12/04/2000 - Work Study - Minutes-Work StudyPort Orchard, Washington
December 4, 2000
Council of the City of Port Orchard, Washington, called to order for a Study Session by Mayor Leslie Weatherill at
7:45PM at City Hall, 216 Prospect Street.
Council members present: Clauson, Wyatt, Geiger, Powers, VanZee, and Stansbery.
Staff present: City Treasurer Tompkins, City Engineer Curies, and City Clerk Parks.
Mayor Weatherill announced the purpose of this Study Session is to provide an opportunity for the City-County
Revenue Sharing Ad Hoc Committee to review and discuss the draft Revenue Sharing Proposal (Exhibit A)
Councilman Van Zee reported on Revenue Sharing Ad Hoc Committee lengthy meeting process and
introduced Mary McClure (KRCC) and Michael Hodgins of Berk & Associates the consulting firm that worked
with KRCC and the Ad Hoc Committee to develop Revenue Sharing Proposal.
Ms. McClure reported two activities; Part 1 -Annexations and Part 2 -New construction, intensification, or
relocation of existing businesses within the Urban Grow1h Areas would implement revenue sharing.
Councilmembers discussed under the proposed revenue sharing plan for annexations payment would flow from
the city to the County over a three year period with 75% year 1, 50% year 2, and 25% year 3. For new
construction, intensification or relocation of existing businesses within the urban grow1h areas payment would flow
from the county to the city on the same three year 75/50/25% soft landing approach used in the case annexations.
For every other major land use decision (in the county), the amount of the payment will be based on 50% of the
estimated sales tax revenues for three years after occupancy.
Council discussion resulted in two recommended changes; (1) Part 1 Annexations amend item 1 to read. ''The
City confirms its willingness amJ iRleRliGR to eventually annex all land within its Urban Grow1h Area Boundary,
recognizing that annexation requires approval of property owners or voters with the annexing area; and (2) clarify
section relative to "The Cities agree to share revenue from all annexations as follows: 1. Revenue sharing
payment will be based on actual county collections within the annexation area during the year preceding the
annexation, from the following sources ... "
Michael Hodgins reviewed handouts titled "Estimated Impact of Annexation Agreement on Cities and County"
illustrating the financial impact on affected cities and the county. Mr. Hodgins highlighted the point that all
annexations will have unique individual issues regarding special services or infrastructure within it boundaries
such as county parks (who will maintain and own), transition of roads, etc.
Mayor Weatherill called for a 10 minute recess reconvening study session at 8:42 PM.
Council members addressed Part 2 relative to "New construction, intensification, or relocation of existing
businesses within the Urban Growth Areas".
Part 2 sets threshold for implementation of Part 2 (payment by the County to a City) as any new development that
houses any single retail tenant greater than 40,000 square feet. Councilmembers questioned the 40,000 square
feet questioning typical square footage of new commercial construction within the South Kitsap area. Ms. McClure
will verify square footage of the new Stapes, Office Depot, Walgreen's, and Rite Aid which are located in the
Bethel/Lund intersection area, Council consensus was to recommend square footage threshold based on average
area of these retail stores.
It was also clarified that under item "2" of Part 2 the "estimated sales tax revenues" would not be based on actual
sales tax receipts, but will be based upon industry standards {adjusted for Kitsap Standards as established by a
committee of Finance Staff from affected jurisdictions).
December 4, 2000
Page 2 of2
Ms. McClure reported she would present the Port Orchard. City Council's recommended changes at KRCC
meeting scheduled for December 6. Council confirmed they are prepared to proceed with consideration of the
Revenue Sharing lnterlocal Agreement.
Meeting adjourned at approximately 9:18 p.m.
~
Patricia Parks, City Clerk Leslie J. Weatherill, Mayor
REVENUE SHARING PROPOSAL
Part 1
ANNEXATIONS
December 4, 2000
Study Session
Exhibit 11 A11
The intent of the annexation revenue sharing agreement is to provide a framework for logical
and orderly annexations that are consistent with GMA and to mitigate the fiscal impact to the
County of future annexations. The agreement would apply to all Kitsap Cities and Kitsap
County and would begin upon adoption of the interlocal agreement implementing revenue
sharing. The agreements shall provide for the following:
r.::\P'f-1:-
1. The City confirms its willingnes~Ael iAte~tior0o eventually annex all land within its
Urban Growth Area boundary, recognizing that annexation requires approval of property
owners or voters within the annexing area.
2. The City shall encourage annexation of all lands equally, and will support logical and
coordinated annexations consistent with the intent of GMA.
3. The County and Cities will address coordinated development in the UGA's, as part of the
2001 KRCC Work Program, including infrastructure standards and funding. Prior to
constructing major infrastructure improvements in an unincorporated UGA, the County
and City will negotiate an interlocal agreement specifying the level of reimbursement to
the County for a portion of its investment, should the area be annexed within a specified
period of time.
4. KRCC shall report annually on all activity relating to this agreement, including
annexation actions and revenue sharing
5. KRCC and member jurisdictions shall review this revenue sharing agreement within 3
years after adoption and then every 5 years thereafter.
6. As part of this agreement, the County will not oppose annexations nor invite the
Boundary Review Board to invoke jurisdiction.
The Cities agree to share revenue from all annexations as follows: ~:
1. Revenue sharing payments will be based on a~ua~ollec'f'ons within the annexation
area during the year preceding the annexation, from the following sources:
• Sales tax (city portion of local sales tax)
• Road levy
• Admissions tax
2. The amount of the payment will be based on a three year "soft landing" approach
whereby the Year 1 payment will be 75% of lost revenue (as defined above), the Year 2
payment will be 50% of lost revenue and the Year 3 payment will be 25% of lost
revenue.
Kitsap Regional Coordinating Council
12/4/001:32 PM
Page 1
REVENUE SHARING PROPOSAL
Part 2
NEW CONSTRUCTION, INTENSIFICATION, OR RELOCATION OF EXISTING
BUSINESSES WITHIN THE URBAN GROWTH AREAS
The intent of the major land use revenue sharing agreement is to recognize the fact that
retail development near jurisdictional boundaries does have an impact on neighboring
jurisdictions. In particular, there are impacts to existing businesses and on the demand for
public services and facilities. This agreement is designed to mitigate these impacts by sharing
sales tax revenues from the new development or relocation of existing businesses with the
affected neighboring jurisdiction. This agreement applies to major land use decisions within
unincorporated UGA's.
This section applies to Kitsap County and would begin upon adoption of the revenue sharing
agreement for developments in the unincorporated UGA's.
For the purposes of this agreement, a major land use decision is defined as any new
development that houses any single retail tenant greater than 40,000 square feet. New or
relocated automobile, truck, recreational vehicle, and boat dealerships are automatically
included regardless of the size of the building permitted.
Revenue sharing will begin in the first full year after occupancy of the development or relocation.
Revenue sharing will only apply with respect to sales tax revenues generated from the new or
relocated 40,000+ square foot retail tenant(s). Recognizing the confidentiality limitations of
using actual sales tax collections from the new or relocated development, the revenue sharing
payment will be based on estimated sales tax revenues using Kitsap-based industry standards
for taxable retail sales-per-square-foot for a range of retail business types.
The revenue sharing payment will vary according to whether the new development will house a
relocating major business. The payment will be calculated according to the following formulas
and will be made from Kitsap County to the affected neighboring City:
1. For a relocation of a major retail business within Kitsap County, the amount of the
payment will be based on the same 75%-50%-25%, three-year "soft landing" approach
used in the case of annexations.
2. For every other major land use decision, the amount of the payment \Vi!! be based on
50% of the estimated sales tax revenues for three years after occupancy.
3. KRCC, in collaboration with the County and Cities, shall track the actual sales tax
revenue generated by any mini malls that are built in the incorporated or unincorporated
Urban Growth Areas as input to the review of this revenue sharing agreement within 3
years of its adoption.
Kitsap Regional Coordinating Council
12/4/00 1 :32 PM
Page2