LETTER TO THE EDITOR: ‘Doing business in a businesslike fashion’


[EDITOR’S NOTE: The following is a Letter to the Editor, written by a Reader. It does not necessarily reflect the opinion of The SeaTac Blog nor its staff:]

Doing business in a businesslike fashion

I have recently undertaken a review of the process used to enter into one of the largest single contracts that the city has with the vendor, the ILA with the Kent Regional Fire Authority. While my review is not complete at this time I am disturbed at the manner and methodology used to aggregate information that was presented to the City Council regarding this $10 plus million a year contract. In my 45 years in business, it was always the responsibility of the people preparing any presentation to document their sources and calculations as being factual and correct. I have not found that to be the case of the work leading up to the final vote to enter into the contract with the Kent RFA. While I will be using the information obtained in that investigation, it is important that this input is not a condemnation of the decision to enter into that agreement, but rather a comment on the methodology used in creating the proposal. It is a statement of how un-businesslike the methods of the city seem to be to the eyes of a businessman.

The majority of the information presented to the Council for this issue consisted of many PowerPoint presentations, which included graphed spreadsheets. Spreadsheets while being a phenomenal asset for calculating what-ifs are only as good as the accuracy of the formulas and data used within them. In business it is normal for significant analysis to include documentation of source and verification of accuracy. When references are made to “savings”, “equipment value”, or effect of future costs, it is the responsibility of the author to document that the data provided has at least 1 foot in reality, by documenting the source, setting forth precedent, or including opinions from experts in the field. The Kent RFA presentations allude to “insurance savings” but include no identification of which insurances would be reduced or in what amount and have no statement of accuracy from the broker selling the city the insurance. When data is placed on a spreadsheet and graphed the data utilized must be verified for input correctness and graphing accuracy. Businesses examining presentations in the range of $10 million a year for 20 years usually have at least two different individuals verify the documents accuracy. Considering SeaTac has a city manager and director of finance, I would expect that the minimum that one employee from each office verified the data used in the spreadsheet calculations and that the structure of the calculations and the spreadsheet, were verified. I would also expect to see sign offs by all parties for accountability.

Another aspect of working with spreadsheets is their ability to model long-term data. I use the term “modeling” which involves creating a spreadsheet of all items that effect the bottom line for each scenario (in this case the cost of the Kent RFA verses the SeaTac FD.) This allows a line by line breakout of the similarities and differences.  When costs, expenses or benefits are being projected for contract term of 20 years and there is an annual modifier (such as the Seattle/Tacoma/Bremerton CPI-W) it is paramount that an accurate estimate of total costs is identified, and that projection of variance in the modifier is included. To assume that any modifier will remain stagnant for 20 years is folly. A good example of the effect of a modifier would be gas. In 20 years gas prices have gone from $1.12 in December of 1995 to $4.12 in July of 2008 and down to $2.06 in January 2016.[1]

In the case of the Kent RFA, there are a number of key points that should have been modeled beside the example above. The ILA must run a minimum of five years before it can be terminated and after that time a two-year period is required to disentangle SeaTac from the Kent RFA. In this writer’s opinion, at minimum, the projected cost for the first seven years of the ILA should’ve been modeled against 7 years  cost for continuing the SeaTac Fire Depart, including a variance in the CPI. A cost of disentanglement should’ve been estimated so that the Council would be able to view what they spent and what they would have to spend to undo the contract. Modeling provides decision-makers with multi perspective insight into what is, what can be and what it will cost to change direction in the future. There is no doubt that this type of work would have been a significant additional amount of work for the city manager.

In the alternative, the city could have hired a third-party consultant with experience regarding decisions of dismantling or maintaining fire departments. I do not know if this was considered but it seems to me that there were few experts in City Hall who had the ability to analyze the question in front of them, using the cities available resources (staff) and the ability to develop a fully explored presentation compiled from verifiable information.

Running the city is not that much different than running a business. The Council looks at information and makes decisions based on presentations created by others. Validation, alternate perspectives, verification of information, and use of methodologies not found within the four walls of City Hall seem not to being embraced. In business, the search for the right answer requires accountability. Accountability is achieved by using business like methods which check and verify that information calculations are correct and come from a source that is capable of expertly analyzing the issue.

It is clear to this writer that in order to become fiscally responsible to the taxpayers, the city must start to question the accountability of anyone presenting information for decision-making. Within the city standards for bringing any form of data to the Council must be established. The finance department and the city manager’s office should be responsible for vetting the data of all matters brought to the Council in a transparent process. To do any less would be un-businesslike.

– Joel Wachtel
________________

[1]  Https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epm0_pte_nus_dpg&f=m

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Comments

15 Responses to “LETTER TO THE EDITOR: ‘Doing business in a businesslike fashion’”
  1. jellybean says:

    There was a article in the Kent Reporter January 29,2016 – Kent RFA seeks extension of fire benefit charge http://www.kentreporter.com/news/367015751.html#storyComments

    My Comment:
    So Jim Schneider mention this tax would pay for equipment and new fire station. Then mentioned City of Seatac will not need to vote because they have a contract which pays 9 million. So if Seatac pays 9 million and this tax is for equipment and new station, WHY DID SEATAC PAY $500,000 FOR NEW LADDER FIRE TRUCK AND IS PAYING 3.1 MILLION FOR NEW STATION AT ANGLE LAKE???

    Response:
    Kent Fire Department Regional Fire Authority
    Ms. Scaman, You’ve asked a question that I’m sure interests many people. The money paid by the contract to the Kent RFA from the City of SeaTac is for the operation of their fire department and has been in place since January 1, 2014.

    The money spent on the ladder truck and the new fire station by the City of SeaTac was done that way because both of those assets belong to SeaTac, and not the Kent Regional Fire Authority.

    This is why they were paid for separately.

    We hope that this helps explain why the City of SeaTac paid for those assets. If you or anyone else ever has questions or comments about your fire department, please always feel free to contact our administrative headquarters at 253-856-4300.

    We are Your Partners for Life.

    Sincerely,

    Captain Kyle Ohashi
    Kent Regional Fire Authority

    My Response:
    So Seatac $9 million is only for operations while Kent $10 million is for operations, equipment and new station. Now I understand why the fire dept supported some council members at election time

    Nothing from Captain Ohashi

    So Seatac is paying 9 million dollars just for ‘operations’…. while Kent 10 million dollars is for operations AND new equipment AND new station….

    Well-liked. Like or Dislike: Thumb up 13 Thumb down 3

  2. Michael T Kovacs says:

    I asked the ? and never got an answer to this experience back in September, 2015.

    A fire truck and ladder truck responded to a medical emergency on my street. 8 firemen total. Tied up the half street for 50 minutes. I could not get out of the driveway of my house.

    In the end the medical emergency was over and no one left in a aid car or ambulance. Which was good.

    How come all those resources responded? Seems like a partial waste of money. On a Saturday morning.

    Hot debate. What do you think? Thumb up 6 Thumb down 7

  3. Joel says:

    Jellybean, the money you are referring to for the new ladder truck was given to SeaTac by Sound Transit because we need this truck to service fires and emergencies at SeaTac station, Tukwila station and the soon to be Angle Lake station. No taxpayer money went to this purchase.

    Also, the $10 million a year is the cost of paying for the firemen, operations and administration. The only real difference is a pay increase the firemen got when becoming employees of Kent. This was a windfall for the firemen and an additional cost of us, but it is really not the biggest problem with the contract. We pay 100% of firemans salaries as before.

    Michael, the unions have negotiated a 72 hour shift, which keeps a minimum staff in each station 24-7. I agree that it seems send a fire truck out on every EMS call appears inefficient, but the philosophy is to get the fastest response possible to the emergency what ever it is. I have wondered if an 8 hour shift might cost less in overtime, but I haven’t finished my investigation and that is one of the questions I will be asking.

    Also an important fact is Kent is responsible contractually responsible for an 8 minute response time 90% of the time.

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    • Mr. SeaTac says:

      Are you really saying that the firefighters’ 20% pay increase is not the biggest problem with the contract? Doesn’t the City have a huge deficit now due to the repeal of the utility tax?Aren’t those salary increases critical in closing that budget gap? Was that budget gap that big or did the city need the utility tax before they contracted with Kent RFA? That is the real question.

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    • Michael T Kovacs says:

      Joel,

      The response to the EMS call was 1 truck and 1 ladder truck with 8 firemen for 1 hour total. Is this just the amount of resources to send to the EMS call? Too many? I think its too many.The truck was parked in front of the ladder truck. It took one firemen 10 minutes to help the ladder truck back out of a dead end street. Then they ran over the side walk 4 times back and forth because there was not enough room.

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    • jellybean says:

      Joel you said the ladder truck was for the Seatac, Tukwila and Angle Lake Stations. Why do I keep hearing City of Seatac when it comes to the Tukwila station? Why isn’t Tukwila responsible for that station? I thought only the parking lot across the street is Seatac?

      Rate: Thumb up 4 Thumb down 1

  4. Resident of SeaTac says:

    What do you mean that no taxpayer money went to this purchase? Where do you think Sound Transit gets their money from? Tax payers! Did Sound Transit pay for the entire cost of the ladder truck? Or did SeaTac pay part of the ladder truck? You might want to take second look at that to get your facts straight.

    Well-liked. Like or Dislike: Thumb up 12 Thumb down 0

  5. Earl Gipson says:

    The budget deficit, how we got there, and how to fix it should have been the subject for discussion at the last Council meeting instead of the CBDG grant ad nauseam.

    What were the true costs of switching to the RFA? How much did the RFA increase our recurring costs? Only our Director of Finance, Aaron Antin can factually answer these questions for the Council.

    Here is another subject for the Council. Why and how does the Port ILA waive all traffic impact fees/permit fees to the City of SeaTac? Why did we extend this awful deal for two more years (last minute-before this Council was sworn in)? Even the developers of a single family home must pay them. Considering the Rental Car Facility, the Concourse Expansion, and the airport freeway alteration (doubling traffic at 170th and IB) these are huge amounts of money the City didn’t get and won’t for the much larger coming airport expansion as it stands now.

    We have our staff chasing butterflies (mission/vision retreat, CDBG discussion for example) while alligators snap at our heals and crotch.

    Well-liked. Like or Dislike: Thumb up 19 Thumb down 1

    • Mr. SeaTac says:

      Mr. Gibson, I have to agree with your comments on the last Council meeting and the RFA. But I have to ask you, why is it that Mr. Antin is the only one who understands what the costs of switching were and what the recurring costs are? Aren’t these numbers available in the budget? If these numbers are not clear in the budget then maybe Mr. Antin needs to explain them at a City Council study session or at a Council committee meeting so that everyone understands exactly what fire services the citizens are paying for and how much they are costing us.

      Hot debate. What do you think? Thumb up 10 Thumb down 2

    • Holly M says:

      Earl,
      For all your good qualities, sometimes I think you talk (and write) just
      to hear yourself speak. Especially after that last little comment. Keep
      the blame where it belongs man. Not on the budget guy, a day-long council
      retreat or a couple-hour discussion about grants.

      It was the previous council, whose spiteful, scorched earth policy on
      their way out the door did this. NEVER forget that. It was Mayor Mia
      Gregerson, Barry Ladenberg, Dave Bush, and the “Left-overs,” Tony Anderson
      & Kathryn Campbell, who irresponsibly put the city in this situation.
      Totally sickening, self-serving leftist politics, not serving the best
      interest of our city.

      Earl, relax and let the new council work. You should know that you can’t
      turn a government on a dime responsibly. So chill out Cactus, you ain’t
      making things any better. Take deep breaths, have some faith, and just
      watch this council methodically fix the problems. We are ONLY a month or
      so into this thing…

      Hot debate. What do you think? Thumb up 7 Thumb down 11

  6. mminnot says:

    Mr. Wachtel:
    When you attempt to analyze policy decisions, and ask provocative questions, your credibility goes up. Many watched as you personally attacked several of our neighbors in the last election in ways that went beyond the pale. It sickened me. Here, you are attempting to provide a thought provoking perspective, and are asking good questions. Until now, I gave you no credibility. However, if discourse is kept at this level in the future, things will change. Thank you for your effort to understand this difficult public safety policy.

    Rate: Thumb up 7 Thumb down 3

  7. Joel says:

    To Mr. SeaTac: I can understand that you’re upset, but please don’t mistake me for “Mr. Answer Man”. I question the entire deal with the Kent RFA. I have spent four months accumulating hundreds of documents to attempt to verify that the information put in front of the city Council was valid. At this time, I cannot honestly tell you whether it was or wasn’t because of the way the presentation was created. The city has a deficit due to the fact that the free spending party that controlled the Council since the city was created has never worked to create a sustainable budget until the crap hit the fan. The sale of the Kent RFA deal is supposed to save the city money in the long term. At least that is what the PowerPoint presentations, say. The city was behind in paying benefits for the firemen and that added budgetary pressure. Also, it appears the city was behind and upgrading the fire equipment pursuant to normal standards. In other words, the city had not been funding its liabilities on schedule for some time. However, I suspect that it was the unions that pushed this deal rather than it being something the city sought.

    Michael: I too have questioned the fire department policy of sending a fire truck out on EMS calls. I have been told that the purpose of this policy is to get the quickest possible response to a medical emergency. I have yet to be able to discuss with the proper fire department official why EMS vehicles, would not be a better and ultimately cheaper response. I have my suspicion that much of this is union dictated. As I believe the 72 hour shift is union dictated and costs way more than using the revolving eight hour shift. If and when I get to speak to the union, I will be asking these questions.
    Jellybean: All the local cities provide each other emergency services support through a formalized agreement. This is not a bad thing. We are all neighbors and we should be helping each other.

    Resident of SeaTac: My statement, explained that the money did not come out of the city’s bank account, I never said that it did not come out of the taxpayers and I do not argue that point. The ILA agreement states that SeaTac was required to turn over the funds given to the city by Sound Transit to pay for this truck. It said nothing about the city purchasing the truck and giving it to Kent. It is my understanding that the fire trucks, including the new one and our equipment inventory, which was sold to the Kent RFA, is now registered in the name of the Kent RFA.

    Mminnot: I am not looking to gain credibility, I’m looking for answers. I have taken a tremendous amount of my own personal time to get these answers to find out if the political system in SeaTac is as out of touch with reality as it seems. This is an important question for me and my family, since we have made a significant investment by moving to SeaTac.

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    • Mr. SeaTac says:

      What benefits are you talking about that the “city was behind on in paying to the firefighters? Which equipment was the city behind on in upgrading and which pieces of equipment has the Kent RFA upgraded besides the ladder truck since they took over? Might be interesting to take a look and see if the Kent RFA is actually upgrading the equipment. Please report back on that. I am very interested in hearing about the new pieces of equipment that have been purchased.

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  8. jellybean says:

    Joel you mentioned ‘the fire trucks, including the new one and our equipment inventory, which was sold to the Kent RFA, is now registered in the name of the Kent RFA.’

    That wasn’t what Captain Kyle Ohashi with Kent Regional Fire Authority said:

    he money spent on the ladder truck and the new fire station by the City of SeaTac was done that way because both of those assets belong to SeaTac, and not the Kent Regional Fire Authority. Paid 1/31/2014 13840 KENT FIRE DEPARTMENT RFA PIERCE AERIAL LADDER TRUCK 600,000.00

    Rate: Thumb up 2 Thumb down 1

  9. Speakeasy says:

    The bickering about the fire department and much is suspect that needs fact checking. I personally have never heard of anyone working 72 hours straight except before wage and hours laws were passed decades ago. Firefighters work 24 or 48 hours shifts averaging around 50 hours a week. Labor laws in Washington provide the means to negotiate and weekly hours are locally determined based on employer and employee priorities. Please get facts before you assume or speculate to allow others reading it as gospel.

    The Emergency Medical System (EMS) system is determined in King County with help regionally by Fire Chiefs, Hospital Medical Directors and healthcare professionals who work at the County. While the system we use is considered by most in the world as the best for patient outcomes, criticism of the response is ok. If fact prevails and 8 firefighters were at a call that Kovacs mentions it was likely someone who was clinically dead and CPR was started. CPR for 15-20 or even 45 minutes is very demanding on the crews doing it and historical data shows high performance CPR saves lives and people go on to live normal lives. Having two firefighter rigs with 3 people, a medic unit who brings a portable emergency room with 2 people and a battalion chief are standard protocol for most every place in King County. Other types of calls with unconscious patients would bring a similar response.

    Could go on about many other speculations made but hopefully this helps a little to better understand a couple comments made.

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