2008/10/15 Council Agenda Packet

CITY OF EVERETT FISCAL ANNEXATION ANALYSIS Beginning July 1, 2007, a city with a population less than 400,000, located in a county with a population greater than 600,000 that annexes an area with a population of over 10,000 (prior to January 1, 2010) may impose a sales or use tax. The tax must be taken as a credit against the sales tax, so it is not an additional tax to a consumer. Key stipulations: • Net Deficit. The tax may only be imposed if the City determines that the projected cost to provide services to the annexation area exceeds the projected revenue from the annexation area. All revenue from the tax must be used to provide, maintain, and operate municipal services for the annexation area. • Ten Year Limit. The tax imposed must only be imposed at the beginning of a fiscal year and must continue for no more than ten years from the date it is imposed. • The Maximum Tax Rate. o 0.1 percent for each annexation area with a population over 10,000 and o 0.2 percent for an annexation area over 20,000 • Revenues May Not Exceed Deficit.The revenues may not exceed the difference of that which the city deems necessary to provide services for the annexation area and the general revenue received from the annexation. If the revenues due exceed that which is needed to provide the services, the tax must be suspended for the remainder of the fiscal year. 1.3 Annexation Scenarios It is generally not practical or reasonable to evaluate each of the potential annexation areas in isolation; there is a logical order of annexing the closest areas first and then the outlying ones. Moreover, there could be economies of scale benefits in annexing several areas at once. For these reasons, the nine contemplated annexation areas were rolled into the seven annexation "scenarios," based on the following criteria: (1) the areas under consideration must have logical geographical boundaries and be contiguous; and (2) the scenarios must have at least 10,000 population, to ensure receipt of the State sales tax credit. The following are the annexation scenarios that have been analyzed: • Scenario 1: Emander and North Creek • Scenario 2: Emander, North Creek, and Lake Stickney(all areas west of City boundary) • Scenario 3: Eastmont, Hilton Lake, and Rugg's Lake • Scenario 4: Eastmont, Hilton Lake, Rugg's Lake, and Larimer • Scenario 5: Eastmont, Hilton Lake, Rugg's Lake, Larimer, Cathcart, and Silver Firs (all areas east of City boundary) • Scenario 6: Emander, North Creek, Eastmont, Hilton Lake, Rugg's Lake, Larimer, and Cathcart (all areas within the UGA) • Scenario 7: All nine study areas nl Final Report:October 2008 Page 3