News

Economy casting long shadows

By ERICA HALL

Staff writer

City officials are contemplating asking voters to approve the base property tax rate to protect Federal Way’s revenue from Initiative 864, a proposed 25 percent property tax rollback.

Under the existing Initiative 747, taxing entities can’t collect more than 1 percent a year in property taxes over the previous year. But with assessed property values rising every year, the same tax rate could bring in a more-than-1-percent increase.

The Federal Way fire district currently asks voters each year to approve a levy lid-lift that allows them to continue collecting property taxes at $1.50 per $1,000 of assessed property value. The lift allows the district to keep the rate the same and collect whatever property tax that amounts to following higher property values.

Assistant city manager Derek Matheson said the city could essentially ask voters to do the same thing to keep Federal Way’s property tax rate at $1.30 per $1,000 of assessed value. But he said city officials would be more interested in finding a way to protect the city from Initiative 864.

I-864 is the latest in a series of Tim Eyman-sponsored, tax-cutting voter initiatives. If voters approve the initiative in November, the initiative will roll back property taxes 25 percent. Eyman has until July 2 to file the requisite signatures to qualify the measure for the November ballot.

If the city had a voter-approved tax rate, the city essentially would be immune from I-864, Matheson said.

The City Council was scheduled to discuss the option of a lid lift at a specially scheduled public meeting yesterday at City Hall. Officials planned to present the city’s budget and programs, prioritized in three levels: Those required by the state, those that aren’t required but are necessary for citizens, and those that are optional. Officials also planned to present an array of revenue options, including the levy lid lift, Matheson said.

If the council decides to pursue a levy lid lift, there would probably be a public hearing June 29, followed by a council decision in July in time for the July 30 deadline to add a measure to the Sept. 14 primary election.

Is public support of private projects the golden egg?

By ERICA HALL

Staff writer

As the city sales tax and gambling tax continue to under-perform, Federal Way officials are laying the groundwork for economic development they hope will eventually provide a long-term, stable source of revenue.

They are hoping to build public support for boosting development downtown, which they say will increase the tax base and bring in more tax revenue.

So far, the city has collected $100,000 less in sales tax and $115,000 less in gambling tax than budgeted, city finance director Iwen Wang said.

While the economy nationally appears to be picking up, Federal Way is still in a downturn, Wang said.

“Downtown is just not as active as in past years,” Wang said, adding city officials don’t anticipate the tax base will stabilize until the new super-Target at SeaTac Mall is finished. “And that’s only to stabilize.”

As part of an information-gathering phase, city officials are planning to float the idea of spending public money to coax private developers into the city center core.

Despite some successes in other cities with public-private ventures, City Councilman Eric Faison questions whether now is the time to do it in Federal Way.

“Even though we’re facing a budget crisis, we’re contemplating providing infrastructure investment that cities typically do as part of a (public-private development),” he said. “To purchase property, the city would have to identify potential sources of funding. It’s tough budget times. Where do we come up with the money, or do we do it at all?”

City manager David Mosely said investment in downtown would be the city’s “long-term strategy for overcoming the budget shortfall.” But Councilman Jim Ferrell, cautiously supportive of the idea, said he’s concerned about the $2 million annual budget deficit overshadowing any city investment plans.

“This would be stoking the economic engine — obviously it has to be put in those terms — but I don’t want to start doing something we can’t stop,” he said.

City staff and officials currently are working to establish the framework that will guide an upcoming public process. To start, they plan to form an executive advisory group of development experts and business leaders to advise the council and respond to ideas for development downtown.

The resulting strategies then would be taken to a public advisory group for feedback. City officials plan to hold public meetings in neighborhoods to present the ideas they’ve come up with and see how Federal Way residents feel about them.

Officials are being intentionally vague about what the city could do because they don’t want people to decide against the whole concept because a specific idea wouldn’t work. “This is just a tool box,” said Patrick Doherty, deputy director of community development for economic development.

A preliminary draft of the presentation he’s creating includes statements that the city has seen “steady improvements in services and amenities” because of public and private investment, but that the city now faces “tough fiscal challenges,” partially because of declining tax revenue.

In showing some options for how to attract development into downtown, officials plan to show neighboring cities’ levels of investment in their downtowns, including Tacoma, Renton and Kirkland, as well as those who’ve just begun –– Kent, Burien and University Place.

Councilwoman Jeanne Burbidge said a redeveloped downtown could ultimately take some of the financial burden off property owners “to provide better services for the city.”

Councilwoman Linda Kochmar said she supports getting feedback from the public but wants to make sure there’s an understanding the council wasn’t actively pursuing any purchases.

“I don’t want anyone presupposing the council is moving forward with the purchase of anything,” she said. “This is just discussion.”

Staff writer Erica Hall: 925-5565, ehall@fedwaymirror.com

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