Lakehaven Water and Sewer District offices in Federal Way. File photo

Lakehaven Water and Sewer District offices in Federal Way. File photo

Court rules in Federal Way’s favor in Lakehaven tax dispute

Judge rules city has authority to tax water, sewer utilities

The city of Federal Way has cleared a legal hurdle to charge water and sewer customers a 7.75-percent utility tax, following a King County Superior Court judge’s ruling on Tuesday.

Judge John McHale determined the city has the authority to tax water and sewer utilities, and that the tax is constitutional.

The Federal Way City Council approved the tax on water and sewer utilities not already paying excise taxes to the city in March. The city already levies a 7.75 percent tax on gas, electric, cable, phone and other utilities. Federal Way anticipates collecting $980,000 from this utility tax, which was one of several measures proposed to offset a $854,000 budget shortfall that the city has since remedied.

Challenging the legality of the tax, Lakehaven Water and Sewer District, along with Highline Water and Midway Sewer districts filed a lawsuit against the city in April.

“The ordinance passed by our City Council is merely a matter of equity in that it now treats water and sewer utilities like other utilities,” Federal Way Mayor Jim Ferrell said in a press release. “As I informed the public and our City Council earlier this year, our actions were lawful, Constitutional, and equitable. We did not initiate any legal action, and now that our King County Superior Court has affirmed what I have been saying all along, I am hopeful that we can move forward without further litigation.”

According to the city, the court relied on the decision of Division III of the Washington State Court of Appeals in City of Wenatchee v. Chelan County Public Utility District in addressing whether RCW 35A.82.020 authorizes the city to impose excise tax on other municipal corporations.

“I’m somewhat disappointed,” said Lakehaven board president Tim McClain of the court ruling. “I think going into this we knew it could go either way. Either side I believe expected that whatever the decision was it would be appealed to a higher court.”

McClain said the board of commissioners will vote on whether to appeal the decision at their meeting next week.

Lakehaven customers have already been paying the 7.75 percent excise tax since June. The Lakehaven board approved a resolution on June 14 to apply the excise tax to designated district fees and charges during the pending litigation.

City spokesman Tyler Hemstreet said Lakehaven has been paying the tax to the city since the ordinance took effect. However, the proceeds are being paid into a court register until the case is resolved, he noted.

More in News

Serving country, serving community

Federal Way veterans, active military talk sacrifices, community service

Federal Way veteran turns 100 on centennial of WWI ending

Man recalls life, Air Force pilot experience

Federal Way Farmers Market co-founder creates community gathering place

Rose Ehl is Mirror’s Citizen of the Month for October.

Former Federal Way basketball player facing voyeurism charges

Detectives filed the case with the King County Prosecutors Office on Friday.

Federal Way police nab armed robbery suspect

A trio of suspects robbed Safeway and fled on foot.

Crime, unsupportive city drives thrift shop out of Federal Way

The Hoarder’s Attic Thrift Shop is moving to Tacoma after lack of police, city response, owners said.

HUD concerned Federal Way has not met requirements for PAEC loan

Housing and Urban Development says city has not met job growth goals since the PAEC has opened.

The team that advocated for I-1631 at downtown Seattle’s Arctic Club on Nov. 6, 2018. Photo by Melissa Hellmann
Washington rejects carbon fee

I-1631 campaign organizers say they will continue pushing for a cleaner future.

The race for Washington’s 9th Congressional District is between two Democrats, incumbent Adam Smith (left) and political newcomer Sarah Smith. File photo
Congressman Adam Smith leads re-election bid for WA’s 9th District

The district spans from Bellevue and south Seattle down through Renton, Tukwila, Kent, Federal Way and Tacoma

Most Read