April 23, 2024 8:33 pm

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What you need to know about the annexation of Mill Creek into South County Fire

MILL CREEK, Wash., April 11, 2022 – The Mill Creek City Council unanimously passed resolution 2022-631 at a Public Hearing Tuesday, February 22, which allows voter’s the opportunity to decide annexation of the city into South County Fire on their upcoming April 26 Special Election ballot.

South Snohomish County Fire and Rescue Regional Fire Authority (South County Fire or SCF) was found to be the lowest cost option when council explored EMS services to replace their expiring contract with Snohomish Regional Fire and Rescue (SRFR). Costs to renew with SRFR are more than doubling the city says.

According to a February 15, 2022, document from the City, “SRFR expressed their desire to move from the current station cost model in previous contracts to a full-cost system cost model” during discussion in October 2020.

By December of 2020, SRFR officially notified the City that renewing its contract under the same costing model will no longer be an option and that “a more equitable agreement at or close to parity with their other District members” should be considered.

According to the analysis done by the city, “parity between SRFR’s property tax rate and the City’s contract cost would nearly double the [current] annual contract cost.”

Equity was the reason stated for the change of SRFR’s cost model in the document.

“…they decided that because their primary revenue source is based on property tax levies, those levies are the most equitable method to allocate costs to all citizens they serve – whether directly or by contract.”

Mill Creek Mayor Pro Tempore Stephanie Vignal shared with the Lynnwood Times that South County Fire is the best option for residents.

“I’ve been excited to be part of this project. The nuts and bolts are that our contract for fire/EMS is ending, and South County Fire is the low-cost provider moving forward. For my family, it’s also about protecting the quality of fire and EMS service we receive. South County Fire is as good as our current provider. They just cost less if we were to annex,” Vignal told the Lynnwood Times.

Property owners in Mill Creek currently pay the city $0.88 cents per $1,000 of assessed property value for the fire/EMS contract, however SRFR can no longer offer services to the city at this rate and is requesting “substantially higher contract fees” to cover the costs – at least doubled ($1.76 per $1,000 of assessed property value) according to the City’s analysis.

Agencies with the same level of service, charge property owners up to $2 per $1,000 of assessed property value for a 24-hour fire and EMS response. It is important to remember that a property’s assessed value is lower than (and not the same as) its market value.

If voters approve the annexation, South County Fire (SCF) will charge property owners the equivalent rate of $1.51 per $1,000 of assessed value, making it the least costly available option when compared to SRFR’s equitable full-cost system cost model.

For example, the owner of a 2,000 square foot home with an assessed value of $602,000 (considered the average for Mill Creek) would pay South County Fire a total of $909.02. SCF’s amount of $1.51 per $1,000 of assessed value is comprised of a fire levy of $0.93 cents per $1,000, an EMS levy of $0.42 per $1,000, and a fire benefit charge equivalent to $0.16 per $1,000.

Under Snohomish Regional Fire and Rescue’s (SRFR) new equitable full-cost system cost model of approximately $1.76 per $1,000 of assessed property value, the owner of a 2,000 square foot home with an assessed value of $602,000 would pay a total of $1,059.52.

Based on the information provided, the net impact to the average homeowner if annexation were in place would be an additional $379.26 a year ($31.61 a month) to SCF for fire emergency services, compared to an additional $529.76 a year ($44.15 a month) under SRFR’s model.

However, the approximate $1.76 per $1,000 of assessed property value stated by the City for SRFR’s parity rate could go as high as $2 per $1,000 of assessed property value when compared to other agencies. Therefore, the unknown risk to the owner of a 2,000 square foot home with an assessed value of $602,000 can be up to an additional $674.24.

Based on the information provided, the city affirms that the known increase with SCF of 72% in total cost to a Mill Creek homeowner is less than the estimated 100% to 127% increase for fire emergency services if annexation is not approved on the April 26th Special Election.

Also, if annexation is approved by voters, the city council will reduce its 2023 general property tax levy by the full amount dedicated to its fire contract with SRFR (0.51 cents per $1,000 of assessed property value) and eliminate its EMS levy (0.37 cents per $1,000 of assessed property value).

Public Meetings Scheduled for April 13 and 19

Two public meetings are scheduled for Mill Creek residents to ask questions about the proposal to annex to South Snohomish County Fire & Rescue Regional Fire Authority (South County Fire). Proposition 1 is on the April 26, 2002, Special Election ballots of Mill Creek voters.

Mill Creek South County Fire

The first meeting is scheduled for Wednesday, April 13 at 6:00 p.m. This is an in-person meeting at the City Council Chambers (15728 Main St. Mill Creek, WA 98012).

Bring your lunch and participate in the second meeting via Zoom on Tuesday, April 19 at 12 noon. Participants can access the meeting through the City’s website at www.cityofmillcreek.com.

What is a fire benefit charge?

Property tax levy rates are based on the assessed value of a property. However, two properties of the same size and use can be valued differently depending on their location which results in different property tax amounts when the cost to serve the properties is about the same, according to city officials.

With a fire benefit charge, the maximum fire levy rate is reduced from $1.50 to about $1 per $1,000 of assessed property value. An agency then applies a formula for the fire benefit charge based on a property’s size and risk of fire. The benefit charge moves away from traditional assessed value/property tax funding models in that it funds emergency services based on a property’s size and risk of fire instead.

Single family homes pay less than commercial developments and multi-story buildings because it costs less to defend them in a fire, taking into consideration that large and high-fire risk structures should pay more than a single-family home.

In 2022, a 2,000 square foot home with an assessed value of $602,000 will pay South County Fire a benefit charge of $96.32 a year.

Property owners have the right to appeal their benefit charge, and any discounts for seniors or low-income households still apply.

“I like the fire benefit charge. I’m tired of property taxes being used to fund all public services. A fire benefit charge reduces what I pay in property taxes for fire/EMS. The charge is based on how much it would cost to defend a structure in a fire, and single-family homes are less than larger buildings,” Mayor Pro Tempore Vignal told the Lynnwood Times.

What happens if voters decide to annex?

If voters decide to annex, Mill Creek City Council has agreed to reduce its general property tax collections by $4.3 million in 2023, an amount that equals what the City paid for fire and EMS in 2022 to a third-party provider. This is about $0.51 per $1,000 per assessed property value.

The City would also eliminate the EMS levy of $0.37 cents per $1,000 of assessed value resulting in a $0.63 cent increase in taxes per $1,000 of assessed property value ($1.51 minus $0.51 for general property tax levy, and $0.37 for the EMS levy). This is projected to be an increase in taxes of $379.26 a year for the average Mill Creek property owner, which according to the analysis by the city, is the least net impact to homeowners.

Mill Creek South County Fire
Map of South County Fire coverage area (yellow) showing the proposed Mill Creek service area (green). Source: City of Mill Creek.

If annexation is approved, South County Fire would staff the current Mill Creek Fire Station with the same number of firefighters, paramedics, and emergency personal. As part of the annexation agreement, the station would become part of South County Fire’s capital assets. All firefighters would be able to continue to be employed with either South County Fire or their current employer.

“The annexation is important to Mill Creek property owners first and foremost. All things being equal, South County Fire is the lowest cost for the same level of service they currently receive. Adding the assessed value of properties in Mill Creek would lower our fire levy rate, but the agency doesn’t benefit from that – taxpayers do,” Greg Urban, Chair of South County Fire Board of Commissioners, told the Lynnwood Times.

What happens if voters decide not to annex?

If the city were to continue with SRFR the average Mill Creek resident would pay $1,113.70 a year, which equates to $1.85 per $1,000 of assessed value (using the Mill Creek community average), government officials say.

If voters decide not to annex, the City will begin another Fire Service procurement analysis process to find and initiate a new service contract but has forecasted all other available services to cost more than annexation.

Scott Harder, Mill Creek Communications and Market coordinator and spokesperson for the South County Fire annexation project, noted that the City will also have to increase taxes to pay for higher contract costs if annexation fails.

The Council has been discussing its options to fund higher contract costs for fire and EMS if annexation is not approved including asking voters to increase the EMS levy and the City’s general property tax levy and having the City Council pass a new utility tax.

Argument against annexation

Mill Creek resident and Seattle Prosecutor Jim Kenny, who has served on the Fire District and South County Fire board of commissioners, argues that annexing into SCF will lead to a 72% increase in taxes for fire services, from $4.3 million in 2022 to $7.4 million in 2023.

Kenny states that the City’s assurance that SCF will not raise taxes more than 1% in 2023 and 2024 is misleading because only the SCF board of commissioners make decisions on these taxes this Fall.

SCF’s general fund budget has a projected deficit in 2023 of $6.8 million, with additional deficits of $8.8 million in 2024 and $10.8 million in 2025. According to Kenny, SCF will have to raise taxes more than 1% to cover those deficits.

In addition, Kenny says the city and SCF are not being transparent about an upcoming capital facilities bond to renovate and build fire stations that, if annexed, would ask Mill Creek residents to assist in paying for its $217 million price tag.

By voting no on annexing, Kenny says it allows the City the time and opportunity to negotiate with SRFR, who have “loyally served” Mill Creek residents and still offers the least expensive contractual option in 2023, according to Kenny. 

“By law, we must operate under a balanced budget. I’m not sure where the deficit issue comes from. At the point more revenue is required, property owners/voters must approve any levy increase. They also must vote to continue the benefit charge,” Greg Urban, Chair of South County Fire Board of Commissioners, told the Lynnwood Times.

Urban added, “The bond issue…every fire/EMS agency has a capital facilities plan that forecasts future needs for stations, apparatus and equipment. It would be irresponsible not to have one when planning long-term for emergency services. At this point, we’ve identified what those needs are, but South County Fire does not have an election date for a bond. What I will say about this is that if we do ask for a bond, that projected rate would be less for taxpayers with Mill Creek as part of South County Fire.”

Mill Creek voters will be able to cast their decisions up until election day, 8 p.m. Tuesday, April 26, 2022.

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