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Renton City Council Delays West Hill/Skyway Annexation Vote in Response to Potential State Budget Cuts

December 6, 2011

For more information contact:
Alex Pietsch
, Administrator, City of Renton, Dept. of Community & Economic Development,
425-430-6592, apietsch@rentonwa.gov

February election postponed until November 2012 to ensure Legislature protects essential annexation assistance program

RENTON, WA: The Renton City Council, during its regularly scheduled meeting December 5, elected to delay the anticipated public vote on annexation of the West Hill/Skyway area until it is determined whether the city will retain access to an important state sales tax credit. Funds from the sales tax credit are essential to the city’s ability to fund the transition costs of providing services to the area.

The 2012 Supplemental Operating Budget Governor Christine Gregoire proposed to the Legislature prior to its current special session eliminates an annual sales tax credit of $2 million per year for the West Hill annexation as well as any future annexations. The Governor’s budget also cuts the annexation sales tax credit for the 2008 Benson Hill annexation by 10%.

The City Council approved a resolution that requests the King County Council postpone the annexation vote until the November 6, 2012, election.

“As a former resident of the West Hill, I would very much like to see this area annex to the city,” said Mayor Denis Law. “But, we are relying on the state tax credit to help make annexation of the West Hill possible. Even with the program, costs for the West Hill annexation still exceed what the area generates in tax revenues. Without the credit, I don’t see how we will ever find a way to cover the costs of serving this community.”

“I remain committed to the West Hill,” said City Council President Terri Briere. “However, given the uncertainty of the state sales tax credit, we cannot move forward with the election in February. Hopefully, the Legislature will recognize that if it wants these urban unincorporated areas to annex it must protect this important tool to help cities like Renton make major annexations viable.”

The West Hill Potential Annexation Area is a pocket of unincorporated King County that lies between the cities of Renton, Tukwila and Seattle. It includes the neighborhoods of Skyway, Bryn Mawr, Campbell Hill, Panorama, Skycrest, Hill Top and Lakeridge. The area has a population of approximately 15,000.

The City of Renton estimates an annual operating funding gap of approximately $4 million if the annexation were to go forward. The state sales tax credit would make up roughly $2 million of the annual gap.

The city has explored extensive intergovernmental and private and non-profit partnerships to help transform this area and has been working internally and with King County and the Legislature to help close the remaining portion of the gap. Renton has lobbied for resources to help with annexation in both state and federal legislative agendas and has worked to partner with the community and foundations to explore possibilities for revitalization. However, the cost to provide municipal services upon annexation remains greater than the revenue available.

The annexation sales tax credit program was established in 2006 by the Legislature as a temporary program to assist cities in the transition costs of providing municipal services to major urban unincorporated areas—the largest, most difficult, and most expensive annexation areas in the state’s most-populated region. Through the program, cities in large urban counties that annex areas with more than 10,000 people are credited with an additional .1% of the sales tax credit the state collects in that city each year for 10 years. Since much of the remaining urban unincorporated areas are residential neighborhoods that do not generate substantial sales tax revenue, they often do not generate enough revenue to cover the costs of providing municipal levels of service in those areas.

The City of Renton is currently receiving approximately $2.1 million per year through the annexation assistance program for its Benson Hill Communities annexation that took place in 2008. If the Governor’s budget proposal is approved by the Legislature that amount would be reduced by 10%.

“The annexation of urban unincorporated areas by cities is an important tenet of the state Growth Management Act as cities are the most efficient providers of urban services,” said Mayor Law. “The Legislature has committed to a critical partnership in recognizing this and supporting this program to help cities fulfill that vision. I encourage lawmakers to stand by the program and keep its funding intact. To undermine or eliminate this state sales tax credit erodes a commitment that has led a number of cities to proceed with annexations that will cost them hundreds of millions of dollars in operating and capital costs. In result, neighborhoods like the West Hill, which so desperately could benefit from city services, will continue to languish as unincorporated islands.”

The King County Council is expected to act on the City Council’s request to delay the annexation election at its meeting on December 12, 2011.