McCormick Annexation Money Matters

For anyone who may have missed last night’s meeting between McCormick Woods residents and city of Port Orchard officials, I will tack on at the end of this post a “Property Tax and Franchise Comparison” prepared by the city treasurer that answers the question:

What’ll it cost me?: Basically it’s a wash. City calculations based on 2008 numbers, show that the owner of a $350,000 home who as a county resident currently pays a total of $3,805.46 in taxes and fees would pay a total of $3,798.55 as a resident of Port Orchard. This does not include a storm water utility fee to be introduced in 2009 (approximately $90 annually).

McWoods residents in Port Orchard would pay a city property tax, which goes into the general fund and the city road fund, in addition to their county property tax, but they would no longer have to pay into the county road fund. And McCormick Woods residents would no longer pay the 50 percent sewer surcharge they now do as part of unincorporated Kitsap County, saving each household an average of $300 per year. (“Who would pay for that loss of revenue?” city resident Genevieve Hall asked me this morning. My notes from the meeting show the difference would be distributed among all city residents as a 10 percent increase in sewer fees.)

Will my property taxes go up?: In a word, no, at least not as a result of the annexation, according to Kitsap County Assessor Jim Avery. “We look as the whole urban growth area as one for our valuation purposes,” Avery said. Besides that, Avery pointed out, assessed values are trending downward at this time.

Will the city pay for streetlights?: (McWoods residents currently pay for their own streetlights in their dues.) The city would pay for any streetlights on public roads within McCormick Woods and The Ridge. Residents who live on private roads will continue to pay for streetlights.

Will properties in McWoods be rezoned, and therefore subject to a possible tax increase, as a result of updates in the city’s comprehensive plan?: Because McWoods is a planned development, no rezoning of properties within the annexation boundaries is expected or planned, Mayor Lary Coppola said.

How is the city doing financially?: Port Orchard has a long history of fiscal conservatism. Only within the last few years have they started including return envelopes with their utility bills, and city hall visitors must pay a penny a sheet for toilet paper if they have to use the restroom. (I made up the toilet paper thing, but it would be very much in the old PO spirit.) While the city expects 8 percent less in sales tax revenue in 2009 as a result of the economic downturn, it is also expecting to annex a considerable amount of commercial property, including Fred Meyer, which could offset the loss. The city’s budget is tight, and they will balance it by making adjustments, but they are in better shape than most of their neighbors (except Poulsbo), reported John Clauson, who chairs the finance committee.

So what’s in it for Port Orchard?: City officials have said the annexation, while it would provide increased property tax revenue and a small amount of sales tax revenue, would financially be “a wash” for the city. Six additional staff members would be needed to provide services to the area. As a larger jurisdiction, however, the city would be better eligible for state and federal grants and other funding, Coppola said.

Aside from any financial incentives, city officials say, they want McCormick Woods as part of the city because they see them as an asset. Coppola, last night, noted that with its many retirees, McWoods represents a new pool of potential representatives on the city’s volunteer boards or as elected officials. Somebody out there could even replace him, Coppola joked. He added that unincorporated McWoods is a small fish in a big pond (he didn’t exactly put it that way). As part of the city, however, they would be a big fish in a smaller pond and have better representation in their local government.

If this annexation fails, would Port Orchard try again by initiating an annexation itself? This could happen in theory. One method of annexation allows a city to initiate an annexation; then residents in the area to be annexed must vote on it. Would Port Orchard actually do this? probably not, said John Clauson. “Why would we fund an election if you’ve just told us no?” he said. If you choose not to, we’ll shake your hands and we’ll still be your neighbors.”

Here’s the line item financial comparison.

8 thoughts on “McCormick Annexation Money Matters

  1. In footnote 3 of your financial comparison worksheet, you acknowledge that Port Orchard is not within the Kitsap Regional Library taxing district.

    This means that the KRL property tax levy is not collected from Port Orchard city residents.

    The city pays KRL under an agreement between the city and KRL, but that city payment is made from city revenue, not from a separate library property tax paid by city residents.

    So, the amount shown as a library district tax to be paid by “McWoods” residents after annexing into Port Orchard needs to be erased from your worksheet.

  2. Interesting information for McCormick Woods residents and taxpayers. How will Port Orchard annexing McCormick Woods affect the taxes for the unincorporated areas of Kitsap County, ie. those of us in South Kitsap rural areas? Will our taxes go up to make up the County losses? Things like the KRL, fire district, Sheriff, etc. Everyone seems to worry about how the poor City of Port Orchard will fair, or how will the highly planned development of McCormick Woods survive without the County. Please include the voters, taxpayers, property and homeowners of the unincorporated areas in the discussions. We have a vested interest in this procedure also.
    Roger Gay
    South Kitsap

  3. Is the $90. storm water utility figure depend on annexation? In other words, is it more for Port Orchard City households if the annexation doesn’t go through?

  4. Sharon – I don’t think the annexation will influence the amount of the SW fee. I will attend a work study of the city council Tuesday where they will discuss SW fees, with coverage to follow. Chris

    Bob – You’re right about the way City residents pay into the library (as compared to other Kitsap residents), but in their comparison, the city of PO broke the library amount out of the city tax. Here’s treasurer Kris Tompkins on the matter. Chris

    “Chris,

    There was two ways we could have shown the Library on our comparison.
    The way we did it was to convey that the City of Port Orchard pays the
    same milage rate to the Library that they receive from all the other
    County residents. Hence the footnote number 3.

    The other way would have been to show the total ($565.16 + 98.07) of
    $663.23 on the City of Port Orchard line. So if you erase the $98.07
    from the sheet, it must move up to the next line. There would be no
    change in the bottom line totals.

    Bob’s paragraph “The city pays KRL under an agreement between the city
    and KRL, but that city payment is made from city revenue, not from a
    separate library property tax paid by city residents” is correct. But
    it does come out of the amount of property taxes we collect.

    Hope this helps. Let me know if you have more questions.

    Kris”

  5. Roger – Here’s the response to your question from Kitsap County assessor Jim Avery. Sound like the effect on county residents would be negligible. Chris

    Roger asked, “How will Port Orchard annexing McCormick Woods affect the taxes for the unincorporated areas of Kitsap County, ie. those of us in South Kitsap rural areas? Will our taxes go up to make up the County losses?”

    Jim Avery said:

    “The answer to Roger Gay’s question is that the only impact would be to the county road fund. Annexation to the City of PO will cause the total assessed value in the County Road District ($20,773,992,162) to be reduced by about $328M. This will cause the road fund levy rate to increase by about 1.57%. Without the McCormick assessed value the road fund levy rate would increase by about $.01789/$1000. The owner of a $300,000 home would pay $5.37 more in county road district tax following annexation.”

  6. Thanks for the clarification on the library tax, Chris. The way it is displayed in the worksheet led me to believe that it is what the worksheet shows it as — the same tax everyone else pays to KRL. I didn’t guess that they had deducted that KRL amount from the amount shown as the tax paid to the city. So, if I had guessed — and double-checked their figure for the city tax to see if my guess was correct — I suppose I would have instead pointed out that footnote 3 ought to tell people how they chose to display the city’s tax in two places, one of which might otherwise look like a tax levied by the KRL and paid by residents to KRL.

  7. Thank you for the information, Chris. It’s a good question. If the city doesn’t grow by 25%, are the current city residents liable for a larger portion of the stormwater utility fee? How does possible annexation affect the people who don’t get to vote on it? It might equal the amount of the school levy increase for a 125,000. home. It seems pertinent.

    I appreciate the forum you provide for discussion.

Leave a Reply

Your email address will not be published. Required fields are marked *

Before you post, please complete the prompt below.

Enter the word yellow here: