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CITY OF EVERETT FISCAL ANNEXATION ANALYSIS <br /> Real Estate Excise Tax (REET) <br /> If Everett were to annex the contemplated study areas, the City would expect to receive Real Estate <br /> Excise Taxes on an annual basis. REET revenues are levied in two halves: The first half (0.25% of the <br /> taxable value of a real estate transaction) may be used for a variety of capital uses, including <br /> development of parks. The second half (the second 0.25%) must be used on a more constrained list <br /> of projects—a list that includes improvements to roads and roadways, but excludes investments in <br /> parks. <br /> Since REET is based on the total value of real estate transactions in a given year, the amount of REET <br /> revenues a city receives can vary substantially from year to year based on the normal fluctuations in <br /> the real estate market. During years when the real estate market is active, revenues are higher, and <br /> during softer real estate markets, revenues are lower. For the purposes of this analysis, it is assumed <br /> that 9.0% of residential property and 4.5%of commercial property turn over in any given year. <br /> Based on the analysis, Scenario 3 is estimated to generate approximately$621,000 in REET revenues <br /> from the annexation areas in 2009. Scenario 4 would generate an estimated $1.3 million. <br /> Gas Tax Revenues <br /> Until 2005, cities had been receiving their gas tax in two distributions: a restricted portion (32%) to <br /> be used for capital; and an unrestricted portion (68%) allowed to be used for operating or capital <br /> funding. Recently, however, the dual-distribution and restriction have been removed, but most cities <br /> (including Everett) have continued to allot about one-third of the gas tax revenues to their capital <br /> program. It is assumed going forward that Council direction on this issue will not change. <br /> Based on the analysis of the per capita gas tax distributions, Scenario 3 is estimated to generate <br /> approximately $85,000 in gas tax revenues for capital projects in 2009 from the annexation areas. <br /> Scenario 4 is expected to generate an estimated $167,000. <br /> IL Final Report:October 2008 Page 48 <br />