Tacoma Public Utilities is taking a group of local governments to court in a case that pits South Sound communities against their big-city water provider.

Depending on the outcome, non-Tacoma water customers could see their rates increase or cities and counties could be forced to pay additional costs out of pocket.

The city is asking a judge to require five governments – Pierce County, University Place, Fircrest, Federal Way and King County – to reimburse Tacoma Water for improvements it made to bring water to their communities, as well as pay for future maintenance on their systems.

Tacoma’s city-owned utility wants almost $3.9 million every two years to cover the costs of installing almost 3,900 fire hydrants and expanding water pipe systems within other jurisdictions’ boundaries. Those improvements are required by code in each of the jurisdictions named in a June 12 complaint filed in Pierce County Superior Court.

The city bases its argument on a Washington State Supreme Court decision last year that reaffirmed fire hydrants were the responsibility of cities and counties, not the water provider.

“It’s not a huge amount of money, but for us, it’s about following the law,” said TPU spokeswoman Chris Gleason.

But to the local governments named in the complaint, the city-owned Tacoma Water is asking for a sizable chunk of their general fund budget.

If the court backs the city and its utility, already cash-strapped local governments would have to take on the ongoing maintenance costs for fire hydrants.

Fircrest City Manager Bill Brandon said his city isn’t opposed to paying for fire hydrants, but it wants to know where Tacoma got its numbers. It’s asking Fircrest to pay more than $3,600 annually.

“We’re just saying, ‘Give us an accounting of how you came up with this,’ ” Brandon said.

Communities such as University Place are taking a harder stance, arguing that Tacoma can’t change something it agreed to years ago.

University Place City Attorney Janean Parker said it signed a franchise agreement with Tacoma Water to provide service after it became a city in 1995. The agreement places the responsibility of installing and maintaining the hydrants on the utility, she said.

University Place got a quarterly bill from the utility at the beginning of the year. The city calculated that the utility wants $303 for each of its 990 fire hydrants this year. That’s $300,000 annually.

“We were clear with them up front that we weren’t responsible for this,” Parker said.

The complaint also names Lakewood, Puyallup, Bonney Lake and Ruston, although those communities have paid Tacoma or have agreed to do so, Gleason said. They account for almost 89 fire hydrants, or $54,000.

Reimbursement wasn’t an issue before the state Supreme Court issued a decision out of King County last October. The court ruled that Lake Forest Park, the city receiving the water, was responsible for installing fire hydrants, not its water provider, the City of Seattle.

The Supreme Court reaffirmed a trial court decision that found “providing fire hydrants is a government responsibility for which a government must pay,” out of its general fund, according to the published opinion.

Jim Doherty, legal consultant for Seattle-based Municipal Research and Services Center of Washington, says the decision left governments across the state with questions about who should pay whom.

Tacoma is asking $700,000 a year from Pierce County for more than 2,500 hydrants. Al Rose, Pierce County’s executive director for justice services, said he agrees with Tacoma that the responsibility of providing hydrants falls on local governments.

But the Supreme Court decision didn’t answer whether indemnity clauses in franchise agreements would shield the outlying governments from having to pay. Pierce County, University Place and other local governments have such clauses in their contracts with Tacoma Water.

The court needs to also decide whether Tacoma’s methodology of calculating the bill is accurate, he said.

“They’re just looking for more guidance from the court,” Rose said.

Tacoma’s complaint also states that if local governments are protected by indemnity clauses, it will increase the water rates for that community’s customers.

It was scheduled to increase rates to outlying customers by 8 percent this year and 6 percent by 2010.

But in the wake of the Supreme Court decision, it lowered the increase to 4 percent this year and 3 percent next year. If the Pierce County judge doesn’t allow Tacoma to recoup its expenses from its outlying communities, the utility will likely raise rates back up to 8 percent and 6 percent.

Gleason said it’s a matter of fairness.

“Yes, if the organizations that haven’t paid us are covered by indemnity clauses, then we will ask for a rate adjustment specific to those organizations to get that money back,” she said. “That way we don’t have City of Tacoma customers pay for the fire hydrants in Federal Way.”

Doherty put it this way: “Ultimately, it’s the residents who pay the tab. It’s just a matter of what pocket it comes out of.”

“If you pay for hydrants through the water company, it’s a rate increase,” he added. “If you pay through the general fund, it’s a tax increase.”

A hearing is scheduled for October in Pierce County Superior Court.

Brent Champaco: 253-597-8653

brent.champaco@thenewstribune.com