Mercer Island utility board hears water supply pipeline update; construction expected to start this summer

The Mercer Island Utility Board received an update June 9 on a major new water supply pipeline that the city plans to build to reduce reliance on Seattle Public Utilities (SPU) after a 2024 leak limited the island's water supply.

Carson Hornsby, management analyst with the city's public works department, told the board the project will install roughly 5,000 feet of new pipeline and remove about 1,500 feet of asbestos-cement main on Gallagher Hill Road to make room for the work. The project also includes curb, sidewalk, bike-lane and lighting improvements on sections of SE 36th Street, Gallagher Hill Road and SE 40th Street.

"We are nearing construction," Jason Kentner, the city's chief of operations, said during the presentation, explaining the city is using a GC/CM (general-contractor/construction-manager) alternative delivery method with Scarcella Brothers as the contractor and RH2 under contract for phase 2 design and permitting.

Staff said design is expected to be complete in July, with construction anticipated to begin in August and run through the following April, and substantial completion currently targeted for December 2027. The schedule was shifted after delays by a King County contractor working in the same corridor and to avoid traffic impacts during the World Cup.

The city is coordinating closely with Seattle Public Utilities because portions of SPU's transmission line will be decommissioned and some segments will be transferred to Mercer Island. Hornsby said SPU formally notified the city in April of its intent to transfer certain pipeline segments and possibly a small real-estate parcel; that transfer will require an amendment to the existing water-supply contract and is expected to be reviewed by the Seattle City Council in early 2027 before returning to Mercer Island for final approval.

Jason Kentner told the board a prior contract reopener with SPU produced an approximately $1.8 million refund to Mercer Island's water fund. "That will be used for water infrastructure improvements on the island," he said, and may help offset costs associated with the asset transfer.

The project will also change service for one large customer: Shorewood Apartments, currently a direct SPU customer. Staff said Shorewood will become a wholesale customer of the city and will be connected at two new master meters on SE 36th Street; the existing SPU main serving Shorewood will be abandoned. City staff have begun monthly coordination meetings with Shorewood to manage the transition and discuss rate implications. "The plan will be to get them on the city's multifamily rate," Kentner said, while cautioning the timing and sequencing of that switch remain under discussion.

Permitting steps are underway: staff reported they submitted a 90% design package to SPU and are addressing SPU feedback, are negotiating a guaranteed maximum price (GMP) with Scarcella Brothers to bring to the city council, and are responding to SEPA comments from the Washington Department of Fish and Wildlife and the Snoqualmie Tribe. Staff said they have addressed the Department of Fish and Wildlife comments and are working through the tribe's archaeological concerns; they expect a determination of non-significance in the near future.

Board members asked about sequencing, including whether the pipeline would be placed into service before roadway restorations. Kentner said pipelines will be fully tested and operational before the official transfer of service and that the transfer timing will be coordinated with contract approvals and final signatures.

Next steps, staff said, are finalizing the GMP, completing the remaining permitting work, and returning to the city council in July for approval of the construction award. The project team will continue monthly coordination with Shorewood and close collaboration with Seattle Public Utilities as the transfer and construction proceed.