$42M sale of Island Corporate Center puts $200,000 of taxes into city coffers
By J. Jacob Edel
Mercer Island Reporter
The city has about a $1.5 million surplus in its 2007 budget from larger-than-expected sales and utility tax revenues as well as a large check it received in real estate excise taxes.
In April, the Island Corporate Center, a 200,000-square-foot office building at S.E. 24th Street and 75th Avenue, sold for $42,000,000. The city then received almost $200,000 in real estate excise tax, which is used for major capital improvement projects of streets and parks.
Redevelopment in the Town Center also continues to generate high sales tax revenues for the city. Funds from construction are up 20 percent more than budgeted last fall and make up over 50 percent of the city’s revenue receipts, finance director Chip Corder told the Council during its meeting last Monday. The extra money the city has earned from the sales taxes amounts to $725,000. Last year, city officials estimated it would receive a little less than $1.3 million in sales taxes in both 2007 and 2008.
“Total revenues are up $1.5 million, just around 9 percent,” Corder said to the Council last Monday. “This is huge. We look strong, we are really doing good, and that is a comfort for me.”
Sales taxes from wholesale retail receipts and food services are also up, Corder told Council members, attributing that to the downtown growth as well.
“As you would expect with the new shops and restaurants opening in the Town Center,” Corder said of the increase in sales tax revenues.
In addition to the big check the city received from the sale of Island Corporate Center, it also got a check of about $285,000 from its insurance pool. After paying around $400,000 for the environmental clean up of a fuel leak at the city maintenance shop, the city attorney’s office was successful at appealing, and the insurance pool was responsible for partial coverage.
“That money is from the fuel spill that went into cleaning up the Honeywell property,” Corder said. “The insurance pool originally said it wouldn’t cover anything, so the city allocated $400,000 to clean it up.”
Corder credited the work of the city prosecutor, Katie Knight, who did the work to show it was the insurance pool that was responsible for the clean up cost at the adjacent Honeywell property while the city was responsible for clean up on its own property.
In addition to the surplus from this year, the city has about $800,000 in unallocated expenditures in 2008. Those include $178,000 needed to pay toward the new firetrucks the city has ordered this year and plans to order in the future. Paying for the parks levy and creating the committee to develop the list of capital improvement projects at Island parks is another unfunded 2008 cost. Then, there are funds needed to set up and run the new regional super dispatch center, called NORCOM.
Other additional costs the city has incurred this year are in paying overtime for the Island’s police and fire forces. A staffing shortage in both departments has generated the need for more overtime hours. According to MIPD Cmdr. Leslie Burns, the department is down one officer and two are currently being trained, leaving it three short.
Jail costs for renting space from Yakima and Issaquah are also up. The city has to pay an extra $81,000, going from the budgeted $98,000 to about $150,000. Several cities are currently under contract with Yakima County to use its jail to house misdemeanor offenders. Many of those cities, including Mercer Island, are working to determine where to build a new jail before King County ceases taking misdemeanor offenders in 2012.
The city also lowered the age and income requirements for seniors seeking utility bill subsidies. Those who are 62 years old and earn less than 50 percent of the state median income now qualify for the assistance. The utility discount for those who qualify is half their water, city sewer and storm water bills. The old discount encompassed 25 customers and cost the city about $4,000. With the new changes, city staff estimates an additional 25 customers will qualify, and the new cost to the city would be about $20,000 across all three utilities.
