2020/02/26 Council Agenda Packet

Impact on Everett's Maximum Regular Levy Rate—The creation of an RFA would reduce Everett's maximum regular levy rate by the amount of the RFA levy rate. An RFA funded by property tax would have a maximum levy rate of$1.50. Under an RFA funded by property tax,the City's maximum levy rate would be$2.325 if the RFA was at its maximum rate. An RFA funded by a combination of property tax and a fire benefit charge would have a maximum levy rate of $1.00. Under this funding structure,the City's maximum regular levy rate would be$2.825. Everett's projected regular levy rate for 2020 is$1.90. RFA Levy Rate—If the RFA was funded by just property tax, its maximum levy rate of$1.50 would generate approximately$30,130,000, based on Everett's 2020 assessed value. This amount exceeds the 2020 cost of fire services, less the net cost of Fire Inspections, by$7.5 million. However,the RFA would not be required to impose its maximum rate initially. The initial levy rate would be a key decision point in the establishment of an RFA. If the RFA is funded by a combination of property tax and a fire benefit charge,the maximum levy rate of $1.00 would generate $20,087,000 based on Everett's 2020 assessed value. The remainder would be funded by the FBC. However,the RFA could choose to fund a greater portion of its operating costs- up to 60%- by the FBC and impose a lower property tax levy rate. Regular Levy Concessions—Similar to the Sno-Isle merger, the City may need to consider possible concessions in its regular property tax levy in order to achieve voter approval to create the RFA. If the City were to make no concessions on its regular levy, adding$1.50(the maximum rate for a property tax-only RFA)to Everett's tax role would cost a homeowner of a median value property an additional$584 per year, based on Everett's 2020 assessed value. Under the combined property tax/FBC funding structure, the maximum rate of$1.00 would cost the same homeowner an additional $389 per year, plus the Fire Benefit Charge. If the City were to reduce its levy rate by the RFA's full$1.50 levy rate, it would increase the General Government deficit by$7.7 million, based on the 2020 forecast. The cities of Kent and Lynnwood formed RFA's with existing fire districts. Both cities chose to initially reduce their regular levy rates by amounts that were less than the initial levy rates of the new RFAs. In both cases, taxpayers paid more in property tax to form the RFAs. Kent consumed its banked capacity in the following year. To date, Lynnwood has consumed about 30%of the banked capacity it created through the formation of the RFA. Impact on the Structural Deficit—The amount of deficit reduction would depend on the level of regular levy concession that the City would offer to promote voter approval. A table showing the incremental dollar value of levy rates based on the City 2020 Assessed Value is provided on page 9. Impact on Median Value Property Homeowner—The cost to a median value residential property owner would depend on the taxing structure of the new entity and the amount of concession the City offered on its regular levy. A table showing the incremental cost increases a median value residential property is provided on page 8. mil LI Alternative Service Delivery/Funding Models Wage