Edmonds mayor vetoes ordinance raising fees for new utility connections

Edmonds Mayor Dave Earling has vetoed an ordinance passed by the Edmonds City Council that would increase the charge for new connections to the city’s water, sewer and storm water systems. It is Earling’s first veto since he was elected mayor last November.

Under the ordinance passed by the council on April 25, connection charges would increase from $908 for water, $730 for sewer and $428 for storm water, to $5,050, $4,417 and $799 respectively. Earling, who was on vacation when the vote was taken, said that he didn’t oppose the new charges, which would result in significant increases for any new utility connections — either for new home or commercial construction or remodels. But he did disagree with the way the council decided to phase them in over a three-year period — a 50 percent increase the first year and a 25 percent increase in each of the following two years. (Earling had favored an increase of either one-fourth each year over four years or one-third yearly over three years.)

“I was very clear that I supported the increases. I just thought we should ease into it a bit more,” he said.

According to Earling, in the past six months the city has issued just six permits issued for new single-family homes and six for commercial construction

“When I see that few new construction starts, it’s worrisome,” he said. “We’ve got to do something to get things moving around here.”

Earling acknowledged that it hasn’t been common practice for Edmonds mayors to veto council legislation, but said it’s likely not the last time he will use the power of his pen to make a point. “I imagine I’ll be vetoing a few things as mayor,” he said. “It’s my prerogative.”

Councilmember Joan Bloom, who voted against the ordinance because she wanted to see the new charges passed along immediately with no phasing in, noted that the council can re-vote on the ordinance and the 50-25-25 proposal, and override the mayor’s veto “with a majority plus one vote.”

“I would obviously prefer this (50-25-25) to 1/3, 1/3, 1/3,” Bloom said in an email.

In his presentation to the City Council before the ordinance was approved, City Public Works Director Phil Williams noted that Edmonds’ utility connection charges hadn’t changed in 12 years, and were very low compared to other cities.

Earling said he wasn’t sure if the council would try to override the veto during its short meeting Tuesday night prior to holding council committee meetings. We left a message for Council President Strom Peterson regarding question but haven’t yet heard back.

Here is the entire text of the letter that Earling sent to the Council last Thursday, May 3, explaining his reasons for vetoing the ordinance:

May 3, 2012


I want to let you know I have vetoed Ordinance No. 3883. The ordinance deals with the increased costs for the city’s water, sewer, and storm water utilities. Understand I am not opposed to the increase in charges that are intended to benefit our utilities. In fact, I agree with what would be the end result of the accumulated charges. I do not agree with the percentage of increases over the three year period.

As you know, I was out of town when the council voted on the ordinance. When I returned, I requested from staff new construction permit information over the past nine months. What I received from staff is, during the nine month period, we approved six (6) single family construction permits. During the same nine month period, we approved six (6) commercial new construction permits. Two (2) of the commercial permits were for the same site on Edmonds Way. I believe adding a new tax at this time in the proportion proposed will have a chilling effect on new construction which already is very slow.

While we know we have been through a tough patch economically, we also know that during the nine month period mentioned above, interest rates have dipped to historically low levels. Banks again have begun to make new construction loans and yet we have a grand total of six permits for new single family construction and six (5 really) permits for commercial construction from last August through April this year.  While I mention the impact of new construction permit fees above, home remodeling fee increases will also directly impact costs to current home owners.

Applying a new tax at any time in the current economy is tricky business. As you are aware, none of the new utility funds generated will benefit the general fund. All funds generated will be allocated to the various utility funds. The point is, we will face the same general fund challenges with or without the new utility tax and when it is implemented. As I said in the opening paragraph, I support the utility tax increases. I would support and sign an increase of 1/3, 1/3, 1/3 over a three year period. (although I would prefer 1/4, 1/4, 1/4, 1/4, over a four year period).

I understand a common argument is we are just passing the additional charges to developers. We of course know that in truth, we are passing the additional fees to the consumer.

I ask you to reconsider the structure and timing of the increases.


  1. I am thankful that the Mayor, staff and City Council are attending to the budget challenges. I believe many Edmond’s citizens comprehend and appreciate the fiscal challenges at hand. The time has come for citizens to unify and face our challenges together with a realistic expectation of the depth of services the City can provide.

    With only six (6) single family construction permits approved during the 9 month period, it is difficult to gauge the impact very low charges for new utility connections has on housing starts in Edmonds. I wonder if any of the six construction permits would NOT have been applied for if utility connection fees were much higher. That is a difficult question to analyze.

    As Property Tax Revenue appears to represent roughly 25% of our Total City Revenue, and there is a strong relationship between property values and economic activity, citizens and elected officials must be aware of the risks related to the historical low mortgage rates. My point being, should mortgage lenders decide the time has come to demand higher mortgage interest rates, additional downward pressure on real estate valuations could take place.

    Hopefully this issue will be overcome by a steady improving economy and slow increases to mortgage rates, but I think it prudent to point out the unusual situation created by real estate deflation since mid-2007 while mortgage rates have declined to historically low levels. I believe the average 30 year fixed mortgage rate was around 6.5% in mid-2007 and had fallen to roughly 3.87% recently. Despite this, property values have declined significantly in Edmonds since mid-2007.

    Property values would likely have fallen even more since 2007 had the average 30 year fixed mortgage rate stayed in the 6.5% range.

    For these reasons, I am excited by Mike Burdett’s sport’s tourism ideas, the idea for an Edmonds Public Market, our great restaurants, the great programs at the ECA and others.

    As we are so built out, I think attracting visitors from out of town to spend money in Edmonds will become more and more critical to Edmonds as time moves on.

  2. If 10,000 people come to town and buy a $10 burger the city will get $850 in sales tax. Building one new house of average value the property tax on that home will be about the same as the sales tax on the burger. That one home with the old connect rates would bring in over $2000 and the new rates would have made it $10,000. So it would take the sale of 120,000 burgers a year to bring in as much as a new house with the new rates for connections and the property tax. Most the the raw materials for the burgers is trucked in from the outside and the people coming from the outside drive in as well. While they may cause our streets extra ware and tear the do give the city enough money to pay about 135 feet of a 4 lane road. Hope their car does not drip oil. While these visitors may help the local business they do little to help the City’s financial issues.

  3. The mayor makes a lot of sense. I hope the council will seriously consider his recommendations. I don’t have a dog in this fight but as my grandmother used to say, “right don’t wrong nobody!”

  4. Hi Darrol, I appreciate your counterpoint and “food” for thought. I’ll respond simply by saying that $100,000 in taxable retail sales has more benefit to the City than just the related $850 sales tax revenue, especially when some of the related restaurant profits are spent in Edmonds. It also helps if employees of the restaurant spend some of their payroll and tip earnings in Edmonds. I believe that the City’s financial issues are helped when local businesses do well.

    I also believe property values are stronger in communities with attractive Arts, Entertainment and Sports programs. I believe strong retail and service businesses, including unique markets, also assist property values.

    I just believe it all works together in a very complex way. Another factor that assists Edmonds is obviously the ferry terminal and train station. And there are obviously more factors.

    The main point I was trying to make is that short term real estate appreciation is not a sure thing and that higher mortgage rates MAY someday impede real estate appreciation. This may have something to do with the small number of SFB permits approved during the last 9 months.

    I simply believe the City needs to factor the historical low mortgage rates into its financial forecasting, in a broad sense – not just as it relates to future property tax revenue. Economic activity is enhanced when all asset prices are appreciating, including real estate. Higher interest rates have traditionally impeded asset price appreciation.

    Contrast where we are today with 1980 and the related very high interest rates. History tells us how years of falling interest rates helped fuel the economic expansion from 1980 to 2000. We are at a different point in the economic cycle and I believe it prudent for the City to heavily consider the interest rate environment in its short and LONG term financial planning.

  5. I hate to say this but: Good job, Mayor. Your thinking on this is wise. I support your decision, wholeheartedly, on this.

  6. As a taxpayer I’m not for an increase in new construction. Edmonds will be less liveable if the density is increased, decreasing the value of all the other homes in the area and hence the property tax income to the city. I’m completely puzzled why city governments always think that adding more residents is a good thing for our city. I would rather see a stand taken to maintain current density.

  7. There’s no need to debate the pros and cons of new construction; our State has decided for us. Some years ago the State of Washington implemented the Growth Management Act. That legislation requires municipalities to grow their populations by certain amounts. Edmonds is only able to comply thru in-fill construction, since we have no unbuilt areas of any significant size.

  8. Sorry, I just don’t buy the Mayor’s reasoning. 50-25-235 versus 33-33-33. Come on, the difference is simply not significant enough to justify the veto. So…, what is the real reason?
    The connection fees have been way underpriced for years. This is great for developers, not so great for taxpayers.

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