The purpose of this newsletter is to provide information, inspire involvement, and make things work in this great city. You can request additional information or comment on the newsletter by emailing richard.conlin@seattle.gov.

CONTENTS:

• Water for Seattle’s Future
• Industrial Jobs Coming Back to Seattle
• Making the University District Work
• Earthquake Lessons from Chile
• How Your Property Taxes Will Pay for the New Arena
• Quote and Deep Thought

WATER FOR SEATTLE'S FUTURE

Seattle Public Utilities has developed an updated water plan covering 2013-2018, with some analysis and projection for future years as far out as 2060. It's a good news plan, demonstrating that Seattle's commitment to water conservation has been extraordinarily successful, and projecting continued success in the future.

The bottom line is that total average demand is forecast to remain at or below current levels of approximately 133 million gallons per day through 2060. That's 20% below the projections made in the last water plan issued in 2007. Actual demand is now lower than in the 1950's. Since 1990, consumption has decreased by about 30% while population in the service area has increased by 15%. Population is expected to grow by more than 20% during the next 3 decades, with no increase in consumption.

Since Seattle's current water supply system produces 172 million gallons per day, there is no need for additional water sources as far as SPU can project. This is true even taking into account the most severe possible impacts from climate change. Under the warmest scenario analyzed, supply would be reduced by about 13% by 2075, which is when the supply would exceed projected demand. SPU projects that even at this point there would be low or no cost system improvements that would enable the system to meet demand.

This good news means that only very modest improvements and renovations will be needed to the supply side of the Seattle water system over the next few decades. The quality of our water supply continues to be very high, and current drinking water quality facilities will probably not need major new increments. That's more good news for water drinkers – and for ratepayers.

There are other parts of the system that will need work, however. SPU has completed permanent covers for eight reservoirs and plans to try decommissioning the two remaining open reservoirs, Roosevelt and Volunteer. However, the first two reservoirs to be covered, Bitter Lake and Lake Forest Park, had floating covers rather than permanent ones, and the plan is to replace these when the floating covers have reached the end of their useful life.

Then there's the distribution system. This is where there is likely to be a long range need to continue to invest in maintenance and replacement of aging infrastructure. Capital spending is expected to level off and decline by about one third over the next decades. The hope is that the new evaluation, maintenance, and scheduling methodology that SPU has been developing and implementing will mean that this level of investment will create a system that is well-maintained and capable of being sustained over time at this level of expenditure. This will mean more stable water rates in the future, especially as the utility pays off the major capital investments made in the last few years in quality treatment and habitat conservation.

Seattle is known around the world for the quality of our water, the effectiveness of our conservation programs, our innovative approach to habitat conservation, and our proactive approach to infrastructure maintenance. The Seattle water system is an example of how we have not just imagined sustainability, but achieved it in this critical area.

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INDUSTRIAL JOBS COMING BACK TO SEATTLE

Seattle's long range strategy for encouraging manufacturing is paying off, as Forbes magazine, in a recent article, rated the Seattle-Tacoma-Bellevue Metropolitan Area as the top area for manufacturing growth in the nation over the last five years.

Manufacturing employment is growing around the country, as industries realize the opportunity for 'reshoring' industrial activity. Much of this activity moved to other countries to take advantage of low wages and the lack of regulatory requirements that are typical of many less industrialized countries. However, these advantages can only go so far: companies are realizing that low wages often mean low skills, and that workers who acquire skills will leave for better jobs as these countries develop. The lack of regulations may cut costs in some cases, but it can also create difficult and challenging environments to work in and cut productivity. Companies seeking long range sustainability not only want strong environmental regulations to level the playing field, but prefer stable and predictable environmental regulations to manage costs.

Companies also have experienced difficulties with legal and political systems, such as arbitrary and/or corrupt officials, difficulties in what should be routine business practices like managing relations and financial issues with subcontractors who have quality control problems, and issues around trademarks and intellectual property rights.

Since 2010, manufacturers have added 470,000 jobs in the United States, with a rate of job growth that is 10% faster than the rest of the private economy, Forbes reports. Areas that have fared best have been those that are well positioned to bring together technology and manufacturing. In our area Boeing is the outstanding example, but many other industries now create high-tech and blue-collar jobs at the same time.

Over the past year the Seattle metropolitan area was No. 2 in the nation in manufacturing growth, expanding employment by 7.9% to 164,000 manufacturing jobs. The aerospace sector, led by Boeing, accounted for roughly half this expansion. Seattle is one of the few big metropolitan areas where there are more manufacturing jobs today than in 2006, before the recession hit. Manufacturing employment is up 0.4% over the past five years.

This is great news for our economy and for the thousands of workers who are making the kind of living wages that these jobs usually provide. It's also a big responsibility for government and decision makers, who will need to be sensitive to the concerns and issues around manufacturing and industrial facilities, effective at finding and using land that can support industry, and efficient at bringing together economic concerns and environmental regulations to ensure that we can simultaneously grow our economy and protect and enhance the environmental quality that is so important to our future.

One creative way Seattle is working to do this is my proposed Industrial Development District. Since I proposed this in 2010, there has been growing momentum in support of the idea, and the State of Washington has just signed on to join Seattle, King County, and the Port of Seattle in issuing a Request for Concepts for pilot industrial development projects, now expected to come out in July.

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MAKING THE UNIVERSITY DISTRICT WORK

The City is embarking on a three year program to support investment in the University District. With construction of light rail from Husky Stadium to Northgate about to break ground, the U District is poised to take a major step forward as an Urban Center, and the City initiative is designed to help make that happen.

The University District and Northgate are the only designated Urban Centers north of the Ship Canal, and the City's growth management strategy is dependent on their success as walkable and vibrant communities connected by light rail to other major centers of employment and housing. Urban Centers are intended to have a mix of commercial activity and employment along with a range of housing types suitable for diverse populations.

The 'University District Livability Partnership' will include three major areas of activity:

• A set of strategies and actions that will encourage commercial activity and economic development.
• An Urban Design Framework that will create a suggested development strategy around land use, zoning, urban design, transportation, with an emphasis on areas within a ten minute walk of the University District light rail station.
• A collaborative partnership with the community and University to coordinate this work and ensure a broad range of public involvement.

The commercial revitalization plan will be developed in a partnership between the Office of Economic Development and the Greater University District Chamber of Commerce, with broad based stakeholder involvement. This plan is intended to be completed this year, with action steps beginning immediately.

The Urban Design Framework will be developed in phases involving a range of community engagement activities. Core concepts will be developed and ideas gathered through 2012, with recommendations then put together by DPD staff, reviewed by the public during 2013, and presented to the Council for legislative action in late 2013 or early 2014. Legislative action will require environmental review, and will likely include zoning, design standards, housing incentives, and a streetscape concept plan.

This program will also inform other possible future initiatives, including a possible community led EcoDistrict initiative and the shaping of the next University of Washington Master Plan update, scheduled to begin in 2015.

I am committed to having the City take a more active and proactive role in implementing and updating Seattle's neighborhood plans. We have heard from communities that their primary interests are generally not to revisit and completely rework the existing plans. Instead, communities have generally emphasized that they are comfortable with the neighborhood plan visions but want to ensure that implementation continues, especially of major initiatives that are not yet complete.

With the expansion of light rail, RapidRide service, streetcars, and other possible transit initiatives, there is also interest in revisiting some transportation issues, but the primary areas that need attention are updating zoning, land use, and housing plans in order to get the maximum integration between development and transit, and in order to further economic development and meet the next stages of the City's long range housing goals under the Growth Management Act and the region's Vision 2040 Plan.

The University District is an absolutely critical element in this work. I had included U District planning as one of my priorities for 2012-2013, and I am very pleased that this work is getting underway.

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EARTHQUAKE LESSONS FROM CHILE

Last month I was one of 40 Seattle business, government, labor, and academic leaders on a study mission to Santiago and Valparaiso, Chile.* One of my major reasons for going was to identify lessons from the recent Chilean experience with a major earthquake. Chile, like Seattle, is on the Pacific Rim of Fire. In February, 2010, Chileans experienced a devastating 8.8 magnitude earthquake. Many electric, water, and sewer utilities were damaged. 81,000 homes were destroyed and 109,000 more were severely damaged, along with 221 bridges, 1554 kilometers of roads, and 3000 schools. The morning after the earthquake, 1,250,000 children were unable to attend classes, and 800,000 people were homeless. Losses totaled about $30 billion, equal to about 17% of Chile's GDP.

Analysts suggest that this event was the most important in the history of modern earthquakes, because it was the first major test of modern building standards and of the ability of communities and government in an economically developed country to respond to and recover from an earthquake of this magnitude.

Here are some of the key lessons that I gleaned from discussions with Chilean officials and written assessments of the experience:

1. Communities responded well to the disaster.
1. Chile is sometimes described as a 'seismic culture', because it has experienced so many earthquakes, including the magnitude 9.5 earthquake of 1960, the most severe in modern history. Volunteerism, preparedness, and community self-reliance are strongly rooted. In Chile, all firefighters are volunteers, and being a volunteer firefighter carries so much prestige that applicants pay a fee to be one.
2. The result was that people took action on their own initiative. The medical community in the most severely stricken area of the country, which lost communications with the central government, responded without central control and successfully improvised and delivered medical responses to the 60,000 injured victims under “austere conditions” that included damaged buildings and loss of water and power. Both the newly injured and existing critical care patients were managed well with minimal losses. Most hospitals were up and operating within a day of the earthquake.
3. Communities responded by sharing shelter and supplies with those who had suffered losses. When the government opened congregate shelters, they were surprised at how few people took advantage of them, because people practiced 'shelter in place' by finding friends and relatives who were able to help them.
2. On the other hand, the central government was slow to respond.
1. A presidential transition was in process, with the new government scheduled to be inaugurated on March 11. Many leadership posts were unfilled, and the outgoing government was hesitant to move decisively.
2. The central government lacked good information, and made poor choices with the information it had. The most crucial error involved a broadcast that no tsunami was expected. Based on erroneous information, the government advised people who had gone to higher ground to return to their homes. More than half of the deaths were attributed to the tsunami, and many of these were likely preventable. Seven people have been convicted on criminal charges for failing to issue proper warnings. Many lives were saved because some local authorities refused to believe the federal government and told people to evacuate (although in one city, the government properly ordered vessels to go out to sea, but unaccountably failed to alert residents). However, the single largest loss of life due to the tsunami occurred on an island where people were camped on vacation: there was no program in place to communicate with and alert tourists and other transient populations.
3. Past experience with military dictatorship led the government to hesitate to order the military to take authority in devastated areas. It was five days before external help reached the most damaged areas, and some looting took place, which shocked Chileans who thought their community cohesiveness would have prevented that.
3. The effectiveness of modern building codes was decisively demonstrated.
1. Half of the deaths were from the tsunami, very few from building collapse.
2. Most of the deaths in buildings occurred in old-style adobe houses: 60% of the houses destroyed were adobe buildings.
3. Of the 9,974 modern mid and high rises that had been constructed since 1985, when the new seismic codes took effect, only 35 had to be evacuated, and the few tall buildings that actually collapsed were those improperly sited on poor soils, which had been overlooked because of mistakes or fraud by the builder. In one building that completely toppled over, most of the occupants survived because the framework of the rooms still met seismic standards and preserved the integrity of the individual apartments.
4. A critical gap in standards was the failure to consider the role of major interior elements, such as air conditioning units, shelving systems, and office equipment. Significant amounts of damage and injury were caused by interior systems that tore from walls or slammed around rooms.
4. Recovery has been slow; ingenuous improvisation has helped.
1. It took a month to restore utility services, and 90 days to restore schools with modular classrooms.
2. Food began flowing to the affected area very rapidly, because the government already had a supply of standard 4x4 boxes of food used in its low income food programs, which could easily be dispatched for emergency use.
3. 65,000 units of prefabricated emergency temporary housing were assembled and deployed to allow people to reoccupy their properties long before they could repair or restore permanent houses. The government has committed $3 billion to finance reconstruction of housing, using a set of model designs.
4. Many businesses, industrial properties, and office and residential buildings were not designed to be resilient enough to be rapidly renovated and repaired after significant damage. The long-term economic effects of the earthquake are still being felt by some people and areas, even though the Chilean economy as a whole has resumed its economic momentum.
5. Effective insurance and liability systems are critical to long-term recovery.
1. Only about 25% of the damage was insured, and the $7.5 billion in insurance settlements greatly exceeded the $4.3 million in premiums that had been collected in the past 30 years. Participation in reinsurance plans was critical to the survival of the insurance system and to ensuring that claims were paid.
2. The government stepped in with a mandatory adjustment system to ensure rapid settlement of claims. In ten months, 99.8% of claims were settled. Of 234,517 cases that were contested, only ten went to the litigation stage.
3. Chile's liability law makes construction companies liable for any damages for ten years after construction if building codes were not properly followed. The few modern buildings that collapsed had generally been constructed improperly, and this law ensured that those major losses would be covered by the construction companies.

Some core messages for Seattle:

1. We cannot overestimate the importance of a community that is prepared and ready to take individual and collective action in the immediate aftermath of a disaster. We should redouble our efforts to work with our residents, businesses, and communities to give them the understanding and tools they need to be able to respond, and the confidence to take action. This includes reemphasizing and expanding our efforts to support community building and developing strong connections among and within communities.
2. Government, especially those responsible for immediate actions to ensure order and provide assistance (including decision makers), must be well-trained and practiced in order to be ready for decisive and swift response.
3. Effective and resilient communications systems are essential, and people responsible for communication to the public must be well-trained and able to effectively interpret and communicate information under conditions when accurate data may be minimal.
4. Building codes should be modified to ensure that buildings significantly at risk (in Seattle, these include unreinforced masonry and other older construction types) are retrofitted to meet modern standards. Requirements for tie-downs and other policies should be reviewed to prevent damage to and from major interior elements (Chile is developing a model interior element code, which it will implement on a national level).
5. The adequacy of the insurance system should be reviewed, and possible changes to insurance and liability laws considered. Systems should be in place, such as the extended builder liability law in Chile, that ensure that building codes are complied with.
6. The jury is still out on recovery strategies. Continued efforts are required to ensure that the framework is in place to ensure rapid economic and social recovery from a disaster.

*The Council usually sends one or two representatives on these annual international study missions, and 2012 was my turn to be eligible to join the trip. The core mission for these trips is developing connections with leaders and business representatives in other countries, and promoting international understanding and peaceful relationships. We also look at specific issues, such as economic planning, education and health care systems, tourism and urban development strategies, and environmental issues. One of the most interesting experiences was meeting with leaders of the ongoing student-led campaign for education and political reform – they gave us quite a different perspective from the government officials we met with.

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HOW YOUR PROPERTY TAXES WILL PAY FOR THE NEW ARENA

Seattle property owners will actually fund about $15 million of the City's proposed $120 million investment in the proposed basketball/hockey arena to be developed south of Safeco Field, even though publicity for the project has suggested that repayment of this investment will come entirely from revenues associated with the arena, not taxpayers, and, further, that this investment will be risk-free for taxpayers. As the Council is finally given the information that will allow us to make a reasoned judgment on the viability of this proposal, details are beginning to emerge about the actual agreement, and some of those details do not quite live up to the hype.

The agreement between Mr. Hansen and the governmental participants is complex, with lots of moving parts and highly specific arrangements. One of those details transfers some of the funding responsibility to Seattle property owners. It's an arcane arrangement specifically tailored to the unique way in which property taxes are assessed in Washington. It's also a challenge to explain, but here's the basic story.

Unlike almost every other state, in Washington local governments do not actually set a property tax rate. Instead, cities levy a total dollar amount of taxes to be collected, and the County Assessor translates that into a rate that will collect that much money. The amount of money to be collected can only increase by 1% per year without voter approval, which means that property taxes are generally pretty stable, with only small increases or decreases as property values fluctuate with the economy.

There is one exception: new development. This is assessed at the same rate as other property, and then is added to the base for the following year. In practice, this means that actual property tax collections increase by 2% or 3% each year, rather than the 1% allowed, but since the additional amounts are paid by the owners of the new development, this does not increase the tax bill for the rest of the property owners beyond 1%, so normally new development and this extra revenue collection does not affect your property taxes.

But the arena deal is structured so that it will. Here's how:

• Hansen's company will build the new arena as a private development, so when it is completed, the approximate $400 million value of the new building (the value of the land underneath the building is not included in this) will be added to the tax rolls, leading to about $1 million in additional property tax revenues to the City the first year that the new facility is in operation.
• But then the agreement provides that the City will take possession of the arena after a year or so. Once the City becomes the owner, no property taxes will be assessed on the arena, because public property is exempt from property taxes.
• The catch is that since the arena was on the tax rolls for a year, its value gets rolled into the next year's property tax base. So the $1 million or so in taxes that the arena would have owed each year from then on gets paid by every other taxpayer. The $1 million per year will be used to pay off $15 million of the City's funding for the arena, but even after the loan is paid off, taxpayers will pay this much more per year -- forever.
• If the arena remained private property, the taxes paid by the arena would go to the City's general fund to support police, fire, human services, and other City programs.

Is this an accident, a mere quirk of the deal? No, the City's financial analysts explained to me that it is deliberately structured in this way to allow the City to sell about $15 million of the bonds with the very secure backing of a guaranteed property tax revenue stream. And then to ensure that these property taxes are not paid by the team owners.

It's a small amount – no more than a few dollars per year for even the owners of the most valuable property. But it disturbs me, and it emphasizes how important it is to look this 'gift horse' in the mouth, and thoroughly check all of the provisions of the agreement before signing off on it.

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QUOTE:

"It is not wise to look too far ahead; our powers of prediction are slight, our command over results infinitesimal.'"
-- John Maynard Keynes

DEEP THOUGHT:

"Rightists and leftists gotta believe in libraries – for lefties they are the only property sharing thing, no qualifications, no strings, we’ve got going and it’s a sin to let it die… And if conservatives want to believe that Horatio Alger can still make the big jump, that everybody has a chance if they work hard, they better have a library open for Horatio to study up on his skills of his choice and it better be close to his home because he’s tired and it better be open late."
-- Anne Herbert

Richard Conlin
Your Seattle City Councilmember

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