Blaine City Council has eliminated all water and sewer connection fees within city limits in an attempt to spur economic development throughout the city but especially within the downtown core. Council took action Monday night after extended discussion and public comment.
The decision followed a special meeting last Thursday at which Fairhaven developer Ken Imus and colleague Kathleen Hill threatened to pull out of Blaine altogether if the city did not make substantial revisions to development fees. Hill is a principal with Community Studio, a Salt Lake City-based group that is interested in developing property on the Blaine waterfront. Imus is affiliated with the group and has other significant land holdings in the city.
During the meeting city staff presented Imus with development incentive alternatives, to which Imus responded that he thought the city was not ready for development and that he felt sorry for “you people” and left the room. In response to Imus’ speech, Blaine mayor Bonnie Onyon said the council should do whatever it takes to keep his interest.
Hill said Imus wanted the sewer and water connection fees removed for not just his development, but for the entire city and he would be unwilling to move forward without them being removed.
After much discussion, Monday, the city council agreed to remove all water and sewer connection fees, known as general facilities fees (GFF), which are paid before the building permit can be issued and represent the new user’s ‘buy-in’ to the system. GFF revenue is generally used to fund major capital improvements to the system.
The resolution received a loud applause from a standing-room only crowd, many of whom, such as Chevron owner Mike Hill, were business owners downtown.
Hill compared the city to a football team with seven owners and one coach that “has been losing for a long time.” He told council members they should be “rolling out the red carpet for Imus.”
“We have a guy here wanting to build a stadium with a proven record and football team that can win. We cannot afford to lose this guy.”
Not everyone was in a hurry, however. Terry Johnston said he wasn’t for or against the resolution, but wanted council members to be careful and take their time in making a decision that could have far-reaching impacts.
“Take a good, hard look at it,” he said. “I would suggest studying it and determining how it is going to affect taxpayers. School is just starting and some of that forgone revenue might impact the school system. It could cost us a lot of money and we need to know what the answer is. I love Blaine and I’m all for incentives but I don’t know if this is the best answer.”
A cost study by city staff determined that revenues collected by the city for GFF connection fees during July were approximately $36,000 for sewer and approximately $18,000 for water. The city’s 2009 budget projected about $94,000 for the entire year for both sewer and water. If development rates stayed the same, this would mean the city would forgo approximately $470,000 in revenue over the five years the resolution would be active.
The resolution would also lower connection fees for water and sewer outside the city limits from $5,794 to $2,897 per equivalent residential unit (ERU) for wastewater and from $3,487 to $1,162 per ERU for water. Council member Charlie Hawkins expressed concern about a retroactive provision that would reimburse those who have recently paid connection fees. Blaine city attorney Jon Sitkin advised against retroactivity saying it would cost the city too much money and could invite litigation as it would constitute an “unconstitutional gift to the public.”
Council member John Liebert said he thought the resolution was a “tremendous opportunity” and said it was a risk the city should be willing to take.
“This is the most positive, pro-business opportunity we have had in the last 20 years, not withstanding the boardwalk,” he said. “Not that business is the only aspect of the community, but it is the driving force. This is a step in the right direction for our community.”
Hawkins said he was uncomfortable with aspects of the resolution but given Blaine’s economic stagnation, the risk was worth taking.
“We need to try to help downtown and make it a viable place to do business. My father-in-law’s store is closing, not because of business, but because there was no one who wanted to take it over,” referring to Goff’s Department Store on Peace Portal Drive. The building has been purchased by Ken Imus.
Council member Paul Greenough voted against the resolution, saying he liked the idea but was hesitant to passing the resolution without taking more time to examine possible outcomes.
“I want to be constructive and positive and visionary but the people of this town elected me in the hope that I would also be prudent and while I want all the positive things that other people have mentioned I am far from saying this resolution would survive a court test.”
Blaine mayor Bonnie Onyon said she liked the idea and said it would create an incentive for developers to take a risk.
She added that the risk the city would incur is small relative to the economic gain of having developers build here, especially since the resolution contains caveats to allow the council to revisit the ordinance on an annual basis.
“The risk we have is small knowing we can cover our costs and that we have safeguards built in,” she said. “I am more than willing to take a small risk for the huge gain we could get from this. I don’t think we can afford to pass up this opportunity.”
Council member Harry Robinson said although he had reservations about whether Imus’ planned development would be the key to revitalizing downtown, he felt council didn’t have a choice.
“We’re living in a ghost town,” he said. “And while no one on this council hopes more than I do that Imus can turn Blaine into a mini-Fairhaven or a mini-Granville Island, I don’t know if we can expect that. If he can turn this around, however, he deserves a hell of a lot of credit.”
Robinson also suggested another way to help local business could be to put up “buy local” signs near Semiahmoo. “People need to support local merchants instead of traveling to Ferndale or Bellingham,” he said.