Snoqualmie’s city council is watching the progress of a state bill exempting tribe-owned land from property taxes with growing concern, wondering how that change would affect everyone else’s taxes.

Council and staff weighed in on the potential negatives of a state bill exempting tribal property from tax during the committee-of-the-whole discussions on February 10 and 24.

Passed by the house and now before a state senate committee, House Bill 1287 would free property owned by Indian tribes, used for economic development, from property taxes.

HB 1287 defines economic development as an essential government service that would be exempt from tax. If passed, it would take effect on January 1, 2015, and would expire in 2022.

Washington’s constitution exempts property owned by federal, state or local governments from property tax. State law also frees all property belonging to tribes from state taxation if the property is used for essential governmental services, such as administration, fire, police, or health. Federal law prohibits state taxation of tribes on reservation land.

Tribal property that is leased out and exclusively used for economic development comes under a payment in lieu of tax, or PILT, which would be determined through negotiation with the county.

However, the city sees a big loophole there.

“All they have to do is put in an office and they could say, it’s no longer exclusive,” said City Administrator Bob Larson.

City’s objection

Larson calls HB 1287 “probably the worst piece of public policy I’ve ever seen or read. There’s no nexus at all with economic development.”

“The suggestion that, but for this legal mechanism (property taxes), economic development would take place (on tribe-owned property)… doesn’t pass the ‘but-for’ test,” Mayor Larson told the council. “Economic development would happen anyway.”

At issue is how the property tax burden would shift under passage, “from, in this case, the tribe(s), to all other parcels in that municipality,” Bob Larson said. “Other folks would be picking up the tax bill.”

If the Muckleshoot-owned Salish Lodge and Spa parcel becomes exempt from property taxes or payment in lieu of tax, the city has calculated that it could lose about $100,000 in revenue, about 2 percent of the city’s tax levy. Should the Lodge vicinity fully develop, that number becomes much larger, as much as $428,000 in new property tax revenue. Such properties would continue to add to the city’s total assessed valuation.

“Every community ought to be alarmed by this,” said Matt Larson. “It means (tribes) can buy motels and other revenue-producing properties and suck it out of the tax rolls.”

One clause of the bill allows one local taxing district to seek amends for the loss of property taxes—fire districts may negotiate with the tribe for their services.

Larson testified against HB 1287 before the legislature. He plans on going to Olympia again to oppose it.

The senate version of the bill, Senate Bill 6162 did not clear its committee after failing to garner sufficient signatures.

House Bill 1287 was passed, 63-38, and now comes over to the senate, where it is now before the Ways and Means committee.

Reps’ decision

The Valley’s state representatives, Chad Magendanz and Jay Rodne, both voted for the measure. Asked about his vote, Rodne told the Record that “analysis that we received from staff here in Olympia indicated that the city… would actually receive more revenue from the payment in lieu of taxes (PILT) component of the bill, that is mandatory under HB 1287. However, the Snoqualmie City Attorney has given us very good analysis that may counter this conclusion.

“We are still watching what the bill will do over in the Senate,” Rodne added. “If it comes back to the House, I intend to offer some amendments that will address the city of Snoqualmie’s legitimate concerns. It is still too early to tell whether this bill will make it through the process this session as it has significant hurdles in the Senate.”

Magendanz echoed Rodne.

“The staff briefing we received certainly indicated at the time that the analysis from the city administrator might have been missing an important aspect of the PILT that would increase overall revenue for the city of Snoqualmie,” he told the Record in an e-mail.

Mark Mullet, fifth district state Senator for the Valley, told the Record he is against the bill.

Sherry Appleton, the state representative for the 23rd District, based in Poulsbo, defended the bill, which she introduced several years ago. Appleton is among seven sponsors of the HB 1287.

“The whole basis for the bill is parity,” she told the Record. Appleton pointed to local governments and universities that own economically active property, such as golf courses and hotels, on publicly owned land. But tribes, she said, don’t get the same breaks.

“This is a good piece of legislation. We’re addressing parity, sovereignty and economic development.

“Nobody wanted taxpayers to foot the bill,” said Appleton. “We’re working long and hard to make the bill as acceptable as it can be.”

“People don’t realize how much money tribes put into the state economy, about $3 billion a year,” Appleton said. “Think about the employment the tribes do.” In her home district, the Suquamish tribe is the largest employer.

“Thousands of non-natives are employed by tribes. Every one of them buys groceries, fills up with gas. That money does come back to the community.”

In other business:

• The council approved a new agreement with the city of Issaquah, in which the city’s 911, dispatch and records management will be run by the bigger western neighbor.

The service will cost the city about $400,000 annually, rising by 5 percent each year.

The city has agreed to pay start-up costs for the hiring of an additional communications staffer by Issaquah to prepare for North Bend police work, which Snoqualmie begins in March.

“Things do get complicated,” commented councilman Charles Peterson, who recalled a similar agreement from a simpler time during his tenure in city government more than 30 years ago. “In the early ‘70s, we were the first city to use Issaquah’s jails and communications system. It was probably a two-paragraph agreement.” The new agreement is eight pages long.

“I would agree that is has gotten more complicated… from all sides of policing,” Police Chief Steve McCulley told the council.

The new deal, he added, continues the city’s long relationship with Issaquah, and is the culmination of work that began under former chief Jim Schaffer.

“It makes a lot of sense to consolidate, for efficiencies,” McCulley said. Benefits of the arrangement, he added, include keeping the city’s communication and dispatch links tightly connected.

“Our dispatchers are very familiar with our community, which can save a life, unlike other dispatch centers, where they don’t know where the Milk Barn is, or Meadowbrook.”

“This will greatly improve efficiency for officers’ work product and for the Records Section work flow,” McCulley told the Record in an e-mail. “This will involve training for all staff which will improve officer safety and ultimately enable us to provide enhanced police service for our residents.”

Councilwoman Kathi Prewitt made the motion, Bryan Holloway seconded. The council’s passage was unanimous.

• The council made some new outside-committee liaison appointments.

Bob Jeans is the lodging tax advisory committee, Railroad Days and Snoqualmie Valley Chamber liaison.

Kingston Wall goes to the Sound Cities Association. Heather Munden agreed to be the first liaison with the Snoqualmie Valley Hospital.  Bryan Holloway agreed to represent the city to the Northwest Railway Museum.