Cheney burned by fire contract

Nobody knows exactly how it happened, but somehow a misapplication of a payment formula has left the city of Cheney out of collecting tens of thousands of dollars on its annual fire contract with Eastern Washington University.

"I don't know what went wrong, but somehow the numbers changed dramatically to where we were shorting ourselves significantly," Cheney Fire Chief Mike Winters said in a recent interview.

Winters had been involved in all fire contract negotiations since coming to Cheney in October 2006, but was excluded from talks beginning in 2010. City Administrator Mark Schuller said those contracts were negotiated between EWU officials and former City Administrator Arlene Fisher.

"No rationale was given to Chief Winters as to why he was removed from negotiations with EWU," Schuller said. "Simply put to him was the fact that the former city administrator would 'handle it.'"

The formula is simple: total assessed value of the state property divided by the total assessed value of the city's property. That produces a percentage ratio, which is then multiplied by the fire department's budget for the coming year to produce the fire service fee.

The contract for 2010, which was done in Winters' final year of his contract involvement in 2009, was based on EWU's assessed value of $110,729,380, divided by Cheney's value of $452,491,026 - which produced a fire service fee charged to Eastern of $314,775.

But in reviewing the fee for 2015, Winters and Schuller both said they noticed something was wrong with the projected amount of $442,792. Looking at fire contract fees over the past four years, they found they were all close to the same value, something that baffled Schuller and Winters given the fact EWU has seen a huge construction spurt over the past decade, with buildings such as Computer Science and Engineering, the Eastern State Archives, Washington State Patrol Forensics Lab built and existing structures such as Monroe, Hargreaves and Patterson halls remodeled.

Schuller contacted the Spokane County Assessors Office, who provided an assessed value for EWU at $243,897,320, and a Cheney value of $520,239,897 for 2014.

After applying the formula, they came up with a fire service fee of $755,709, over 58.6 percent more than what was charged and collected by Cheney. When Schuller went back and reversed the formula for 2011, 2012 and 2013, he came up with a total assessed value for EWU of $13,478,320 in 2011 and $14,529,624 in 2012 and 2013.

Figures from the county Assessor's Office put EWU's total assessed valuation at $237,742,120 in 2011 and 2012, and $245,0030,920 in 2013.

Schuller said when they approached EWU officials with this information, they asked for proof of the assessed value figures. So, he began a time-consuming process of locating all county parcels owned by the university and determining what was shown on those parcels.

What he found was that the county's data didn't show much of the construction and remodel work. He also found that one facility, the Morrison-Streeter Residence Hall complex, actually was listed as belonging to Cheney, not EWU.

"That was $18 million right there," Schuller said.

What Schuller found doesn't necessarily surprise Dave Loomer, who is the levy specialist in the County Assessor's Office. Loomer said the county physically inspects one-sixth of the properties each year, and doesn't give public properties as much "scrutiny" as it does private property.

The reason for this is simple.

"They (public properties) don't generate tax," Loomer said. "Our values are there to generate property tax."

After showing EWU officials their work and calculation proofs, Schuller said he and Winters entered into renegotiations on the 2015 contract. Realizing trying to recoup $312,917 would be a tough sell, they reached a settlement of $531,350 - $88,558 more than the original fire service fee.

"As far along in the game as we were, we just wanted a deal," Schuller said.

At press time, Schuller and Winters were in negotiations with EWU on the 2016 contract, which if the correct assessed values are used, would charge the university a fire service fee of $779,904.

As for who and how the incorrect figures were calculated, and why no one caught them before, Schuller is at a loss to explain. Prior to 2010 it was Winters who did the calculations and gave them to EWU. After he was excluded from the process, Schuller said Fisher would give the numbers to Finance Director Cindy Niemeier, who didn't question their validity.

"She really didn't think anything of it as there were modest increases in the value of the contract over the course of the last several years, even with the errors," Schuller said in an email. "Same goes for the Mayor and Council when they were approving the contract and passing the city budget each year."

John McCallum can be reached at [email protected].