The Newcastle City Council roundups offer a digest of notable items for those who can't make it to the regular meetings. View the meeting agenda packet here and listen to the audio here. View past City Council roundups at newcastlewa.gov/councilrecaps.

COUNCIL ADOPTS FISCAL SUSTAINABILITY IMPLEMENTATION PLAN

The Newcastle City Council took a critical step forward in addressing future projected budget shortfalls. On Tuesday, the Council adopted an action plan that outlines specific strategies to resolve the fiscal gap that occurs over the next six years. The Fiscal Sustainability Implementation Plan includes a combination of staff consolidations, cost recovery, improved sales tax collection and the addition of a utility tax, with timelines for implementation.

Please note that the adopted plan is just that — a plan. It’s a guidebook of recommended actions meant to steer the City toward a viable financial future. It is NOT a mandate, nor is it a final action. It is ultimately up to the Council to decide if, when and how these strategies will be implemented. For example, the mere adoption of this plan does NOT establish a utility tax, it simply outlines the revenue source as a tool and gives the City a chance to gather additional information about implementation. If a utility tax were to be implemented, staff first would need to bring back a utility tax ordinance. All ordinances require a public hearing, so citizens would have an opportunity to comment before any consideration.

How did we get here?
Newcastle relies on three revenue sources to fund basic City services like police, fire and street maintenance: Property taxes, sales taxes and development revenue. With a limited commercial retail base, declining opportunities for development and ever-increasing public safety costs (which remains the City’s largest expense), the City does not have the revenue streams to provide the current level of service the community desires.

Last year, the Newcastle City Council took a few steps to slash expenses in response to the budget deficit. For example, the roles of the Community Activities Coordinator, who coordinates all City events, volunteers and the efforts of the Community Activities Commission, and the formerly contracted Communications Coordinator, who manages the City’s website, social media accounts, email and other outreach, were combined in an effort to cut staff costs.

However, with a budget deficit forecasted to annually exceed $1 million, cuts alone would not bridge the gap without major impacts to City services that residents value. A cut-only solution would require a reduction in police officers, a reduction in maintenance technicians who service parks and plow streets during snow storms, the elimination of events AND more.

The Plan
Last year, the City contracted with a nationally-recognized firm to develop a plan that addresses Newcastle’s forecasted financial challenges. The firm, Management Partners, helped develop a list of strategies to resolve the fiscal gap. The Council took those strategies and crafted a plan that both maintains residents’ expected level of service and sets the City on a fiscally sustainable path.

One of the items on the plan is already complete. The City previously consolidated the Activities and Communications Coordinators into one position. The plan also calls for a stronger emphasis on sales tax collection, something that will be achieved with the hire of an Accounting Technician this year. The City will also evaluate its fees for development services in an effort to better achieve cost recovery.

The most fiscally impactful of the plan’s strategies is the implementation of a utility tax. The state legislature allows Cities to establish a utility tax to generate revenues for general operating costs, such as police and streets. Taxes are imposed on any business or public entity providing utility services (Cable, electric, waste, etc.). A utility tax is imposed upon the utility itself, not upon the individual utility customers. Most natural gas, garbage, electric, and telephone utility companies in the state pass these taxes on to their customers. Although it is not a tax on the customer, many utilities list the tax as a separate item on the utility bill since it is part of their business costs. Newcastle is one of just three King County cities without a utility tax.

As already noted, adoption of this Fiscal Sustainability Implementation Plan is NOT the implementation of a utility tax. Staff would first need to present a utility tax ordinance for Council review. Prior to that, staff would meet with utility providers to obtain revenue estimates and complete further research.

The City Council can choose to put a referendum clause in any ordinance implementing a utility tax. That clause would give citizens an opportunity to collect enough signatures to put the matter of a tax increase on the ballot. Councilmembers learned that in order to prepare for a possible tax measure to be placed on the November 2020 ballot, a utility tax ordinance would have to be adopted by the end of April. Staff also noted that should the Council adopt a utility tax ordinance with rate increases over time, Councilmembers could amend the ordinance to pause implementation of future increases should conditions warrant, giving Councilmembers control over rate increases.

The City of Newcastle is committed to keeping the community informed through this process. Please stay tuned to these City Council recaps (newcastlewa.gov/councilrecaps) for the latest news, facts and updates on further Council actions.

Resources: Feb. 21 Staff Report on Agenda Item | Adopted Plan and Resolution

DELEO WALL CONSERVATION

As the City continues to explore options to protect a beloved property threatened by clear-cutting, the City Council identified at least one mechanism for funding, should they attempt to acquire it.

During the meeting, the Newcastle City Council authorized staff to enter into an agreement with King County for Conservation Futures Grant funds. At the end of 2019, King County awarded the City of Newcastle a $450,000 grant to assist with the potential purchase of the DeLeo Wall property. It is a matching grant, so the City would have to come up with additional funds. The current adopted budget includes no City expenditures for such a purchase. City staff and community partners are exploring alternate funding sources for the required grant match including King County Parks Levy funds, private donations, neighboring agencies, Forterra, and City tree mitigation funds.

Authorizing staff to move ahead with this King County grant agreement does not commit the City to purchasing the DeLeo Wall. It simply makes available one funding mechanism, should the Council choose to go forward with that option. It is recognized that while the City is currently leading this project, it is unable to provide significant funding. King County is eager to partner with Newcastle on this project, as the City continues to explore creative and cost-effective solutions to protect this property from logging.

GENERAL UPDATES

— Prior to the regular meeting, the Council held a joint meeting with the volunteer Planning Commission. The Commission advises the City Council on the Comprehensive Plan, development codes and other matters related to development and land use. The Commission shared, and the Council approved, its 2020 Work Plan. Among the more notable items is an exploration of regulations on short-term rentals. The City has received an increasing number of complaints related to nightly online rentals such as Airbnb.com and Vrbo.com. View the Work Plan here.

— A potential developer for the property located behind the Newcastle Library presented the City Council with a proposed design. The Waterline Homes would be built for ownership (condominiums, rather than apartments) and would include some ground-floor retail. They’re proposing a 74-unit, 5-story condo building with 163 parking stalls (more than 40 above what the code currently requires), including about 60 spaces allocated for library and retail patrons. The developer noted that the site has some constraints that make this project challenging, so they would likely seek some City flexibility in height and density. If that were the case, this would eventually have to come before the City Council in the form of a development agreement. This was just an initial presentation for the Council’s information. The developer has not yet submitted applications for the project, and any applications would be required to go through the City’s regular review process.

— The City Council adopted new standards for development along Lake Boren’s waterfront. Learn more about the standards in the staff report here and view the full ordinance here.

The Newcastle City Council wants to hear from you! Members of the public are invited to share thoughts during public hearings or two open public comment periods at meetings. Regular meetings of the City Council occur on the first and third Tuesdays of each month at City Hall, starting at 7 p.m. You can also email your thoughts to Councilmembers. To send a message to the entire Council, email [email protected].