Annexation plans causing rifts

Spokane City Council members on Saturday said they are becoming increasingly impatient with Mayor Jim West for his coziness with Spokane County commissioners.

Council members for months have called for city annexation of a prime commercial property north of Francis Avenue on the west side of Division Street. They view the annexation as part of a strategy to shore up the city’s ailing budget.

But the mayor has been unwilling to move ahead with the annexation because of a reported verbal agreement he has with county commissioners.

The annexation would net well over $1 million a year in tax revenue to the city. A Costco store at 7619 N. Division produces about that much in sales tax alone for county government.

At the same time, the city is facing up to $6 million in cuts for 2006.

The dispute over annexation shows a deepening rift between the mayor and council. The council last spring called for West to resign in the wake of allegations of sexual misconduct. West’s relationship with the council has been troubled ever since.

The annexation issue is part of another rift between city and county elected officials. They are at odds over urban growth boundaries, gambling taxes, city utility taxes and wastewater disposal.

Council members met Saturday to talk about long-range strategies for improving the city’s financial health. Annexations were identified as one way to bolster sagging revenues.

But the mayor reportedly has a “verbal agreement” with commissioners that the city will not “cherry pick” its richest tax areas – specifically the commercial strip on the west side of Division north of Francis Avenue, one city staffer told the council. An annexation would give the city most of that sales tax revenue from businesses, although the county would continue to receive a share of property and sales taxes.

West, a longtime Republican legislator, is a close associate of Phil Harris and Todd Mielke – two of the county’s three Republican county commissioners. The mayor’s job is nonpartisan.

The city has obtained covenant agreements from property owners along the Division strip that obligates them to join a city annexation. The covenants were obtained in exchange for city sewer and water services.

“Has the mayor found a way to fund those handshake agreements?” asked Councilman Al French in expressing his frustration with the mayor.

Council members said the city is providing core urban services to the region and should be able to acquire high-tax areas. “The county is cash rich because it is eating off the city plate,” said Councilman Bob Apple.

He urged an aggressive approach to annexations.

County commissioners recently reduced the gambling tax in unincorporated areas from 15 percent to 2 percent after Aces casino relocated at the northwest corner of Francis and Division. Aces will now benefit from the lower county tax.

The city collects a 20 percent gambling tax and faces the prospect of losing Big Daddy’s casino on the South Side unless it lowers its gambling tax, too, a move that would further aggravate the city’s budget problem.

The city several years ago failed to annex the Yardley area in east Spokane, and that later became part of Spokane Valley. Newer retail stores there – including a second Spokane-area Costco – generate more than $1 million in taxes a year.

Annexations are frequently unpopular with residents living in unincorporated areas, such as Linwood on the North Side and portions of the West Plains. And the cost of delivering services to residential areas makes them less attractive to the city. Also, the city is required to compensate fire and other special service districts for their tax losses when they annex an area.

West, who was not at Saturday’s meeting, has said he does not want to force residents to join the city of Spokane but wants to annex only areas that have public support.

However, the city is essentially requiring developer Rod Plese to annex his 42-acre Park Place development north of Nine Mile Road and adjacent to Riverside State Park before new residents move in there.

A small development on Hatch Road near the Highland Park subdivision is being brought into the city as well.

Residents living in the Ridgeview area at 57th and Hatch Road are resisting a city attempt to annex that 36-acre area even though a private water system within the development is in danger of failing, said Dave Mandyke, assistant director for public works and utilities. He said the city will probably abandon that annexation effort.

Council members also said they are unhappy with county commissioners for failing to designate urban areas where they city could eventually seek annexations, which the county is required to do under state law and a negotiated agreement with the city.