South King Fire and Rescue will lop off a small piece of its territory in unincorporated King County to avoid losing an estimated $5.3 million in property tax revenue.
South King officials sent letters this week notifying property owners in the affected area. The department will soon hold public hearings on the de-annexation and ask each property owner to enter into a contract for fire protection in lieu of paying for it through their property tax bill.
The affected area is approximately 1.16 square miles and is bound by the Green River on the north, Lake Fenwick on the west, State Route 167 on the east and 287th Street on the south.
The process to de-annex the territory will take several months and will require the eventual approval of the King County Council.
If approved by the council by Aug. 1, the de-annexation would take effect on Jan. 1, 2012.
The area is largely zoned for agricultural use. A portion of the southwest part contains homes. There are a total of 65 parcels of property in the area, 32 of which contain homes and one that contains a business.
On Feb. 4, the South King Board of Commissioners approved the fire district to proceed with de-annexation.
Levy apocalypse is possible
The reason for the de-annexation rests in the complicated network of taxing entities that overlap in the 1.16-square-mile area, and the manner by which property taxes are raised.
There are six taxing entities in the affected area, including South King Fire and Rescue. Under state law, the total amount that these six entities can levy is capped at $5.90 per $1,000 of assessed value per property.
The maximum levy allowed for each of these six taxing entities can not add up to more than $5.90, though each entity has its own individual levy cap. Because of recent declining property values, taxing entities have increased operating levies to stay funded at current levels. If each of the six taxing entities continues to increase levy rates, that $5.90 cap could be breached.
South King officials predict that the levy cap could be exceeded, making it necessary for some of these taxing entities to lower their levy limits.
In the local tax entity hierarchy, South King would be the first to have to decrease its levy next to the flood district. If that happens, according to state law, the department would have to lower its levy across the entire district.
South King Chief Al Church said this would be catastrophic: a loss of $5.3 million in tax revenue, which would require laying off 40 to 45 employees. The department estimates it would lose $133,000 for every penny the levy is reduced.
Measures had been taken in recent years to fight off the breach of the levy cap. The King County Flood Control District paid some fire departments, including South King, not to increase levies. The district essentially transferred its own tax revenue to entities like South King because it would be cheaper than being pushed out of levying districts.
Kjristine Lund, head of the flood district, said this cost her agency around $3.5 million. But, she said, there’s no appetite to continue paying off fire districts because it becomes more expensive as assessed values continue to decline.
Lund said the flood district has no plan to raise its levy rate from 10 cents per $1,000 of assessed value. It has the ability to levy up to 50 cents.
Kimberly Blakely, a spokeswoman for Valley Medical Center, said the public hospital district has no plans to increase its levy.
Options for residents
South King is betting that property owners in the 1.16-square-mile area will enter into contracts for fire protection. Church said the district would not deny anyone fire protection if they did not enter into a contract.
Church said each property would pay an annual fee calculated on assessed property value. He said it would be the same amount they pay on property tax bills now, but just paid in a different way.
For mortgage holders, he said, the incentive would be that property insurance would go up if there was no official fire protection.
However, property owners in the area have options outside of entering into a contract with South King.
Robert Zeinemann is an attorney at Short, Cressman and Burgess in Seattle who has worked on government annexation issues in Washington and other states. He said residents could petition to be annexed by another fire district. They could also petition to be annexed by another city, or even form their own fire district, though that option would likely be cost prohibitive.
The 1.16-square-mile area is bordered by Kent and the Kent Fire Department. The Kent Fire Department recently split and became an independent fire authority from Kent, though it still serves that city.
Fred Satterstrom, Kent’s planning director, was unaware of South King’s de-annexation plan. However, he said the region around Lake Fenwick — excluding agricultural zones — is part of the city’s annexation plans.
Coincidently, Zeinemann said there was a state law passed in 2007 that directly addresses the issue of a fire district’s de-annexation or re-annexation of territory. The law (RCW 52.04.056) states that fire districts are allowed to de-annex property if an operating levy is in danger. Further, the territory can be re-annexed at a later date if the process is approved by fire commissioners. Voters in the affected area can also petition for a referendum to be re-annexed.
