MLT finds a way to pay city hall rent without tax increases

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After years of warnings from Mountlake Terrace city officials that there would be no more money to pay rent for city hall offices beginning in 2014, City Manager John Caulfield announced Monday that the city would be able to adjust its budget enough to find approximately $500,000 to meet City Hall rental payments next year.

Caulfield made the announcement at the City Council meeting on July 1, a meeting at which councilmembers were prepared to begin discussions on whether to bring a property tax increase proposal to voters this fall to raise some additional city revenue. The council adjourned without the property tax levy lift lid being formally proposed, effectively killing the idea for this year.

After presentations on the condition of city-owned buildings and current city finances, Caulfield took away any suspense concerning the council seeking a possible tax increase proposal for the November ballot. “Let me just cut to the chase: our recommendation is you not do that for the simple reason that we have been able to identify a source of funding , because things do change, within the existing general fund to be able to accommodate rent in 2014,” Caulfield told the council.

City officials said that more than $200,000 of general government cuts over the next year, plus additional unexpected revenue means that money will be available to make rent payments for city hall offices in 2014. The unanticipated funds that the city is seeing in its coffers include casino tax revenue, higher property tax revenues, income from telecommunication tower lease collections, and an increase in pet license revenues.

While city officials outlined a number of reductions that could be made to the city budget, specific cuts will be decided upon during the budgeting process early this fall. General areas that city officials speculated could see cutbacks included recreation and parks administration, park services labor, city council training, city government mailings, police department staffing, and street and building maintenance.

Responses from city councilmembers to the recommendation to pass on a property tax ballot measure for this fall was mostly favorable. “I’m not ready to go out for another bond issue,” said Mayor Jerry Smith. “I think we ought to try it, just live within our means and see how we survive. We’re going to be out a few police officers and a couple of other things, but we’ll see if it works. If it doesn’t we will have to come back.”

“I do not support a levy at this time,” said City Councilmember Bryan Wahl.

The City of Mountlake Terrace has been renting almost 17,000 square feet on the second floor of the Redstone Building at 6100-219th St. S.W. since 2009. Rental payments are being made from a bank line of credit. Payments on the bond anticipation note (BAN) are scheduled to begin in 2014.

While making adjustments to the current city budget to meet rental payments for city hall was the general consensus among councilmembers, some also expressed that capital needs around the city may necessitate increased tax revenue in the future. “I like the idea of going with the finances that we discovered that we can use because the assessed value is going up and we do have a (new) casino and so forth,” said Councilmember Kyoko Matsumoto Wright. “But again, I’d like to look into what exactly will a levy lift lid do for some of the other things we need to do.”

Councilmember Seaun Richards was more direct in his support for a property tax increase. “I find it kind of interesting that this conversation started with an overview and analysis of public buildings needing about $1.2 million in Band-Aids. And then, all of a sudden, we find out that the City Manager and staff have found about $500,000 to pay rent. I feel we really need to start working on these building needs. I think we should do a levy lid lift and spend the money on the buildings and not kick the can down the road,” he said.

In order to put a property tax levy lid lift on the November ballot, the city council would have to pass an ordinance to do so by the first week in August. Caulfield said that timeline could be “doable,” but he and his staff would need council direction to pursue that at Monday meeting.

— By Doug Petrowski

9 COMMENTS

  1. Councilman Richards should realize that as property values recover, there IS an implicit increase in the property tax, because that tax is tied to property valuation. Since property values are expected to continue their recovery over the next year, he’ll see even greater revenues to come – those taxes will rise further. Maybe when the NNN fees on his two restaurant leases begin to reflect that, he’ll begin to understand.

    I commend Mayor Smith for his willingness to embrace the concept of living within our collective means. It only took three adverse votes by the citizens of Mountlake Terrace for him to get it.

  2. Where to start? The departure of our city manager and the budget miracle happening on the same day is just a coincidence, right? Then there is Mr. Richards, one of two members not on this fall ballot lecturing his constituents on the necessity of capital improvements. What happened to our capital reserves programs meant to build up over time in preparation for such eventualities?

    The bigger truth is a council which unanimously supported a bad idea three times has five members on this Fall’s ballot, even though two are unopposed. Nonetheless, they can’t hide from their decisions. Council gambled they could force citizens to give them everything they wanted, betting the dire economy of 2009 would improve enough by now to vindicate their very bad choice. It didn’t and they aren’t. So, as has been inevitable from the day they tore down the still usable old city hall and began renting, we are now painted into the predictable “cut-services” corner of council’s making.

    Despite there being no proof yet that any of the contemplated cuts will really hurt us, they may. But before the hand wringing protests begin, lets get straight about some of the realities of our situation. First, this money is not all a sudden miracle bestowed upon us by the economy and a gambling casino. A substantial portion is money borrowed from the Utility Fund and must be paid back, just like all the borrowed money to pay for the last 4 year’s rent.

    You see, the elephant in the room is not the money necessary to fund one year’s rent. We may even find that we can engineer a long-term space needs solution which is well within our revenue capacity – without an expensive bond measure.

    Whatever the funding solution to our future space needs is, for next year and beyond, nothing that happened Monday night moves even an inch toward finding the money necessary to pay back the borrowed money we, until now, have been using to pay for our rented city hall. Look at the staff report from their Monday presentation. Their estimate is that we must find $1,700,000 – in addition to paying current and future rent. Council has tabled that discussion until after the election as well. They want no part of any timely conversation about the policy choices they made which put us where we are today.

  3. Len, what are your proposals for funding city services, providing space for city government, and paying the debts already incurred?

  4. It’s unfortunate that to meet this rent without tax increases, the Parks Director position will not be filled in the short term. This is not a long-term solution. The City needs to do better.

    • I’m not sure that’s a correct statement. Duties of the retired director were redistributed to two other City employees, both of whom received raises for taking on the additional work. That IS a long-term solution.

      The needs of the City change over time, and re-allocation of resources is, to my eye, an intelligent way of addressing those changes.

  5. Mr. Holt if you would have attended the City Council Meeting when the Parks Director retired you would have heard that the position at that time was not going to be filled and that the responsibilities he had would be shared by those already employed.

  6. Vince, as the city makes all of us privy to the full gamut of background information necessary to answer those questions, I will be focussing on answers to just those questions. Transparecy, particularly on big ticket initiatives is one of my key goals. It isn’t the strong suit of this council or the current city administration.

    As you have known me for years, you know I want as much information as possible. You also know that my cost-consciousness is not recently acquired. I will say that we need a city government, including capital plans, which we can afford. Much of the hullabaloo surrounding our Town Center, including attempts to build an over-priced Civic Center project have been a so-far unproductive allocation of resources which in general I oppose. Despite the misleading hype surrouding it, this infatuation with one small area of our town shows little potential of providing the ordinary tax payer with their money’s worth.

    Big picture, again I have been saying for many years, citizen do not have to vote to increase their taxes just because council says so. Council, playing with our money, rooled the dice 4 years ago.

    Now we must all live with the consequences. That may mean re-thinking our space needs and/or re-allocation of currently owned space. It may also mean re-allocation of available revenue streams and, depending on those revenues, it may also mean service cuts like those about to take place after the third Civic Center loss.

    My priorities in those discussions would be essential public safety personnel and maintaining a high quality infrastructure – streets and underground utilities – everyone here expects.

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