Port Townsend extends timeline for decision on banked capacity funds

PORT TOWNSEND — The Port Townsend City Council has unanimously approved a resolution that would extend the timeline for a decision on the potential expenditure of more than $900,000 in banked capacity over the next four years.

The banked capacity follows the city’s annexation into the East Jefferson Fire District.

In February 2019, Port Townsend voters approved the city becoming part of the coverage area for the East Jefferson Fire Rescue (EJFR), which would allow for the district to directly collect tax dollars rather than the city paying for services through its general fund via a previous interlocal agreement.

As part of the annexation agreement, Port Townsend officials agreed not to collect the property tax for 2020 that would have paid for EJFR services for the next four years, leaving the city with $908,000 in “banked capacity.”

In a previous resolution, the city outlined a public process for determining if and when the city would collect those funds and for what purposes.

The funds already are restricted to items such as streets, parks capital, housing trust fund or utility tax relief.

A public process will further refine the use of the money.

But due to the COVID-19 pandemic and the state’s restrictions on public interactions, the previously adopted timeline for the public process had to be modified to fit social-distancing guidelines.

“We had envisioned a pretty robust public process to talk about how we might use annexation funds, should we decide to levy those, and we are not able to do that at this time because of the COVID-19 restrictions,” said Nora Mitchell, Port Townsend finance and administrative services director, at Monday night’s meeting.

“We might want to keep as many options open as we can and extend the timeline for making that decision until later in the summer, early fall.”

Officials are considering a late August-early September time frame to begin the public discussions, barring any other public health-related issues.

The timing was chosen to await more details on Gov. Jay Inslee’s details on the reopening of public gatherings as part of the phased plan and also so whatever decisions are made can be included in the 2021 city budget.

The public process is necessary before the city council can vote on any potential expenditure.

Once a project or group of projects are identified, the next factor to consider will be how much of the funding will be available.

For example, if an appropriate project is identified in 2021, only 33 percent of the $908,000 will be allocated, 66 percent in 2022, and 100 percent in 2023 and years afterward.

In a letter to the city council, former council member Bob Gray of Port Townsend noted his concern regarding the potential use of the funds and the associated raising of property taxes.

“City revenues are forecast below the city budget because residents and businesses are having a difficult time paying their utility, business and property taxes,” Gray wrote in the letter, which was read during the public comment period Monday. “Estimates are that these difficulties will carry over into at least fiscal 2021. Nevertheless, in this agenda bill, the city is proposing starting the process to raise property taxes in 2021.”

“Do you think it is wise and fair to raise property taxes when residents and businesses are already having such a difficult time paying the current tax rates?” Gray wrote.

Both Mitchell and Port Townsend Mayor Michelle Sandoval clarified that Monday’s discussion was about postponing the public discussion on what to do with the funds, not on how the funds are to be spent.

“This resolution is merely changing the date and timeline of making that decision and not that we are making a decision to levy or not to levy tonight,” Mitchell said.

“Remember that what we’re talking about is this timeline for policy framework and not actually the discussion in regard to what we’re going to do once we start the process,” Sandoval said.


Reporter Ken Park can be reached at kpark@peninsuladailynews.com.

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