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Home My WebLink AboutReg 2023-04-03 Item 5D - PSRFA - Financial Considerations Regarding Annexation into Puget Sound Regional Fire AuthorityCOUNCIL AGENDA SYNOPSIS .4.%) " 4,1, Initials ITEM NO. .4 Meeting Date Prepared by Mayor's review Council review 0� 4/3/23 RB a ,� oJ.D. 2908 ITEM INFORMATION STAFF SPONSOR: RACHEL BIANCHI ORIGINAL AGENDA DATE: 4/3/23 AGENDA ITEM TITLE Financial Considerations of Annexation to the Puget Sound Regional Fire Authority CATEGORY 0 Mtg M*. Discussion Date 3/20/23 ❑ Motion Mtg Date ❑ Resolution Mtg Date ❑ Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ther- ❑ Other Mtg Date SPONSOR ❑ Council ►1 Mayor ❑ Admin Svcs ❑ DCD ❑ Finance ❑ Fire ❑ P&R ❑ Police ❑ PW SPONSOR'S The Council has asked staff to provide additional information on financial considerations SUMMARY regarding annexation to the Puget Sound Fire Authority. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety ❑ LTAC ❑ Arts Comm. DATE: COMMITTEE 0 ❑ Finance & Governance ❑ Planning & Community Dev. Parks Comm. ❑ Planning Comm. CHAIR: KRULLER RECOMMENDATIONS: SPONSOR/ADMIN. Mayor's Office COMMITTEE COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 4/3/23 MTG. DATE ATTACHMENTS 4/3/23 Informational Memorandum dated 3/28/23 Minutes from Finance and Governance Committee meeting of 03/20/23 45 46 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Committee of the Whole FROM: David Cline, City Administrator Vicky Carlsen, Finance Director CC: Mayor Ekberg DATE: March 28, 2023 SUBJECT: Financial Considerations Regarding Annexation to the Puget Sound Fire Authority ISSUE The Council has asked staff to provide additional information on financial considerations regarding annexation to the Puget Sound Fire Authority. BACKGROUND In 2022 the City made the decision to contract with the Puget Sound Fire Authority (PSRFA) for the delivery of fire and EMS services in Tukwila. This decision was made based on a community -driven process that included formal recommendations from the City's Future of Fire and EMS Services Community Advisory Committee. That group recommended annexation to the PSRFA because of the high level of service the PSRFA is able to provide — above and beyond what Tukwila was able to provide with an in-house Fire Department — and because of the long-term financial sustainability of the provision of fire, EMS and other municipal services in Tukwila. The City Council adopted the Advisory Committee's recommendations, which the Mayor also supported, and the City began contracting with the PSRFA on January 1, 2023 with the goal of a formal annexation within two years. To access the report, visit http://records.tukwilawa.gov/WebLink/ElectronicFile.aspx?docid=355066&dbid=1. OVERVIEW • Annexation into the RFA was the consensus of the 2021/2022 Future of Fire and EMS Services Advisory Committee in order to ensure the long-term sustainability of funding Fire and EMS services and to enhance Fire and EMS services in the City of Tukwila • The Committee also understood that annexation would also provide the City a tool to address structural funding gaps; annexation would allow the City to return to pre - pandemic service levels • Annexation allows for a more equitable allocation of responsibility for funding fire services as larger, more complex buildings pay a higher proportion of fire services • As a part of the adopted 2023/2024 biennial budget, the City anticipated lowering the City's property tax levy rate upon annexation starting in 2025 • The 2024 Council will ultimately make the decision on what rate to levy as a part of the 2025/2026 budget, but the current adopted six-year plan includes the following assumptions: o Reduce property taxes levied by the City o Return service levels to pre -pandemic levels o In Q3 of 2023, initiate the long-term fiscal sustainability planning effort, which includes the formation of an advisory committee of residents and other 47 48 INFORMATIONAL MEMO Page 2 stakeholders to be completed in Q2 of 2024 to provide long-term fiscal solutions to the City Council in time to inform the 2025/2026 budget • The 2023/2024 adopted budget includes the following property tax rates in the six-year plan: City's Property Tax Rate for General Fund Purposes Year AV PropTax LevyRate Difference Actual 2020 7,883,057,562 $ 16,251,567 2.06 Actual 2021 8,010,892,032 $ 17,124,167 2.14 $ 872,600 Actual 2022 8,970,452,548 $ 17,100,000 1.91 $ (24,167) Budget 2023 9,374,122,913 $ 17,682,000 1.89 $ 582,000 2024 9,795,958,444 $ 18,124,000 1.85 $ 442,000 2025 10,236,776,574 $ 11,457,720 1.12 $ (6,666,280) 2026 10,697,431,520 $ 11,801,452 1.10 $ 343,732 2027 11,178,815,938 $ 12,155,495 1.09 $ 354,043 2028 11,681,862,655 $ 12,520,160 1.07 $ 364,665 • The decision regarding the City's 2025 property tax levy rate rests with the next Council. Similarly, the PSRFA cannot predict its 2025 rate as it is dependent on a number of factors, including the overall assessed value of every property in the RFA. • Because of these realities the City can only rely on 2023 numbers and the assumptions referenced above to provide examples on the impacts to property owners. • While staff have provided an example below on impacts to one single-family property below, it is important to remember that this is in 2023 dollars and that the Fire Benefit Charge (FBC) is calculated on square footage and therefore is specific to the example property below; a single-family home with less square footage than the example below will pay less FBC. • The adopted six-year plan anticipates the following changes in property taxes with annexation for a single-family homeowner with a current assessed value of $604,000 and square footage of 2,980 sq ft' (in 2023 dollars): (For example purposes only) • A single-family homeowner with a home with an assessed value of $604,000 and square footage of 2,890 sq ft would pay an additional $385 annually, approximately $32 more a month to ensure Tukwila has: 1 Fire Benefit Charge (FBC) is based on square footage to ensure larger buildings that require more resources to combat fires pay a larger share than smaller ones requiring less resources. Larger buildings pay more FBC than smaller ones; actual FBC cost are calculated directly a property's square footage. 2 Includes voter -approved Public Safety bond, approximately $309 for this specific single-family house. City Property Tax2 RFA Property Tax RFA Fire Benefit Charge RFA Total Taxpayer Experience Total Pre- $1,481 $1,481 Annexation Post $1,010 $519 $337 $856 $1,866 Annexation Annual Difference in 2023 dollars $ 385 • A single-family homeowner with a home with an assessed value of $604,000 and square footage of 2,890 sq ft would pay an additional $385 annually, approximately $32 more a month to ensure Tukwila has: 1 Fire Benefit Charge (FBC) is based on square footage to ensure larger buildings that require more resources to combat fires pay a larger share than smaller ones requiring less resources. Larger buildings pay more FBC than smaller ones; actual FBC cost are calculated directly a property's square footage. 2 Includes voter -approved Public Safety bond, approximately $309 for this specific single-family house. INFORMATIONAL MEMO Page 3 o Sustainably funded Fire and EMS services, increasing such services in our community including the CARES program that dispatches social workers and nurses to non -emergency calls to stabilize the most vulnerable residents and higher levels of public education and community engagement o Returned City services to pre -pandemic levels, allowing more resources for Public Works, Technology, Permitting and Parks and Recreation Sources: 2023/2024 Adopted Budget, Six-year plan on pages 53-54 Future of Fire and EMS Services Advisory Committee Report RECOMMENDATION Information Only 49 50 City of Tukwila City Council Finance & Governance Committee Meeting Minutes March 27, 2023 - 5:30 p.m. - Hybrid Meeting; Duwamish Conference Room & MS Teams Councilmembers Present: Staff Present: I. BUSINESS AGENDA Kathy Hougardy, Acting Chair; De'Sean Quinn, Cynthia Delostrinos Johnson Vicky Carlsen, Tony Cullerton, Brandon Miles, Rachel Bianchi, David Cline, Griffin Lerner A. Financial Considerations - Annexation into the Puget Sound Regional Fire Authority Staff provided an overview of financial considerations, including taxing capacity, of annexation. The current six-year plan does forecast a reduction of City property taxes, yet the details are the responsibility of the 2024 City Council to determine with input from the financial sustainability community advisory group. Committee Recommendation Discussion only. Forward to April 3, 2023 Regular Meeting. B. Capital Facilities Financing Update Staff presented an updated memo reflecting additional information requested by the Committee. Item(s) for follow-up: • Emphasize conditions such as deed restriction on former Fire Station 52 Committee Recommendation Discussion only. MISCELLANEOUS The meeting adjourned at 6:28 p.m. KJH Committee Chair Approval 51