SUMMARY OF MEASURE

The City of Kirkland is proposing to annex the unincorporated neighborhoods of Finn Hill, Kingsgate and North Juanita to the city, a total of 33,000 new residents.  This represents a significant addition to Kirkland’s population which is currently at 49,000.  The annexing area is single-family residential and is largely built-out.  The measure would annex the remaining unincorporated areas between Kenmore, Bothell and Kirkland, thus completing the intent of the State’s Growth Management Act and King County’s Urban Annexation Initiative to provide urban service levels within the Urban Growth Area.  The measure asks residents in the annexation areas to approve three questions:  the annexation, the assumption of a share of the city’s debt service payments on outstanding bonds, and the adoption of zoning regulations consistent with the city’s.  Passage requires a 60% vote.  The Boundary Review Board has approved the city’s proposal.

The economic downturn has caused sales tax revenues to decline since 2008 and has created a budget deficit for the city in the 2009-2010 fiscal year.  The City Council approved expenditure reductions and utility tax and business license fee increases.  The City’s fiscal feasibility analysis found that the annexing area would generate expenses greater than revenues to the tune of $3.3 million per year and assumes that services in the annexing area would be covered by the $4.4 million per year in state sales tax credit (for 10 years) that newly annexing cities are entitled to.   The city could also earn $800,000 per year in gambling tax revenues by allowing the existing casino card room in the annexing area to continue to operate.

Overall, property owners in the annexing area would pay less in property taxes and in total taxes than they currently pay as unincorporated area in King County.  A typical $495,000 home currently pays $9.26 per thousand of assessed value to the County, as compared to $7.89 per thousand it would pay to the City of Kirkland.  If annexed to the city, owners would also pay a utility tax estimated at $409 per year and increased surface water management fees of $59.  The total estimated impact is still $210 less per household per year within the city.

Fire service and library and school districts would remain unchanged after annexation.  City zoning would establish the same densities as currently allowed under the County, but some building heights, setbacks and rules for protection of streams and wetlands would be aligned with the City’s other neighborhoods.  Residents in the annexing area would experience some changes in services and regulations.  Police services would be increased from one sheriff’s deputy to three city police officers on patrol at all times.  Curbside garbage and recycling would be required.  City ordinances prohibiting fireworks and requiring permits for tree removal and for fire sprinkler installation would be in effect. 


ARGUMENTS FOR THE MEASURE

The proponents of the measure made the following arguments in support of the measure:

•    The annexing communities have been part of Kirkland for decades. Annexation will formally recognize neighbors who are already a part of the business and social community of Kirkland.
•    The annexing area will receive better services without higher taxes.
•    Police coverage will increase. Three officers (instead of just one deputy) will patrol the area and response times will be faster. The community will also have improved traffic enforcement.
•    Total taxes will be somewhat lower for most families. Property taxes will be 14% lower in Kirkland than they are as an unincorporated area.
•    Government officials will be more accessible and responsive--seven city council members, rather than just one county council member. It will be much easier to go to downtown Kirkland if citizens feel they are not being adequately served or want a law changed, than to Seattle.
•    Residents will have a stronger say in development.  They will be able to vote for zoning, and development will be overseen and enforced by officials who are only minutes away, with neighborhood input, rather than by a county council and departments in Seattle.
•    Residents will be able to serve on and influence the park, planning, design review, and transportation boards, and neighborhood associations.
•    Home owners will be able to control their utility consumption and directly influence the amount of utility tax they pay.
•    It is costly and inefficient for King County to continue to serve pockets of unincorporated but increasingly urban communities whose residents expect urban levels of service.  Also, the Growth Management Act encourages municipalities to assume responsibility for urban areas.
•    It costs King County 40% more to provide services than it takes in from the annexation area.  It would either cost the area more in taxes to maintain existing services or would require fewer services. Incorporation as its own city is not feasible for the annexation area as it has no commercial tax base. 
•    It is true that the City of Kirkland is going to need new or expanded facilities if annexation occurs. However, it is also true that Kirkland is going to need expanded facilities if the annexation doesn’t occur.  Kirkland will need increasing jail space regardless if annexation occurs or not.
•    According to census data, income, background, house values, etc. are similar in both the city and the annexing area. There is no truth to the concern that annexation will create “two Kirklands” and that the “the people of the annexation area don’t fit.”
•    It is not true that the City of Kirkland residents will subsidize the annexation residents. It is in fact the annexation residents who subsidize the City of Kirkland because they shop in the commercial areas in Kirkland and pay sales tax to Costco, car dealerships, restaurants, and stores that are all located in the city.
•    There isn’t room in the annexation area for any large scale growth. Most of the annexation area is single family houses. Residents of both the City of Kirkland and the annexation area support maintaining and keeping the character of the community.
•    Contrary to some perceptions, the residents of the annexation already exist. There isn’t going to be an influx of people or a change in character because of annexation.

ARGUMENTS AGAINST THE MEASURE

Opponents of the measure made the following arguments:

•    The largest concerns about the annexation proposal stem from the troubled financial picture of the City of Kirkland. The City Council will be looking to cut over $1.6 million from future budgets if a November increase in city utility tax is not approved.
•    The city wants the annexation because the revenue from the state sales tax credit and the property and utility taxes from the annexing area will stabilize the city’s dwindling sales tax revenue.
•    Across the board cuts are being made from city services and Fire Station 34 will likely be closed, some of the very services residents were looking forward to gaining are being threatened.
•    The proposed annexation is linked with an agreement for the annexing area to accept over $8 million in bonded debt.
•    Residents in the annexing area will have to pay the city’s utility tax of 7.5% if the increase passes in November.  This represents about $500 a year for the typical household.
•    The annexing area is unfairly going to be shouldering additional utility taxes and bond debt in an attempt for the City of Kirkland to save their budget.
•    Property taxes will likely increase over the years because the city can raise taxes 1% a year without a public vote.
•    The annexation will only place more strain on Kirkland to cover the shortfalls.
•    The City of Kirkland is going to require new and expanded facilities if annexation were to occur.
•    Residents will have mandatory garbage collection whether they want it or not, whether they may be travelling six months a year or not.
•    Many Kirkland regulations will be more restrictive.  Zoning and building codes will be more restrictive than King County has in place, including setback increases and height restrictions.  Permit fees will be higher across the board. RV and boat parking in residential areas will not be allowed.  To cut down a tree on your own property will require city permission.
•    The city has not committed to taking over the many neighborhood parks in the annexing area.  Kirkland cannot afford to maintain its own parks and is cutting back on parks staff.
•    People in the annexing area have a lifestyle that is incompatible with the city.

RECOMMENDATION and RATIONALE

The Municipal League of King County supports the annexation of Finn Hill, Kingsgate and North Juanita to the City of Kirkland. 

Significant islands of population remain unincorporated in the urban areas of King County, wedged between growing regional cities.  The proposed Finn Hill, Juanita and Kingsgate annexation is such an area.  It has long been costly and inefficient for King County to continue to serve and its residents increasingly expect urban levels of service.  This and similar largely residential areas do not generate sufficient tax revenues to pay for needed services and have posed a dilemma for the County and cities.  The state legislature authorized a transitional sales tax credit to annexing cities for 10 years to help bridge the financial gap.  In response, cities have been stepping up to meet the state and regional growth management goals by proposing to annex the remaining unincorporated pockets in the urban growth area.

Not all citizens are happy with this transition.  Some residents of the annexation area prefer the old lifestyle that involved less government and less regulation.  Nevertheless, the encroaching urban growth impacts and service needs require management by municipal government.  The Municipal League supports the goals of the Growth Management Act and believes that completing the annexation and incorporation of the remaining areas is appropriate.  The current economic downturn and fiscal crisis facing local government have made the timing of this annexation proposal awkward as Kirkland is experiencing difficulties meeting the service needs of the existing city.  However, this annexation is the right thing to do, for the city, for the annexing area, and for the entire region.