2008/10/15 Council Agenda Packet

CITY OF EVERETT FISCAL ANNEXATION ANALYSIS: EXECUTIVE SUMMARY Potential parks acquisition and development in these annexation areas presents a policy-level question for the City, especially considering the neighborhood and community parks deficiencies within the current City boundaries. These policy decisions would have capital and operating implications of bringing the annexation areas up to the higher level of service. Depending on how the City might choose to address these parks deficiencies, an annexation of the magnitude envisioned in either Scenario 3 or 4 could significantly increase the costs of achieving a given level-of-service goal. The potential for higher capital expenditures for initial parkland purchase are not included in this analysis. Transit Based on a review of Community Transit services, it appears that there is currently no significant bus service in Eastmont, Hilton Lake, Rugg's Lake, and Larimer. Upon annexation of these areas, the City of Everett would face a policy choice of where and how much transit service it would provide. According to Everett's Transit Department, sales tax revenue is a major funding source for its services. Snohomish County now levies 0.9% sales tax for Community Transit, while Everett levies a 0.6% sales tax for transit. Annexation would shift the sales tax revenues collected in these areas from Community Transit to Everett,with taxpayers paying less in sales taxes. Assuming annexation under Scenario 3, the City is likely to receive an estimated $256,000 in sales tax revenue for transit in 2009. Under Scenario 4, the estimated increase in tax revenue is approximately $448,000. CAPITAL IMPACTS The capital impacts from annexation are somewhat more difficult to discern. While this analysis does estimate the equipment costs associated with new staff, it only addresses infrastructure costs on a qualitative basis. The annexation analysis does estimate the additional capital revenues available after annexation. The analysis provides estimates of the revenues from the Real Estate Excise Tax and the capital portion of the Gas Tax,which are held aside as available funding for capital infrastructure needs in the contemplated annexation areas. These revenues for Scenarios 3 and 4 are displayed in Exhibit 25 below. Scenario 3 amounts to an estimated $207 million over the next 20 years in present value terms and Scenario 4 results in an estimated $224 million. Upon annexation, as capital costs are fully fleshed out, there likely to be more needs than there are resources coming from the annexation area. This situation is comparable to the base City situation, which has unfunded portions of its current capital needs, and unless there are significant immediate capital infrastructure needs in the annexation areas, the long-term funding situation is unlikely to be dramatically different than the status quo. EL Final Report: October 2008 Page ES-8