DUVALL — Recent downturns in the economy have led King County Fire District 45 to return $1,295,000 of unspent bond money to its taxpayers.
The original bond of $4.2 million was passed in 2000 for the purpose of building two new fire stations.
The headquarters station in Duvall was completed in 2003 — leaving a station on the eastern portion of the district to be built with the remaining funds.
Over the years there were many challenges finding an appropriate and buildable site.
Wetlands and limits on available property were the biggest issues, as the district did not want to displace a family with the use of eminent domain — in other words, forcing the sale of their property.
Eventually a site was secured from the state on Kelly Road (near Cherry Valley Road).
However, it was then determined that the costs for building the station had escalated to an amount greater than the remaining bond monies.
As a result, the district would be forced to supplement the bond with one of two options: use operational funds to bridge the gap or borrow money. Both would result in decreases to available operational funding and impact service delivery.
It is important to note that this only speaks to the costs of building the station, not its operational costs that include staffing.
The district could not afford either due to losses in revenue.
Because the district is funded by taxes based on home valuations, the last few years have seen drastic losses in revenue.
Specifically, the collective assessed valuation (AV) of the fire district has been reduced by almost one-half billion dollars, resulting in the elimination of nearly $700,000 in revenue since 2009.
At the time of the largest drop in AV, the district’s levy rate or tax assessment ($1.35 per thousand) was well below the allowed maximum of $1.50 per thousand valuations.
A 16 percent loss in AV moved the collection rate to $1.50 and still yielded less money than the previous year.
This meant that any subsequent drops in AV would be reflected in lost revenue at equal percentages.
The District’s AV for 2012 dropped another 8 percent, meaning that collections would be reduced by another $200,000 for the year; leaving the operational budget at $2.5 million.
The assessor for King County has predicted an additional 4 percent drop for 2013, so the hope of an immediate recovery is unlikely.
Based on these facts and projections, a decision was made by the board of fire commissioners to return the unspent bond monies to the citizens.
Chairperson Jerry Smith said: “Although difficult, the most cost-effective solution for the district is to return the money to the taxpayers.”
This process, called defeasance, reduces the collection rate to each taxpayer.
The remaining bond amount of $1,295,000 will be used to pay off the minimum obligations of the bond. By the board’s actions, the district lowered the bond payments that will result in an overall savings to the taxpayers of $1,515,955.
The district’s staff coordinated the defeasance process with a bond attorney and bond underwriter.
Based on the bond underwriter’s estimates, the savings of a house valued at $300,000 will yield a total combined savings of approximately $270 for tax years 2012 through 2020 when the action is completed.
Fire Chief David Burke added: “The citizens trusted us to use their money wisely and if we borrowed money beyond the bond to build a station that we could not afford to staff, it seems as if we would have violated that trust.”
He continued “our plan is to hold the property for future use and hope that they (the taxpayers) will remember our prudence and support us again when the economy will support building and staffing a new station.”