend, repair, renew and replace water and sewer facilities, including pipelines, mains and structures. The agreement also allows the company to directly charge and collect tolls, rates or compensation for such services, according to the agreement.

Under the agreement, Lakehaven will continue to operate and maintain the city's fire hydrants and components of the water system that provide fire suppression. A Seattle lawsuit ruled the responsibility for hydrant operation and maintenance now lies with individual cities, rather than utility districts, unless otherwise negotiated. In exchange for the hydrant upkeep, Federal Way will continue to waive the levying of a utility tax on the water and sewer systems, according to the agreement.

The agreement outlines stipulations regarding conditions of use, locations of facilities, permitting requirements associated with utility work within the jurisdiction, Lakehaven's standards of performance and more. The complete drafted franchise agreement can be read by visiting www.cityoffederalway.com/weblink/docview.aspx?id=364609.

"The benefit of the franchise is that it gives you a lot more certainty," Lakehaven general counsel Steve Pritchett said.

Customer impact

Strengthening the relationship between the city and Lakehaven is projected to better serve Federal Way residents and Lakehaven customers. Rate-payers should not immediately notice a difference in service, Salloum said.

However, included in the agreement is a mandatory meeting between Lakehaven and the City of Federal Way within the next two years, in which a merger will be discussed. This could include a complete merger between the city and Lakehaven, he said. It is more likely to entail combining services and operations that both public agencies offer, such as their fleets, to better achieve efficiencies, Salloum said.

Lakehaven already cooperates with the city to provide cost savings to both agencies when possible, Pritchett said. The city has, in the past, floated the idea of merging the agencies on a larger scale, he said. Lakehaven's board of commissioners currently feels the agency is better independently run, he said. But Lakehaven is open to further discussing a merger, in several forms, Pritchett said.

"There is really no reason why we can't sit around a table and discuss these issues," he said.

The Federal Way City Council is expected to have a second reading of the proposed franchise agreement at its 7 p.m. April 20 meeting at City Hall, 33325 8th Ave. S. The agreement will not be adopted until after the reading and approval by the city council.

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