For annexation geeks only or … read the fine print

This post follows on my story about the Bethel Corridor annexation that ran Saturday.

Just kidding about the “geek” thing. Annexation is something everyone should be interested in because it can affect the services you receive and how much you pay for them, which was the point of the story. In fact, one of the reasons I wrote it at this time is that the father of one of my fellow reporters lives within the proposed annexation area, and he was wondering about the ramifications.

I wanted to add to this post some information from Port Orchard Mayor Lary Coppola that I wasn’t able to squeeze into the story.

But first, a correction. This comes as a result of the inquiring mind of Bob Meadows, who is a geek in the best sense of the word. Bob pointed out that the comparison of the city and county stormwater fees didn’t make sense, based on the rates charged under each jurisdiction’s code. The city’s first analysis compared county rates for a building with “multiple units” to city rates for a “single family residence,” which resulted in the confusion.

The correct information is: property owners’ net payments would increase with annexation by just less than $220 per year per $100,000 of assessed value if the annexation were in effect today. (I erroneously reported $150.)

Here is the city’s analysis of the comparative cost of living in the city and the county, with the correct figures.
Bethel Corridor Property Franchise Tax comparison-2010.
And here are the respective tax codes for the city of Port Orchard and Kitsap County:
taxcode- City of Port Orchard
taxcode8040

There also are some differences in development codes between the city and the county, illustrated by the city-generated document below (the home is a real residence, used by permission of the owner). As you can see it’s a residential property, not commercial. Given that the Bethel Corridor is commercial and going to become more-so, residential property owners, considering the effects of annexation, may be thinking about selling and moving, or moving and developing properties to the allowed density. I’d be interested to hear from anyone in that boat; e-mail me at chenry@kitsapsun.com. Here’s the code comparison, which has links to both the county’s and city’s codes.
Bethel Corridor 1880 Salmonberry

And here’s the city’s proposed zoning for areas to be annexed:

Mayor Coppola, in his statement for the story Friday, made some noteworthy points. (The mayor outlines the potential advantages of annexation. There is no organized opposition to the annexation. If I hear of any I’ll give them equal air time.)

The mayor goes into greater detail than I did in the story on what would happen to the county’s Bethel Corridor Plan if annexation occurs. The city would use about half of the increased sales and property tax revenue from the annexation (expected to be about $1.4 million per year initially) for help fund the major road improvement. The city would also seek grants, and federal and state transportation funding (all of which I reported). Although the city may modify the plan somewhat, they would adhere to an aesthetically pleasing design since the corridor would be another “gateway” into the city,” Coppola said (which I didn’t report).

The mayor expects the revenue to increase with the eventual competion of two major retail projects, yet to break ground: the Walmart expansion to a Supercenter, and the construction of a Home Depot nearby. Coppola points out that these two projects could, to a certain extent, “cannibalize” some sales tax revenue from other stores in the city. This trend could be partly offset if the Bethel Corridor can attract shoppers from Gig Harbor, he said.

The story summarizes advantages listed by Coppola, including public safety, prompt permitting and improved road maintenance. He goes into some detail about the staffing and equipment needed to maintain the city’s current level of service.

As I said, I’d be happy to post other arguments for or against annexation (or you can simply comment on this post). Here’s the complete text of the mayor’s e-mail (note he mentions an estimated cost of $30 million for the Bethel Corridor under the county’s plan. The county’s website, however, still lists it at $43 million.)

Here’s the mayor:
The City Treasurer and the Finance Committee have vetted the Bethel Corridor annexation, after input from the Police Department, Planning, Public Works, Clerk, HR, and the Court.

The annexation will generate approximately $1.4 million in annual revenue, split between property and sales taxes. The Finance Committee has tentatively committed to put away half of that annual revenue for debt service on the widening project – which will end up being the largest public works project in the history of the City. We are already searching for grant opportunities and federal and state transportation dollars that could be available to also help defray the costs.

The County has done the engineering on this, and the last estimate I heard was about $30 million. However, that was in 2006 (I think) dollars. Considering the current state of the economy, I believe we could shave 15 to 20 percent off of that. Also, we haven’t seen the actual drawings, so we’re not sure what was included in the way of lanes, medians, landscaping, etc., so we don’t know for sure what opportunities there are for additional savings – if any.

Right of way acquisition is also an issue. We’re not sure if the cost estimates included that or not, but they should have. Also, any future commercial development will have to deed the necessary right-of-way to the City as a condition for permitting any development, which should help decrease the overall cost of the project. There will also need to be some re-engineering done, as the County has allowed some construction to encroach upon what should have preserved as right-of-way, so we’ll have to cross that bridge when we get to it.

With all this in mind, we have a budget of about $700,000 to support the annexation. We expect this to increase as development occurs. For example, the two big projects already in the works are Walmart and Home Depot. It appears the County will collect the permitting fees on these, but we will generate inspection fees, sales tax on the construction, and additional sales tax revenue once they open. Since we did our usual conservative budgeting, none of those gains are figured in our projections.

We also expect those developments will cannibalize some of the existing sales tax revenue we already collect. For example, Walmart will take sales away from some of the existing grocery stores, and Home Depot will impact Lowe’s and Scott McClendon’s Ace Hardware. However, we also anticipate a sales tax jump from all the local folks who currently patronize the Gig Harbor and Silverdale Home Depot’s, and think a grocery department at Walmart will attract some additional shoppers from Gig Harbor since they don’t have a Walmart.

As far as personnel goes, in consulting with all the departments, we have identified and prioritized our additional needs, and created a tentative hiring order.

In looking at the costs associated with this annexation, we will have to hire an additional two police officers, and equip them – cars, guns, radios, computers, etc., as well as train them. Since it takes on average about six months to get a cop from new hire to patrol-ready, we are already engaged in this process, and have identified the top candidates, and made an offer of employment to one of them. Currently, police response time is two minutes or less anywhere in the City, and we are committed to not to diminish that standard in any way.

The next immediate need will be for public works personnel. We are ramping up for that, as well as looking into purchasing the additional equipment we’ll need. One thing this does, is justify the cost of another snow plow, but there’s other equipment we’ll need as well.

It’s imperative to note here that water and sewer services for this area are not supplied by the City, but by West Sound Utility District. You may want to chat with Larry Curles and John Poppe about their plans.

The City Development Department will need at least one more person at some point, and we’re planning on that, as well as additional people in the Clerk’s office and the Court. As we learned with the Fred Meyer annexation, calls for police service will increase primarily due to shoplifters, so with the amount of retail involved in this annexation, we’re planning on the need for more time for the judge, an additional court clerk, and more time for the police officer who staffs the courtroom.

As far as taxes go, I believe Allan sent you a comparison sheet. However, since there is very little residential included in this, I’m not certain how valid such a comparison is in reality. I’ve also attached a comparison for the property on Salmonberry Rd. you asked about.

Finally, what’s in it for the property owner? The biggest positive is the police protection and Public Safety. There’s no way the Sheriff’s Department can match our response time given the County’s budget situation. Sheriff Boyer does a great job, but his people are stretched to the limit right now, so public safety is a big plus. As you recall, when the Walmart shooting happened, the Port Orchard Police were first on the scene when the call from the deputies went out. There’s a reason our crime rate is down over 60 percent since I’ve been Mayor – it’s a major priority. Port Orchard is a safer place to live, raise your family, and own a business than at any time in the past quarter of a century.

Another benefit is our permitting time and customer service. We have the shortest permitting time in the county – and unlike the County and some other Cities, we’re still open for business five days a week. Our people understand that they work for the taxpayers and customer service is their highest priority.

The Bethel Road widening will actually get done. It’s been on the County’s work plan since 1999, and I believe is listed as the 13th priority for the county – behind some trails and other things the County has deemed a higher priority – for 2011.

The roads will be maintained better – and snow plowing will happen sooner.

I hope this is what you wanted. Call me if you have questions.

LFC

Lary Coppola, Mayor
City of Port Orchard
216 Prospect Street
Port Orchard, WA 98366
(360) 876-7025 – Direct Line
themayor@cityofportorchard.us
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3 thoughts on “For annexation geeks only or … read the fine print

  1. The total additional cost for a single-family residence isn’t really being estimated as a certain amount per $100,000 of assessed value. Only the property tax is imposed based on the assessed value. The lion’s share of the added cost to homeowners when annexed into the city comes from the fees and taxes that aren’t based on assessed value. For the majority of the added cost, people need to apply the tax rates to their own costs for the taxed things like cable, electricity, phone, etc., in order to estimate the additional cost from being annexed.

    The county’s Bethel Corridor Project web page shows the total cost as $43 million only because they have done what no one (other than a project’s opponent) normally does. They included the estimated interest that would be paid on the bonds, i.e., $15.6 million.

    When someone buys a home and borrows much of the money to pay the purchase price, is it customary to include the interest that will be paid during the ensuing decades when stating the purchase price for the home? I don’t think so.

    Including the cost of interest on the bonds was apparently someone’s way of making the cost of the project look greater than it is. (It’s costly enough already, and doesn’t need this exaggeration to get the point across about the cost.)

    On another point, it is true that the West Sound Utility District now serves the area; but it is also apparently true that the City of Port Orchard could decide in accordance with RCW 35.13A.050 to take over that part of the district’s systems. If the city took over that part of the systems, it apparently could then impose the city’s taxes on sewer and water utility services just like it already does within what is now the city’s boundaries.

  2. True, that, Bob. The city has used the following monthly estimates to calculate the typical annual increase from franchise taxes (which are not calculated like regular property taxes): Phone, $50 per month (at 6 percent); waste management, $25 per month (at 6 percent); natural gas, $50 per month (at 2 percent); electricity, $100 per month (at 6 percent); cable, $55 per month (at 5 percent). Total $171 out of a total estimated increase of $219.34.

    Residents in the area to be annexed could look at their average utility bills and make their own calculations.

    Chris Henry, reporter

  3. “The city has used the following monthly estimates to calculate the typical annual increase from franchise taxes (which are not calculated like regular property taxes): Phone, $50 per month (at 6 percent); waste management, $25 per month (at 6 percent); natural gas, $50 per month (at 2 percent); electricity, $100 per month (at 6 percent); cable, $55 per month (at 5 percent). Total $171 out of a total estimated increase of $219.34.

    Residents in the area to be annexed could look at their average utility bills and make their own calculations….”

    And the residents gain what in the increased costs of being annexed into the city?

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