Council adopts ordinance to temporarily increase utility tax rates

Hike will help pay for potential litigation with Sound Transit.

While revisiting potential litigation costs to enforce the terms of the city’s 2017 Settlement Agreement with Sound Transit at its Sept. 15 online meeting, Mercer Island City Council unanimously passed a trio of motions to set the wheels in motion.

Council first adopted Ordinance No. 20C-20 to temporarily increase utility tax rates, it then passed Resolution No. 1586 to authorize interfund loans, and then voted to appropriate $1.5 million in loan proceeds authorized in the resolution for litigation costs.

Interfund loans in the resolution are in the amount of $750,000 each, for a combined total of $1.5 million, from the city’s water and utility funds to the general fund.

In its second reading of the ordinance, which was rolled over from its Sept. 1 meeting, council passed the temporary 36-month utility tax increase — from Nov. 1, 2020 to Oct. 31, 2023. It is estimated to cost an average single-family residence $55.37 per year (about $9.23 every two months).

Council informed the community about the scenario in an open letter on Aug. 25. The online letter noted that the city has reached an impasse with Sound Transit in discussions regarding the organization’s modification plans to North Mercer Way in the Bus/Rail Interchange design.

* In other action at the Sept. 15 meeting, council discussed permit expiration extensions for construction projects, unanimously adopting Ordinance No. 20C-21 to authorize building officials to extend permits for an additional six months.

According to Alison Van Gorp, deputy director of the city’s Community Planning and Development Department, many projects were halted for one to two months in the spring due to the pandemic, stay-at-home order and Phase 2 job-site requirements. Many permit applicants have requested extensions because their project expiration dates are looming and the circumstances have impacted their ability to complete their work by those times. Extensions can be made upon request with no additional permit fee.

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