CCUD building purchase questioned

January 2, 2015

By Christina Corrales-Toy

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A Newcastle City Council-approved agreement to purchase a building for equipment and vehicle storage is raising questions, after the city offered up more than money to acquire it.

In September, the council authorized City Manager Rob Wyman to enter into a purchase-sale agreement for the Coal Creek Utility District-owned property on 129th Avenue Southeast.

In exchange for the property appraised at $750,000, the city would agree to pay $250,000 and forfeit its legal right to assume the utility district for 10 years.

It’s the non-assumption clause, in particular, that has some current, and one former, council members questioning the logic of the agreement.

“I was perplexed by this decision from the start,” Deputy Mayor John Drescher said, “and it only gets uglier the closer you look at it.

“The need for the building is suspect, the cost is unnecessary because it would be zero if we chose to assume the CCUD, but most of all I cannot believe we would surrender a potentially valuable city right to assume the district for 10 long years.”

Drescher was one of three council members who voted against the initial agreement, along with Councilmen Gordon Bisset and Rich Crispo. It passed 4-3, though, Sept. 16.

The building would serve as a place to store and work on the city’s public works vehicles, which are currently parked at City Hall. It’s an ideal location, just down the street from City Hall.

The property wasn’t for sale, said Robert Russell, Coal Creek Utility District’s general manager, but the city of Newcastle expressed interest, so they entered into discussions about an agreement.

The utility district worked with the city to offer a budget-friendly price for the $750,000 property, Russell said. The result was the $250,000 price tag and the 10-year non-assumption clause.

The non-assumption agreement is important, he added, because it “gives the district assurance to be able to plan for the future and know we are going to be around.”

“It seemed like a win-win for us and the city,” he said.

The agreement unjustly binds the hands of future city councils, though, according to former Newcastle City Councilman Sonny Putter.

The longtime councilman spoke as a citizen during the council’s public comment period Nov. 3, and contended that the deal was illegal and a misuse of public funds.

“You’re going to spend $250,000 for an asset that you could get for zero cost, that, I maintain, is a violation of your fiduciary duty to the city,” he told the council.

The city does have the legal right to take over the utility district. All it would need is four votes of the council and approval from the King County Boundary Review Board to assume all of the district’s assets.

Newcastle is in no position to make such a move, though, Councilman John Dulcich said at the Dec. 16 meeting, after Drescher proposed rescinding the previous agreement.

“We heard our city manager the other day talk about how full up the staff is, how there’s not another thing they can do,” Dulcich said. “For people to think that we could assume the district and it’s a plug and play, is wrong. It’s going to take time and effort and we don’t have the capacity in-house at this point.”

Dulcich added that he felt the initial agreement was a good deal, and didn’t see the non-assumption clause as an “egregious or errorful action.”

Drescher’s Dec. 16 attempt to rescind approval for the agreement automatically failed when the vote ended in a 3-3 tie, with Councilwoman Lisa Jensen absent.

“I am not currently advocating the need to assume, but I believe it is my responsibility to maintain and strengthen the financial tools at our disposal — not surrender them,” he said. “I also believe that compelling future councils to uphold the surrendering of this right is far from clear in the law.”

The agreement has not yet been finalized, Russell said, as legal counsels on both sides work through it. He said he had hoped it would get finished before the end of the year, but that is no longer possible.

The City Council will have at least one more chance to vote on the agreement’s funding, though it is unclear when that will be, as both sides continue to work on it.

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Comments

3 Responses to “CCUD building purchase questioned”

  1. CCUD agreement back on the Jan. 20 council agenda : Newcastle News – News , Sports, Classifieds in Newcastle, WA on January 16th, 2015 2:38 pm

    […] Newcastle City Council-approved deal that continues to cause a lot of controversy headlines the agenda items for the Jan. 20 regular council […]

  2. Council approves CCUD building purchase : Newcastle News – News , Sports, Classifieds in Newcastle, WA on January 21st, 2015 12:58 pm

    […] We will have a full story, including council members’ comments from the meeting, in the Feb. 6 Newcastle News. Our original story on the controversial purchase can be found here. […]

  3. CCUD to hold public hearing about controversial building sale : Newcastle News – News , Sports, Classifieds in Newcastle, WA on January 29th, 2015 12:34 pm

    […] We will have a full story, including council members’ comments from the meeting, in the Feb. 6 Newcastle News. Our original story on the controversial purchase can be found here. […]

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