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MRSC Publications › The New City Guide (February 2002)
 
The New City Guide

The New City Guide

February 2002 - Report No. 54

Contents

Introduction

The voters have approved the creation of a new city, and it is now time to begin putting the voters' choice into effect. A new city, a municipal corporation, must be organized, staffed, and funded to begin official operation between 180 and 360 days after voter approval of the incorporation. The members of the governing body must be nominated and elected before any official action may be taken. Obviously, there is now much to learn and much to do. This guide is intended to help in this process of learning and doing, a process that should also be informed by the knowledge and experience of others, including local and state officials, professional consultants, volunteers, and organizations such as the Municipal Research & Services Center of Washington (MRSC) and the Association of Washington Cities (AWC).1

The 1991 legislature made the process of creating a new city somewhat easier and less confusing by extensively amending and adding to the governing statutes to clarify and enhance the authority and power of the interim city council.2 But the statutes can only tell a new city what its powers are; it cannot tell a new city how to best exercise them. A basic purpose of this guide is to both inform new city officials of their statutory powers and limitations and to set out and discuss the myriad issues and decisions that the new city will confront. In doing so, we hope to provide general guidance to help new officials better focus their efforts on ensuring the continuation of governmental services and setting the course for the new city.3

Statutory Framework for Interim/Transition Period

Although a code city4 has broad powers of home rule authority, it does not possess those powers until it officially becomes a city. During the interim period until the official date of incorporation, the powers of a "city" and its governing body (council) are generally limited to those set out in chapter 35.02 RCW5 for the purpose of establishing the basic framework and initial functioning of city government.

Powers of Interim City Council

The basic powers of the city-to-be during the interim period are, for the most part, set out or referred to in RCW 35.02.130. These powers are outlined as follows:

Adoption of Ordinances and Resolutions
The newly elected council is authorized to adopt ordinances and resolutions to become effective on or after the official date of incorporation. Ordinances and resolutions are, of course, the basic means of establishing the laws that govern the city and the rules that govern its administration.6

RCW 35.02.130 addresses, with respect to the interim period, the statutorily imposed delays in the effective dates of ordinances. An ordinance is generally not effective until five days after its publication in the city's official newspaper. RCW 35A.12.130. Some ordinances, such as those imposing a business and occupation tax, are subject to a referendum period (and possibly a referendum) before they become effective. See RCW 35.21.706. These statutory delays are, under RCW 35.02.130, not delayed further during the interim period. Specifically, these delay periods "shall commence upon the date of such enactment [of the ordinance] as though the city or town were officially incorporated." Thus, ordinances can be enacted so as to be truly effective, without delay, upon the official incorporation date.7

Adoption of Contracts and Agreements
The interim council may "enter into contracts and agreements to facilitate the transition to becoming a city or town and to ensure the continuation of governmental services after the official date of incorporation." In addition, RCW 35.02.225 authorizes counties to contract with newly incorporated cities "for the continuation of essential services until the newly incorporated city or town has attained the ability to provide such services at least at the levels provided by the county before the incorporation."

Most, if not all, new cities will find the need to contract with other governmental agencies, such as counties and special purpose districts (e.g., fire protection district, water-sewer district, library district), to continue their provision of services, at least temporarily. An interim council will also likely need to contract for consultant services, for an interim city manager or administrator, and for legal services.

Adoption of SEPA Policies and Procedures
The interim council may adopt, to be in effect during the interim period, State Environmental Policy Act (SEPA) policies and procedures to implement the requirements of that legislation. The issuance of development permits and approvals that require processing under SEPA, if they are not subject to an interim council-imposed moratorium under RCW 35.02.137, will be handled by the county during the interim period. However, the interim council may adopt during the interim period a comprehensive plan and zoning and land use regulations (to go into effect on or after the date of incorporation), legislation that must be reviewed under SEPA. WAC 197-11-704(2)(b)(ii).8 As a practical matter, however, it is highly unlikely that the interim council will have time to do anything more than adopt county plans and regulations, as a temporary measure.

Borrowing Power
RCW 35.02.130 authorizes the interim council to borrow funds to finance operations during the interim period in either of two basic ways:

N Issuance of tax anticipation or revenue anticipation notes or warrants or other short-term obligations and borrowing of funds on the security of these instruments, as provided in chapter 39.50 RCW. As their names imply, these instruments create indebtedness that is payable from tax and other city revenues in anticipation of which the notes, warrants, or other form of indebtedness were issued. This indebtedness is subject to the statutory limit on nonvoted general indebtedness contained in RCW 39.36.020.

N Borrowing from federal, state, and other governmental entities, in the same manner as if the city were officially incorporated.

An interim council may borrow staff and equipment and use technical and financial assistance from other cities, from counties, from other local government agencies, and from state agencies. Such loans may be made without compensation. RCW 35.02.270

Adoption of Property Tax Levy
The interim council may adopt the property tax levy for its first full calendar year following the interim period. See discussion of property taxes at page 26. The timing of the adoption of the property tax levy can be an important consideration in selecting the official date of incorporation. See pages 65-68.

Acquisition of Needed City Facilities, Supplies, Equipment, and Insurance
The interim council has the same authority to acquire such as if it were officially incorporated.

Hiring of Staff
Again, the city has the authority it would have if it were officially incorporated. The staff the city may hire includes an interim city manager or administrator. The council may limit the powers and duties of an interim manager as it desires.9 The appointment of an interim manager may be extended up to 90 days after the date of incorporation. Thereafter, a council-manager city council must heed the statutory requirements with respect to the powers and duties of a "permanent" city manager.

Ballot Propositions to Authorize Taxes
The interim council may submit ballot propositions to city voters to authorize collection of taxes on or after the official date of incorporation. An example of a tax that requires voter approval is the additional .25 percent real estate excise tax authorized by RCW 82.46.035(1) in counties that choose (but are not required) to plan under the Growth Management Act (ch. 36.70A RCW).

Fire Protection and/or Library District Annexation
The council may authorize annexation of the city by a library district10 (in lieu of providing a city library), to become effective upon the date of incorporation. If it is located in one or more fire protection districts, a new city is deemed to be annexed to the district or districts, unless the interim council adopts a resolution precluding annexation. See RCW 52.04.161 and discussion of this issue at page 44.

Adoption of Development Moratoria
Although the county retains jurisdiction during the interim period over zoning and other land use matters within the boundaries of the city-to-be, the interim council is authorized by RCW 35.02.137 to adopt moratoria on the filing of applications with the county for development permits or approvals, such as subdivision approvals and building permits.11

Adoption of Budgets
This is a mandatory duty of the interim council. The council must adopt an interim budget for the interim period or until January 1, whichever occurs first. If the interim period extends after January 1, a second interim budget must be adopted for the period between January 1 and the official incorporation date. The interim budget or budgets are to be adopted in consultation with the state auditor's office. See RCW 35.02.132.

The interim council must also adopt a "first year" budget for the period between the incorporation date and January 1 of the following year. See pages 34-37 for discussion of budget preparation.

Laws Applicable to City During Interim Period

Under RCW 35.02.130, a city during the interim period is subject to the following laws:

Immunity for Discretionary Decisions
RCW 4.24.470 provides that an appointed or elected city official is immune from civil liability for damages "for any discretionary decision or failure to make a discretionary decision within his or her official capacity." A discretionary decision is one that involves basic policy evaluation and judgement; it does not involve the implementation of policy.12 However, the city remains, pursuant to this statute, potentially liable for damages resulting from torts committed by its officials.

Public Disclosure Law
Chapter 42.17 RCW requires financial disclosure by elected officials, regulates campaign financing, prohibits the use of public office or public facilities in election campaigns, and requires, with some exceptions, disclosure of public records upon request.

Records Preservation and Disposition
Cities and other governmental agencies are required to preserve and retain public records for certain periods of time, and records may be destroyed only by following approved procedures.13 RCW 40.14.070. The Archives and Records Management Division of the Office of Secretary of State adopts records retention schedules for local governments, including the Local Government General Records Retention Schedule & Records Management Manual, which can be viewed on the MRSC Web site at http://www.mrsc.org/recordsmanual/reclist.htm.

Ethics and Conflicts of Interest
Chapters 42.20 and 42.23 RCW establish ethical and conflict of interest rules that apply to public officers.14

Open Public Meetings and Minutes
Chapter 42.30 RCW is the state open public meetings law that requires, in brief, that all meetings of a governing body must, with some exceptions, be open to the public. A governing body includes such city bodies as the city council, planning commission, board of adjustment, and civil service commission. The definition of a meeting to which this law applies is broad enough to include special meetings such as workshops, study sessions, and retreats, as well as regular council meetings. Even some council committee meetings may be required to be open to the public under this law. Executive, or closed, sessions may be held only in certain specified situations.

Since the newly elected councilmembers will need to meet shortly after they are elected in order to begin the process of establishing a city government, it is important to understand the requirements of this law when they do meet.15 Municipal officials who knowingly violate its provisions are subject to a $100 penalty. RCW 42.30.120.

Publication of Ordinances and Notices/Official Newspaper
A city is required to publish in its official newspaper the content or a summary of the content of each ordinance that it enacts. RCW 35A.12.160, 35A.65.020. Further, these statutes require that cities establish a procedure for notifying the public of upcoming hearings and of the preliminary agenda of council meetings.

Every city must designate an official newspaper. RCW 35A.21.230. Code cities under 20,000 population must select an official newspaper annually pursuant to a bid procedure.16 RCW 35.23.352(7).

Liability Insurance for Officers and Employees
Cities are authorized to, in their discretion, purchase insurance to protect officers and employees from claims arising out of the good faith performance of their duties and to hold them harmless from expenses connected with such claims. RCW 36.16.138. However, since cities are required, upon request, to pay for the defense of and for any monetary penalties resulting from such claims (RCW 4.96.041), purchasing such insurance is a practical necessity.

Public Contracts and Bidding
State law imposes certain requirements upon the procurement of public works contracts, requiring bidding procedures for certain contracts, as well as for certain purchases of supplies, materials, and equipment, that vary with the size of the code city involved.17 RCW 35A.40.210; 35.22.620; 35.23.352.

RCW 35.02.130, which sets out the laws applicable to an interim city council, does not specifically refer to chapter 39.80 RCW, which establishes requirements for the procurement of contracts for architectural and engineering services. However, based on the language of chapter 39.80 RCW, it is advisable that the interim council follow its requirements in procuring any such contracts.

Interlocal Contracting
Chapter 39.34 RCW authorizes "local governmental units," including cities, to enter into agreements with other such governmental units, including the state, for the performance of any power or authority that may be exercised singly by the governmental units involved. Typical interlocal agreements involving cities include contracts for law enforcement services, building code enforcement, animal control, planning services, fire protection, and purchasing.

Organizing City Government During Interim Period

The interim council will have many issues to consider, much information to gather, and many decisions to make. There is no definite chronology that the council must follow, although there are clearly some matters that should be addressed more immediately than others. For example, the council will immediately need to hire or borrow staff to help it organize and establish the framework of city government. Also, many things will need to be done simultaneously. The interim council may find it helpful to divide into various ad hoc committees of two or three members to better deal with the many issues the entire council will have to address.18 Regardless of how the council approaches the interim period, it will be critical for the council to recognize that: (1) the highest and most immediate priority is to ensure the effective continuation of local public services; and (2) it will be prudent to defer critical long-term decisions until competent, professional legal and administrative advice is obtained.

The following discussion presents a generic and flexible chronology that the interim council may wish to consider. Reference should also be made to the "Suggested Schedule of Activities During Interim Period" in Appendix C. (See also the list of tasks developed by the interim Shoreline City Council, a council-manager code city, in Appendix D.) Attention to some items can begin even before the interim council is elected.

Transition Process

The "city" need not wait until its councilmembers (and mayor in a mayor-council city) are elected to begin the transition process. It is recommended that some sort of informal group begin the process of planning the transition to cityhood before there exists an interim council that can take official action. In all recent incorporations, transition groups were formed even before council candidates were nominated at the primary election after the successful incorporation vote.

Such a transition group, however, has no legal authority to take any action on behalf of the yet-to-be-incorporated city. Nevertheless, the danger exists that this group may begin charting a course that does not adequately represent the diverse interests of the residents of the new city. But a course can be shifted, and the benefits of an early start may outweigh the possibility of an errant one.

Transition groups commonly plan meetings with the nominated council candidates to discuss transition issues, roles, and responsibilities. They essentially recognize the group of nominated council candidates as a body capable of making some initial decisions to guide the transition process. A well-organized and representative transition group can provide much of the groundwork, such as information gathering, for many of the decisions to be made by the interim council.

After the deadline for filing for nomination to elective city office has passed, it may be helpful to hold candidates' forums to inform voters. "Workshops" may also be helpful in which candidates and others who may likely be involved in city government can begin discussing the course that the interim council could take and gathering information to assist it in charting that course.

In addition to the volunteers who will be needed to organize and coordinate these pre-officer election activities, MRSC, AWC, state officials, local officials from neighboring jurisdictions, and private consultants can provide information and assistance. Recent incorporations have established a tradition of neighboring cities helping new ones get started.

Swearing-In Ceremony

The councilmembers and the mayor of a code city must take an oath of office. It is not required that the oath be taken at a public meeting; it may be done in private. However, for a new city, the swearing-in provides a ceremonial beginning. It is, after all, an historical occasion, and it should ideally be done in the context of a well-publicized community event, with appropriate fanfare.

Council Organization

The interim council will need to schedule a meeting, in compliance with the requirements of the Open Public Meetings Act, chapter 42.30 RCW, as soon as possible after the council election results are certified.19 One of the purposes of that initial meeting should be to establish the procedural framework for the council, including addressing the following:

Selection of presiding officer (council-manager city).
 Although one of the mayor's functions is to preside at council meetings, there is no explicit statutory authority for someone to exercise the powers of this office during the interim period. However, the authority can be implied for the council to choose a presiding officer in order for the council to function according to accepted rules of procedure.

    In a mayor-council city, the elected mayor functions as the presiding officer at council meetings. The council should, however, appoint one of its members to be the mayor pro tem who would exercise the powers of the mayor, including presiding at council meetings, in case of the absence or temporary disability of the mayor.

The day, time, and place of regular council meetings.
These should be established by ordinance.20 A city council is required to meet regularly, at least once a month. Special meetings, those not held on a regular schedule, may be held at other times, subject to at least 24 hours' notice. See RCW 42.30.080.

    The initial meeting place (or city hall) for the council will undoubtedly be temporary. The meeting room selected must be large enough to accommodate attendance by members of the public. As a practical matter, the site of the first formal meeting may need to be chosen by the transition group, which should include council candidates. Selection of a permanent meeting place and city hall would, of course, be one of the matters to address during the interim period.21

    The council must also establish the hours in which the city hall will be open to the public. RCW 35A.21.070. This must be done by ordinance (to be effective on the official incorporation date) and can be applied, by motion or resolution, to the interim period. Under RCW 42.17.210 (which applies to the interim council), the city must have office hours of at least 30 hours a week.

Council rules of procedure.
The council will need to adopt rules of procedure to govern the conduct of council meetings. These rules should include rules of parliamentary procedure, which could be in the form of standard rules, such as Roberts' Rules of Order, adopted by reference,22 or in the form of more simplified and tailored rules.23 The rules can also address such other matters as the order of business, agendas, committees, absences, public hearing rules, specific procedures for adoption of ordinances and resolutions, rules governing participation by the public at meetings, filling vacancies, executive sessions, and adjournment of meetings. The rules may, of course, be expanded and refined in the future as the council uses them and decides what works well and what does not.

Selection of official newspaper.
Except for code cities over 20,000 population, selection of an official newspaper must be pursuant to a call for bids. RCW 35.23.352(7).24 The contract for the official newspaper must be awarded to the lowest responsible bidder. Id. Since the bid process is time consuming, it is important that the councils for such cities direct interim city staff to begin it as soon as possible. For code cities over 20,000 population, the council may simply select the newspaper from among those with the proper legal qualifications for an official newspaper.25

Notice procedures.
The council must adopt procedures for notifying the public of the agendas for upcoming council meetings and of any upcoming public hearings.26 The procedures could, but are not required to, include written notification to the official newspaper, publication of a notice in the official newspaper, posting of the preliminary agenda (in places such as the city hall and post office), and/or "such other processes as the city determines will satisfy the intent of this requirement [of notification]." RCW 35A.12.160.

Council meeting minutes.
The city must provide for the taking of minutes at council meetings. Usually, this is done by the city clerk or his or her deputy; it may be necessary for there to be a temporary clerk, at least for the first meeting.

Hiring of staff.
As noted above, the interim city has the authority to hire staff as if it were officially in existence. The city may wish, at first, to create certain interim staff positions, and may decide to contract with other local governments for the loan of staff. Loaned staff may be especially useful while searching for interim or permanent staff. The city may also find it advantageous to contract with professional consultants, such as in the area of financial affairs. Although it perhaps goes without saying, it is critical to an effective start-up of city government that experienced and capable staff are contracted for or hired.

When hiring permanent (non-interim) staff, it is advised that organized recruitment, evaluation, and hiring procedures and schedules first be in place. It may also be helpful to develop an initial organizational chart of the city administration that outlines the departments and positions integral to the initial operation of the city.

It is strongly recommended the job descriptions be drafted for each position, not only to help ensure that qualified individuals fill those positions but also to help ensure compliance with the federal Americans with Disabilities Act (ADA). This law prohibits discrimination in employment against a "qualified individual with a disability," who is defined as someone who is able to perform the "essential job functions" of a position, with or without a "reasonable accommodation." To determine whether a person is qualified to perform a particular job, the employer (city) must identify, in advance, the "essential" and "nonessential" functions of the job. It is therefore necessary, as a practical matter, that the new city create formal job descriptions for each position, defining, among other things, the essential and nonessential functions of the particular position. Ideally, this should be done in consultation with legal counsel. MRSC and the Local Government Personnel Institute (LGPI) at AWC can also provide information on complying with this legislation's mandate.

There are also numerous other personnel-related decisions that will confront the interim council, such as salaries, benefits, and policies. These matters will be discussed later, at pages18-21.

Among the necessary and/or required staff are the following:

  • City manager (council-manager city). In a mayor-council city, the mayor has the hiring and firing authority.27 In a council-manager city, the manager, who is chosen by the council, has the hiring and firing authority.28 Thus, in a council-manager city, it may be advisable for the council to select as soon as possible either an interim or "permanent" city manager who would then hire staff.29 It does not appear, however, that the statutory scheme regarding an interim council dictates that an interim manager have hiring authority. (The interim manager "shall have such administrative powers and duties as are delegated by the governing body." RCW35.02.130. The council should thus expressly define the role of the manager during the interim period.) The interim council could therefore retain some or all of the hiring authority. However, whether it is practical or advantageous for the council to become directly involved in hiring interim staff other than the interim manager is questionable. In any event, since the interim manager has only the powers and duties specifically delegated by the interim council, it is essential that the interim council specifically define those duties and powers.

    Since it is a pivotal position in city government, the city manager position should be filled only after a careful selection process.30 If the council is not hiring an interim manager, the interim council should establish the process for hiring a "permanent" manager as one of its first orders of business. If the council is hiring an interim manager, it will nevertheless need to establish a selection process for and arrange for the hiring of the "permanent" manager, because the interim manager is authorized by statute to serve only to the official date of incorporation. RCW 35.02.130. The council may, however, extend the appointment of the interim manager for up to 90 days after incorporation. Id.

  • City administrator (mayor-council city). The interim council of a mayor-council city may wish to consider whether to establish a city administrator position that would function much like a city manager but subject to control by the mayor, rather than by the council. If the interim council establishes such a position, it may wish, initially, to establish an interim position (to be filled by the mayor). In establishing a city administrator position, it would be important for the council to specifically and clearly define the duties and responsibilities of the position.

  • Clerk. Another essential, and required, office is that of city clerk. Certain clerk duties are prescribed by statute and others are established by the council by ordinance. In general, the clerk takes council meeting minutes, attests ordinances, authenticates and records ordinances and resolutions, draws warrants (or checks), provides voter registration assistance to the county auditor, and is in charge of city records.31

    The council may also establish a deputy clerk position. The deputy clerk would assist the clerk in his or her duties, and would perform, with some possible exceptions, the duties of the clerk when the clerk is absent.

    The clerk must furnish an official bond conditioned on the faithful performance of his or her duties. The city's insurance agent or broker can advise the city on bonding and provide the necessary bond for the clerk and other officials who may require one. The city should pay the premium for the bond.

  • Treasurer or financial officer. A code city is not required to have a treasurer position. Even if a code city does not create a treasurer position, it will most likely need the services of a finance officer who would function, in essence, as the treasurer in all but name. In smaller cities, a treasurer position is often created and combined with the office of clerk. However this position is established, it generally includes such duties as keeping the monies of the city, paying out city monies on warrants or checks appropriately authorized and signed, keeping required receipts, and depositing and investing of municipal funds. The treasurer must also furnish an official bond.

  • Auditing officer. A city must have an auditing officer to audit all claims (contractual) presented against a city. RCW 42.24.080. This officer, whose position is created by ordinance, must authenticate and certify, with respect to such claims, that "the materials have been furnished, the services rendered or the labor performed as described, and that the claim is a just, due and unpaid obligation . . ." Id. In smaller cities, this position is usually held by another city officer such as the clerk or treasurer. In some cities, the council or a committee of the council acts as the auditing "officer." (Whether that arrangement strictly complies with the statutory requirement of an auditing officer is uncertain.)

  • City attorney. A city must have a city attorney on a full-time or part-time basis, either as in-house legal counsel or "by any reasonable contractual arrangement for such professional services." RCW 35A.12.020. If the interim code city council decides that, instead of creating a city attorney position, it will contract for legal services, then it, rather than the mayor, would decide on the attorney or firm to provide those services.32

    It is particularly important that the city during the interim period have access to legal counsel to help ensure that legal requirements are being followed in establishing and operating city government.

  • Police chief. Although a city is required to have a police chief or chief law enforcement officer, it is not a position that need be filled immediately as the city may not for a while, if ever, provide its own law enforcement services. Under RCW 35.02.220, the county is required to provide law enforcement services at the pre-incorporation level up to 60 days after the official date of incorporation or until the city "is receiving or could have begun receiving" sales tax distributions, whichever is the shorter time period.33 After that period expires, the city may contract with the county for continuation of law enforcement services for whatever time period they can agree on.

  • Department heads. The need for such positions will vary, of course, depending upon local circumstances. Common department head positions include a fire chief, public works director, planning director, building official, and parks director.

Personnel Issues

Salary schedule.
A salary schedule for city officials and employees should be adopted as soon as possible.34 This must be done by ordinance (often as part of the budget ordinance), to take effect on the official date of incorporation. During the interim period, however, the salary for interim staff can be set by resolution. A salary schedule for the interim period should be a part of the interim budget for the city.

For elected officials, the relevant statutes35 provide that, until a salary ordinance can be passed and become effective as to elective officers of a newly incorporated code city, such officers are entitled to compensation as follows:

City with less than 5,000 population:

Mayor (mayor/council city) - $150/month
Mayor (council-manager city) - councilmember salary plus 25% ($25/meeting)
Councilmembers - $20/meeting (for not more than two meetings per month)

City with between 5,000 and 15,000 population:

Mayor (mayor/council city) - $350/month
Mayor (council-manager city) - councilmember salary plus 25% ($187.50/month)
Councilmembers - $150/month

City with greater than 15,000 population:

Mayor (mayor-council city) - $1250/month
Mayor (council-manager city) - councilmember salary plus 25% ($500)
Councilmembers - $400/month

A salary ordinance governing mayoral and council salaries cannot be effective except for a new term, which in the case of an initial city council (that follows the interim council) will begin on January 1 following the next general municipal election after the official incorporation date, or following the municipal general election after that if the next general municipal election is less than 12months after the date the councilmembers are first elected. RCW 35.02.130. This is because article 11, section 8, and article 30, section 1 of the state constitution prohibit increasing the salary of an elected municipal official who fixes his or her own compensation (i.e., the members of the city council) after election and during the term of that office. Sometime during the initial term and before the next council election, the initial council should adopt a salary schedule to apply to its members who take office after that election. (If the council does not do so before the next election, then it appears that the next council may not be entitled to a salary.)

Also, because article 11, section 8 of the state constitution prohibits decreasing the salary of an elected municipal officer after his or her election and during his or her term of office, it does not appear that the council of a new code city may provide for a lesser salary to be paid to its members or the mayor during their initial term of office than that established in the above schedule.

The 2001 legislature provided a new option for setting local elected official36 salaries. Under RCW 35.21.105, cities may by ordinance establish an appointive salary commission with the authority to increase councilmember and mayoral salaries during their terms of office or decrease them for the following terms of office, subject to potential voter referendum. An interim council may establish a salary commission, but it could not begin operation until the official incorporation date or later, when the ordinance establishing it can be effective.

Personnel policy.
Development of a personnel policy is a necessary feature of an effective city government system. In Personnel Policies for Small Cities (prepared for the Local Government Personnel Institute, April 1991),37 authors Gil Sparks and Scott Snyder note the importance of clear, written personnel policies:

Well-developed personnel policies serve a variety of purposes for municipal employers. First, they promote consistency in the operation of city business and in the conduct and treatment of city employees by providing one source of reference for the city's personnel practices. Second, well-written policies can be an effective communications tool for municipal employers to make certain that employees understand the benefits available to them from city employment, and the expectations of the city regarding their behavior as employees. Comprehensive and understandable policies are an invaluable resource for supervisors in helping them to explain city policies to their employees and to apply them in a fair, consistent, and nondiscriminatory manner.

Carefully drafted policies can assist municipal employers in both avoiding and defending against the increasing number of discrimination charges and lawsuits brought by employees or former employees. In short, clear and concise personnel policies can be a significant component of an effective employee relations program.

Personnel policies do have legal effect. In Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 230, 685 P.2d 1081 (1984), the Washington State Supreme Court held that written provisions of personnel policy and procedure manuals as well as employee handbooks can be enforced as if they comprise a contract between employer and employee:38

we hold that if an employer, for whatever reasons, creates an atmosphere of job security and fair treatment with promises of specific treatment in specific situations, and an employer is induced thereby to remain on the job and not actively seek other employment. Those promises are enforceable components of the employment relationship.

Personnel policies commonly deal with such issues as working hours, overtime and compensatory time, breaks and meal periods, recruiting and hiring practices, probationary periods, promotions, compensation, benefits, expense reimbursement, training, performance evaluation, leaves, employee conduct and responsibilities, and discipline and termination.

Because of the legal and practical consequences of personnel policies, such policies should be tailored to the city's own particular circumstances. In addition, legal counsel should review all policies before adoption to ensure compliance with state and federal law and to ensure that they do not have legal effect beyond that intended by the council.

Also, because of the necessary complexity of a well-developed personnel policy, it may be difficult to implement a "final" version during the interim period. Thus, it is recommended that a preliminary policy be adopted to be effective until the more permanent version is adopted. A personnel policy may be adopted by ordinance or resolution.

Employee benefit plan.
In addition to providing such fringe benefits as paid sick leave, holidays, and vacation, municipal employers commonly provide additional benefits such as health, life, and disability insurance programs, and retirement plans, to the extent they can be afforded. Some city officers and employees are subject to mandatory retirement programs established by statute and administered by the state.

Full-time city police and firefighters are, pursuant to statute, members of the Law Enforcement Officers' and Firefighters' Retirement System (LEOFF). Ch. 41.26 RCW. This mandatory system, funded by both employee and employer contributions, provides sickness, disability, death, and retirement benefits. It is administered by the state Department of Retirement Systems, as well as by local disability boards. Volunteer fire fighters are covered by the state volunteer fire fighters' relief and pension system. Ch. 41.24 RCW.

All city employees not covered by a qualifying retirement program, such as LEOFF, must be covered by Social Security.39 The council may elect to have city employees covered by the state Public Employees' Retirement System (PERS), which is considered a qualifying retirement program, or by an alternative program which provides a benefit comparable to Social Security benefits. The city's elected officials and its appointed manager or chief administrative officer, if any, may choose to be covered by PERS.

With respect to health benefits, there is a statutory requirement that if a municipal employer offers its employees group hospitalization and medical aid policies or plans, it must provide its employees with "a choice of policies or plans through contracts with not less than two regularly constituted insurance carriers or health care service contractors or other health care plans." RCW 41.04.180. This requirement might be satisfied if the city initially offers a choice of two plans and then, depending upon the preference of city employees as a whole, selects the preferred plan. Another requirement that applies when a city offers a health benefits plan is that the city provide the option of enrollment in a health maintenance organization (HMO). RCW 48.46.180(1). However, this requirement does not apply if there is no HMO in the geographic area. RCW 48.46.180(3).

Insurance

Since a municipality and its officers and employees will certainly be subject to liability claims, it is crucial that liability insurance be procured.

Insurance should be procured to protect the city against the myriad damage claims that can result from operation of the city, whether, for example, they are claims arising from damages due to potholes or from claims of inverse condemnation. The exposure to liability can be immense, and, even if successful, defense against claims can be expensive.

Cities are required, upon request, to defend and pay the expenses to defend officers, employees, and volunteers against damage claims or actions resulting from acts or omissions that the city council determines to be within the scope of that individual's official duties. Cities may also be liable for nonpunitive damages (and, at its option, punitive damages) with respect to such damage actions. RCW 4.96.041.

There are four basic avenues for insurance for cities: purchase of a conventional insurance policy; self-insurance; pooling (joint self-insurance); and joint purchasing (of conventional insurance, but at group rates). Obviously, a new city needs to scrutinize these options to ensure effective coverage at the lowest possible rate. Because the city will legally exist as of its official date of incorporation, it is critical that some form of insurance coverage be procured by that date. It is nevertheless strongly recommended that some insurance be provided for the interim period, because there will also be liability exposure during this period.

Insurance should also be procured to protect a city's officers and employees. Although, in view of the law at this time in the state, personal liability exposure for officers and employees appears minimal, the risk may justify purchase of such coverage.

As an adjunct to insurance coverage, it may be advisable for a new city, particularly a larger one, to establish a risk management program. By definition, risk management is a program of attempting to minimize the adverse consequences of loss through pre-planning. The basic idea of such a program is to identify and reduce risks. Although not the priority that purchasing insurance is, developing a risk management program, where appropriate, should be considered as an important adjunct to the establishment of city government.

Financial Management

One of the first organizational measures that must be undertaken is establishment of an accounting system for the city. The state auditor's office has created the Budgeting, Accounting, and Reporting Systems Manual for Cities and Counties and Other Local Governments (BARS), which establishes a uniform system of accounting applicable to all local governments. There is a BARS manual for cities with a population of greater than 25,000, requiring a double entry accounting system, and a separate BARS manual for cities under 25,000, allowing a single entry system.

Funds.
This governmental accounting system is organized and operated on a fund basis. A fund is defined by the BARS manual as "a fiscal and accounting entity with a self-balancing set of accounts . . . segregated for the purpose of carrying on specific activities or attaining certain objectives . . ." It is important to establish certain funds, required by law, as soon as possible. These include:

  • General fund (current expense fund). This fund is used to pay the current expenses of the city and to account for the financial transactions of the general operating functions of city departments, and those transactions not properly accounted for in another fund. Separate accounts must be established for each city department or division.

  • City street fund. All funds distributed to cities from the state motor vehicle fund must be placed in a fund designated as the "city street fund." RCW 47.24.040. The moneys from this fund are to be used for:

    salaries and wages, materials, supplies, equipment, purchase or condemnation of right of way, engineering or any other proper highway or street purpose in connection with the construction, alteration, repair, improvement or maintenance of any city street or bridge, or viaduct or underpassage along, upon or across such streets.

  • Other funds as may be required. Other types of funds that should be established as needed include special revenue funds, debt service funds, capital projects funds, enterprise funds, internal service funds, and fiduciary funds such as trust and agency funds.

    New cities with a population of 15,000 or more must establish an arterial street fund. Although RCW 46.68.110 does not specifically mention "arterial street fund," it requires that such cities spend the gas tax moneys received under RCW 46.68.090(1) exclusively for "[t]he construction, improvement, chip sealing, seal-coating, and repair for arterial highways and city streets . . ." (Emphasis added.) Thus, a separate fund is required.

A financial officer well-versed in municipal accounting procedures can be essential in creating this fund-based financial management structure. However, as a practical matter, it may be necessary to contract with a local or state governmental unit for interim accounting services.

It is recommended that the interim council and appropriate interim staff meet with the auditors from the regional offices who will be auditing the city in the future. The purpose of this meeting would be to help ensure that the city is setting up its financial accounting system in a manner consistent with the state auditor guidelines.

Establishing state and federal accounts.
It is advisable to, as soon possible, apply for federal and state identification numbers.40

Designation of depository bank.
The city council must designate one or more financial institutions as the depository or depositories for city funds and for general banking services. Some councils and treasurers designate the depository after requesting and receiving proposals for such services, although the relevant statutes do not specify the procedure to be followed.

Miscellaneous policies.
The interim council should establish interim or permanent policies regarding petty cash use, travel advances and reimbursement, voucher approval, use of city credit card (if any), and the like. With respect to reimbursement for official travel, RCW 42.24.090 provides, in part, as follows:

the legislative body of any municipal corporation . . . may prescribe by ordinance or resolution the amounts to be paid officers or employees thereof as reimbursement for the use of their personal automobiles or other transportation equipment in connection with officially assigned duties and other travel for approved public purposes, or as reimbursement . . . in lieu of actual expenses incurred for lodging, meals, or other purposes. The rates for such reimbursement may be computed on a mileage, hourly, per diem, or other basis as the respective legislative bodies shall determine to be proper in each instance.

If the council desires to establish a policy allowing for travel advances, it must establish a revolving fund to be used solely for that purpose. RCW 42.24.140; see also RCW 42.24.150 - .160 for other statutory requirements relating to travel advances.

A city may establish credit card accounts and issue credit cards to officers and employees for official travel expenses and for governmental purchases. RCW 42.24.115; 43.09.2855.

The city council must, by ordinance, establish regulations governing the presentation, auditing, and approval of "demands" against the city. Such "demands" against a city include bills for purchases by city officers or employees for city purposes and payments for the performance of contractual obligations. Although the general statutory scheme requires auditing of such demands by an auditing officer followed by council approval before the demand can be paid, RCW 42.42.180 allows a city to authorize issuance of warrants or checks to satisfy demands or claims prior to council approval, if certain statutory conditions are met.

Commonly, the council at its regular meeting is presented with a voucher list that it will usually summarily approve, since most claims or demands against a city involve routine expenditures. (The claims on the voucher list should have been previously audited as required by RCW 42.24.080.) A voucher list will typically contain a warrant or check number, a brief description of the expenditure, the name of the payee, and the amount. The council may, however, remove individual items from the list for particular scrutiny (while the remainder of the list gets summary approval). A majority of the entire council (not just of the quorum) is necessary to pass a "resolution for the payment of money" (e.g., voucher approval). RCW 35A.12.120.

Borrowing of Money

To finance the costs of operating the city during the interim period and beyond, pending the receipt of tax and other revenues, the interim council should identify and tap as soon as possible sources of funds that may be borrowed. As noted above, the statutes governing the interim council authorize two basic methods of borrowing: tax or revenue anticipation notes or other short term obligations; and borrowing from other governmental entities.41

Short term obligations.
These must be issued pursuant to an ordinance passed by the interim council, and may bear whatever interest rate the council deems to be "in the best interests" of the city. The maximum repayment period possible for these obligations is 18months (six months from the end of the fiscal year in which they are issued), although this long a period may not be possible, depending on the earliest date on which the interim council may take such action. The amount of these short-term obligations, which are considered nonvoted general indebtedness, is subject to the statutory maximum amount of nonvoted indebtedness (1 ½ percent of the assessed valuation of taxable property in the city) which is allowed by RCW 39.36.020(2).

Borrowing from other governmental entities.
This can also be an important source of funds to finance the city during the interim period. Recently incorporating cities have borrowed from either the state, a county, or another city.

When the city officially incorporates, it may have a significant source of funds to borrow in its own street fund. County road taxes will be diverted into this fund as of the official incorporation date, and state-shared gas tax revenues will also be deposited in this fund. The city may borrow from this fund for deposit in another fund so that the moneys borrowed may be used for other purposes. The borrowed funds must be repaid, with interest, into the street fund.

Revenues

Retail sales tax.
This is a major revenue source that is the easiest to tap and should be implemented as a matter of course. RCW 82.14.030 authorizes a city to impose a retail sales and use tax of up to 1.0 percent, comprised of two separate .5 percent options. (The second .5 percent tax is subject to a referendum, if one is initiated within seven days of the passage of the ordinance imposing the additional tax. RCW 82.14.036.) However, since the county receives 15 percent of each .5 percent tax option imposed by a city, the effective rate is .85 percent. It is important to note that the imposition of this tax by the city will not, except in a few counties, result in increased taxes for city residents, because this tax is already imposed by the county; only the recipient of the tax revenues is changed.43

    There are important timing issues with respect to this tax. Under RCW 82.14.055, enacted in 2000, a sales tax rate change, such as occurs when an interim city council first adopts a local tax, can take effect only on January 1, April 1, July 1, or October 1. Also, a local government must notify the Department of Revenue at least 75 days before the change can take place. This law may have an effect on the timing of a new city's incorporation date. See the discussion on pages 65-68 on "Choosing the Official Incorporation Date."

    Of course, the new city will not begin receiving sales tax revenue on one of the dates identified in RCW 82.14.055, but it will receive the taxes that the Department of Revenue will collect beginning that month. Although the department now distributes local sales tax revenues on a monthly basis, there is a lag in the distribution of local tax revenues of at least two months while tax returns are submitted and processed.

Property tax. 44
This is also a major source of revenue available to a city. Consequently, the timing of the official incorporation date with respect to the levying of this tax may be critical to an effective start-up of city government if, as explained below, that date is likely to fall somewhere in the second half of the calendar year.

Property taxes are levied by action of the council, up to the statutory maximum rate and subject to the 101 percent lid on property tax increases.45 Increases beyond the statutory maximum and the 101 percent lid (special levies) require voter approval. (Special levy ballot propositions may be submitted to the voters during the interim period, although collection could not occur until after the official incorporation date. However, it is unlikely for political and practical reasons that an interim council would submit an excess levy to the voters during the interim period.)

Since the property tax is collected at the county level and the property assessment function is the responsibility of the county assessor, state law imposes certain notification requirements and timetables upon cities with respect to city-levied property taxes. The city must set its property tax levy and certify it to the county by November 15 (RCW 35A.33.135; 84.52.020). Where the incorporation date is likely to fall in the second half of the calendar year (because of the timing of the incorporation election), that date should be selected so as to allow sufficient time to meet these deadlines.

At least one-half of the property tax is due from taxpayers on April 30 and the remainder is due on October 31. RCW 84.56.020. Thus, a city will receive the bulk of its property tax distributions in May and June and in November and December. The county treasurer must, on or before the 10th of the month, transfer to cities their respective shares of taxes collected the previous month. RCW 84.56.230. Some counties, however, transfer to cities their shares on a daily basis rather than pay the interest charges they are obligated to pay cities for the time the revenues are held prior to distribution. Cities in these counties receive most of their revenues in April and May and in October and November.

County road tax.
This tax is a part of the county property tax that is distributed to newly incorporated cities based on the amount of tax collected from within the area incorporated from the date of incorporation to the end of the calendar year.46 RCW 35.02.140. This is an important initial source of revenue and its receipt may be a very significant factor in choosing the official incorporation date.

Counties are required by statute to levy a property tax for county road purposes, in addition to a property tax for general county purposes. RCW 36.82.040. It is assessed only in unincorporated areas of the county and is based on the assessed value of taxable property and is governed by the provisions of Title 84 RCW. As with all property taxes, the road taxes become due on April 30 and October 31. The road taxes received by a new city are required to be deposited in the city street fund, and the use of this tax revenue is accordingly restricted. RCW 35.02.140. However, the new city can access these revenues for other municipal purposes by means of an interfund loan from the street fund to the general fund. The loan must be paid back with interest. According to the BARS manual, a loan that is not paid back in three years will be scrutinized to see if there has been a "permanent diversion" of funds.

Since these taxes are "diverted" to newly incorporated cities on a tax-received basis, it would be advisable for the interim council to choose an incorporation date that takes advantage of the prime time for receiving these road taxes: before April if the incorporation date is in the first half of the calendar year, and before October if the date is in the second half. See "Choosing the Official Incorporation Date," at pages 65-68.

Nevertheless, although the road taxes may be "diverted" to the newly incorporated city on a tax-received basis, the actual transfer of these revenues to a new city may not necessarily occur as they are received by the county. A county may not have the resources and facilities to first identify which properties are within the new city and then to process and distribute these road taxes to the new city as soon as they are received by the county. Also, a daily distribution may be too costly for a particular county. The interim council (or, earlier in the process, the incorporation initiators) should contact the county to determine how the county will be distributing these diverted road taxes. Advance notice is helpful because a county may have never before had to consider this procedure.

Despite the beginning of this diversion as of the incorporation date, road maintenance by a county must continue in the new city for a period not to exceed 60 days from the official date of incorporation or until 40 percent of the anticipated annual tax distribution from the road tax levy is made to the city, whichever occurs first.47 RCW 35.02.220(2).

Real estate excise tax.
This tax is levied on all sales of real estate, based on the full selling price. The state levies this tax, and a locally-imposed tax is authorized. RCW 82.45.035; ch. 82.46 RCW. The local tax may be imposed in two .25 percent increments, the second increment available only to cities within counties that are planning under the Growth Management Act (GMA). The tax is collected by the county and is remitted monthly to cities that have levied the tax.

Cities that are not planning under the GMA and cities under 5,000 population that are planning under the GMA must spend the first .25 percent "for any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040." RCW 82.46.010(2). RCW 35.43.040 lists improvements that can be funded through a local improvement district (LID), such as streets, parks, sewers, water mains, etc.

Cities with a population of 5,000 or more that are planning under the GMA must spend the first .25 percent of this tax solely on capital projects48 that are listed in the capital facilities plan element of their comprehensive plan. Obviously, a new city must have in place an adopted comprehensive plan that complies with GMA, including the requirement of having a capital facilities plan element, before it may spend the revenues this tax will generate. Nevertheless, the new city may impose this tax before compliance with the GMA planning requirements is achieved.

The second .25 percent real estate excise tax, which may be imposed only by cities planning under the GMA, may be spent only on capital projects as defined in RCW 82.46.035(6). In those cities located in counties that are voluntarily planning under the GMA, the second .25 percent may be imposed only if approved by a majority of the voters at a general or special election. RCW 82.46.035(1). A proposition to impose this second .25 percent tax may be submitted to the voters during the interim period. RCW 35.02.130. In other cities planning under the GMA, the second .25 percent tax may be imposed by council vote, without reference to the voters.

Leasehold excise tax.
This tax should be authorized by a new city because it will result in the city receiving a share of this tax that is already imposed and collected by the state. Those who may be subject to this tax will not incur any additional burden. This tax applies to most leases of publicly-owned real and personal property, in lieu of a property tax that may not be imposed upon such exempt property. Of the state rate of 12.84 percent (of the rent), a city may levy and receive a 4 percent tax. RCW 82.29A.040. The tax is collected by the state and is remitted bi-monthly in even numbered months.

Gross receipts business and occupation tax.
This is an often unpopular type of tax, but it is a major revenue option.49 This tax is levied at a percentage rate on the gross receipts (not profits) of a business that does business within the city. The imposition of this tax by a new city is, however, subject to a referendum procedure. RCW 35.21.706. A city may levy this tax at a rate not to exceed .2 percent, although a higher rate may be imposed if approved by the voters. RCW 35.21.710, .711.

Business licenses.
Cities impose business license requirements primarily as a means of regulating businesses but sometimes also as a means of raising revenue. A regulatory business license program requires businesses to register with and obtain a license from the city, subject to a flat fee designed to cover the costs of implementing the program. A revenue-raising business license scheme generally involves different fees for different classes of businesses. Such fees may be based, for example, on the type of business, on the number of employees, or on the square footage of the business facility.

Utility business and occupation taxes.
Utility taxes are levied on the gross operating revenues that public and private utilities earn from operations within a city. Utilities on which these taxes may be levied include electric, water, sewer, solid waste, stormwater, gas, telephone, cable TV, and steam. Taxes on some of these types of utilities are subject to a statutory maximum 6 percent rate, unless a higher rate is approved by the voters. Taxes on electric, gas, and telephone utilities cannot take effect until at least 60 days after the ordinance is passed. The imposition of this tax for the first time may be subject to a referendum procedure.

Lodging (hotel-motel) tax.
Most cities may impose a "basic" 2 percent tax on all charges for furnishing lodging at hotels, motels, and similar establishments for a continuous period of less than one month. RCW 67.28.180(1). When this tax is imposed, the state sales tax decreases by a like amount, so tourists and other lodgers experience no increase as a result of this tax. Most cities may also impose an additional 2 percent for a total of 4 percent, though this additional tax is not credited against the state sales tax. RCW 67.28.181(1).

Before a city with a population over 5,000 may impose a lodging tax, it must establish a "lodging tax advisory committee." RCW 67.28.1817. A proposal to impose a new lodging tax must be submitted to the lodging tax advisory committee for review and comment at least 45 days before it is to become effective. Presumably, an interim council may establish a committee prior to the official incorporation date, so that the tax can be made to go into effect upon the official incorporation date.

Revenues from this tax may be used only to pay for tourist promotion and the acquisition and/or operation of "tourism-related facilities." RCW 67.28.1815. See A Revenue Guide for Washington Cities and Towns, MRSC Report No. 45 (August 1999), at pages 18-22, for a detailed discussion of the lodging tax, the lodging tax advisory committee, and the permissible uses for the revenues from this tax.

This tax is remitted to the city by the state on a monthly basis. The Department of Revenue needs at least 45 days to notify taxpayers of a new tax, rate change, or change in recipient of the tax, and such a change must be effective the first day of a month. Therefore, if the council passes an ordinance effective the first of the month after incorporation, the first revenue will be received five months later. For example, if a city incorporates on August 31 and passes a lodging tax ordinance effective September 1, the DOR will begin collecting on November 1. Taxes collected during November are remitted to DOR on December 25 and paid to cities at the end of January.

Gambling tax.
A city that decides to allow gambling activities within its borders may impose a tax on gambling revenues. The maximum tax for amusement games is 2 percent of gross receipts less the amount awarded as prizes. For bingo and raffles, it is 5 percent less the amount awarded as cash or merchandise prizes. For punch boards and pull-tabs, the maximum rate is, if based on gross receipts less the amount awarded as prizes, 10 percent, and, if based only on gross receipts, 5 percent. A tax of 20 percent may be levied on gross receipts from card games. There are different tax rules that apply to gambling activities conducted by bona fide charitable or nonprofit organizations. RCW 9.46.110.

Gambling tax revenues must be spent primarily for gambling law enforcement purposes. RCW 9.46.113. Funds remaining after necessary expenditures for such enforcement purposes may be used for any general government purpose.50

Admission tax.
All cities may levy an admission tax in an amount no greater than 5 percent of admission charges to theaters, stadiums, dance clubs, private clubs, swimming pools, amusement parks, rides, and any other activity in which an admission charge is collected at the door. RCW 35.21.280. This tax also applies to season tickets, cover charges, and to the rental of facilities and equipment for recreational purposes. Revenues from this tax will, for most cities, be minimal.

Other taxes.
Other taxes that a city may impose include an additional property tax to support emergency medical services, ambulance taxes, and a use tax on brokered natural gas.

State-shared revenues.
State-collected revenues that are shared with all cites and towns are derived from two main sources: liquor receipts and gasoline taxes.51 Cities and towns as a group receive a fixed percentage of each of these sources, and the funds are allocated to individual jurisdictions on a per capita basis. Groups contemplating incorporation should note that as more cities incorporate, the per capita distributions will grow more slowly than they have in the past, or actually decline, depending on the relation between the growth in the funding source and the growth in population in incorporated areas.

Since the distributions to cities of these state-shared revenues are based on population, state agencies that make the distributions must have population figures for a new city before they can make the distributions authorized. RCW 43.62.030 provides that the state Office of Financial Management (OFM) shall determine annually, as of April 1, the populations of all cities and towns. This statute also provides that when a city becomes incorporated after this annual determination, the population "as shown in the records of incorporation filed with the secretary of state" are to be used in determining the per capita distributions.

Unfortunately, there is no statutory or other requirement that anything be filed with the secretary of state that shows the population of a newly incorporated city. The only required filing with the secretary of state is made by the county in which the new city or a majority of the new city is located. RCW 35.02.130 provides that the interim council, after specifying the official incorporation date in a resolution, must file a copy of the resolution with the county legislative authority. The county legislative authority must "file a notice with the secretary of state that the city or town is incorporated as of the official date of incorporation." Because there is no requirement that any population information be filed with the secretary of state, OFM recommends that the city ensure that the county file with the secretary of state the necessary population information, along with the required notice. A copy of the incorporation petition, which must contain a population estimate, should suffice for this purpose.

State-shared revenues are distributed on a quarterly basis, although not all revenues are distributed in the same month of the quarter. A new city can "join" the state-shared revenue "pool" only on the first day of the months of either January, April, July, or October. In order to allow sufficient time to process and transmit population figures to state agencies, OFM requires that the incorporation be effective (that the incorporation date occur) more than 30 days in advance of a particular quarterly period in order to participate in the revenue-sharing distributions for that period.52 Thus, for example, it will be necessary for a new city to incorporate by February28 to receive state-shared revenues for the period beginning on April1 and ending on June30. A new city should therefore notify OFM of its chosen incorporation date as soon as possible after choosing it. This 30-plus day period is an important consideration for purpose of deciding on a particular incorporation date.

The state-shared revenues that a city will receive are the following:

  • Liquor receipts. Cities receive a share of both Liquor Board profits and liquor excise tax receipts.53 RCW 66.08.180, 66.08.190, 82.08.160. The former are distributed on the last day of March, June, September, and December, and the latter are distributed on the last day of January, April, July, and October. To be eligible to receive these revenues, a city must devote at least two percent of the distribution to support an approved alcoholism or drug addiction program. RCW 70.96A.087.

  • Motor vehicle fuel excise tax (gas tax). There are two separate distributions to cities from revenues from this tax. For cities with a population of 15,000 or more, 31.86 percent of the funds received must be deposited in an arterial street fund for the construction, improvement, chip sealing, seal-coating, and repair of arterial highways and city streets. The remainder is deposited in a street fund to be used for street maintenance. RCW 46.68.090, 46.68.110. Cities under 15,000 population may combine the two funds and use all their tax money for maintenance if desired. RCW 46.68.110(4).

An understanding of the timing of the receipt of these revenues is important for revenue flow considerations for the initial operation of a city and for the selection of the official date of incorporation.

Criminal justice revenues.
Funding for criminal justice purposes is from two annual state general fund allocations of $4.6 million for fiscal year 2000, increasing each year by the fiscal growth factor. There are many different bases for the distribution of these funds. A small portion of the funds are distributed on the basis of population only.54 Other moneys are given to cities that qualify as "high crime" and "high violent crime" cities. Cities that contract for law enforcement services qualify to receive some funding. Finally, cities that initiate innovative law enforcement programs, domestic violence reduction programs, or programs for at-risk youth and child abuse prevention may apply to receive funding for these programs. See RCW 82.14.300, .320, .330.

The county legislative body may vote to impose a .1 percent countywide sales tax for criminal justice purposes. The county gets 10 percent of the revenue from this .1 percent tax off the top, with the remaining 90 percent being shared by the county and the cities within it on the basis of population. RCW 82.14.340.

Transportation revenues.
Recognizing that the state-shared revenue from the gas tax was insufficient for the needs of local jurisdictions, the 1990 legislature provided them with a number of local option revenue sources to be used for highway and transportation purposes. These local options include a gas tax that can be levied countywide, a vehicle license fee on certain trucks of up to $15 per vehicle, a commercial parking tax, and creation of a street utility (later found by the state supreme court to be unconstitutional).55 See chapter 82.80 RCW.

Fees, charges, and fines.

  • Franchise fees. These fees are charges levied on private utilities for the right to use city streets, alleys, and other public properties. Franchise fees levied against light, natural gas, and telephone utilities are, however, limited by statute to the actual administrative costs incurred by the city relating to the permitting or franchising process. RCW 35.21.860. Cable TV franchise fees, governed by federal law, may be levied at a rate of up to 5 percent of gross revenues, regardless of the costs of managing the franchise process. 47 U.S.C. § 542 (part of the "Cable Communications Policy Act of 1984").56

  • Other fees and charges. State law provides authority for cities to levy fees and charges to cover the costs of providing services or programs and regulatory activities. A familiar example is the fees that are charged for building permit application and processing, including inspections.57 However, fees may and should be charged for all permitting activities of a local jurisdiction for cost recovery purposes. The guiding principle in fee imposition is that fees may be set at a level no higher than that necessary to recover direct and indirect costs associated with the activity, including administrative overhead.

    A city will be involved in processing and issuing permits (and collecting fees) for numerous activities, some of which involve discretionary approval authority. For example, permits or applications and approvals are necessary for short plats and subdivisions, zoning matters (e.g., rezones, conditional uses, variances, and shoreline substantial development permits), SEPA review, activities requiring use of public streets (street use permits), and fireworks stand permits. Fee schedules for these and other activities requiring permits should be established along with the creation of the permitting mechanisms.

    If the new city is within a county that is required to or that has chosen to plan under the Growth Management Act (GMA), it has specific authority to enact an impact fee ordinance that imposes fees on new development to help finance the public facilities and improvements that are reasonably related to such new development. Among the public facilities for which such fees can be assessed are streets, parks and recreation facilities, open space, schools, and fire protection facilities. See RCW 82.02.050-.090.58

    Fees may also charged for the various licensing activities that a city will conduct. For example, a city may require licensing of businesses, dogs and cats, and bicycles.

    There are numerous other types of fees that municipalities charge for purposes of cost recovery. Other common fees include copying charges, returned check charges, charges for false home security alarms, fees for participation in municipal parks and recreation programs, and charges for use of municipal ambulance services.

    All such fees and charges should be imposed by the council by ordinance or resolution.

  • Traffic and parking fines. Although the state supreme court establishes the schedule for fines for traffic infractions, cities share in the revenue from infractions committed within their boundaries. However, it is necessary for a city to have established a municipal court or a municipal department of a district court or to have contracted with a district court for municipal court services in order to enact and enforce a traffic infraction ordinance.59 After fines are collected by the municipal or district court, 32 percent is sent to the state and, of the remainder, 1.75 percent is sent to the county treasurer for a crime victims and witnesses program. RCW 3.50.100; 3.62.040; 7.68.035(7). The funds retained by the city may be deposited in any city fund.

A city has complete control over setting fines for violation of its parking ordinances. Justice Court Traffic Infraction Rule 6.2(c). It may also charge a penalty of up to $25 for failure to pay a parking ticket fine in the time prescribed by law. RCW 46.63.110(3).

A city may also install and collect revenues from parking meters. Such revenue is to be used to cover the costs of installing and maintaining the meters, for collecting meter fees, and for enforcement of parking meter zone requirements. Revenue collected in excess of such costs may be used for parking studies and for establishing and operating public off-street parking facilities. RCW 46.90.650.

The Budget Process

Interim budget or budgets.
The interim council of a new city must adopt an interim budget for the interim period. If the interim period extends into a new calendar year, it must adopt a second interim budget; the first would extend from the beginning of the interim period to January1 and the second would extend from January 1 to the official incorporation date.60 RCW 35.02.132. The only statutory guidance with respect to creation of the interim budget or budgets is as follows: "These interim budgets shall be adopted in consultation with the state auditor." Id. There are no state auditor guidelines for development of an interim budget. The interim council should contact the state auditor's office soon after taking office in order to develop an interim budget in a timely matter.

First year budget.
Prior to the official date of incorporation, the interim council must adopt a first-year budget. RCW 35.02.132. The budget will actually deal with only a partial year, covering the period from the official date of incorporation until January1 of the following year.61

  • Preliminary first-year budget. RCW 35.02.132 authorizes either the mayor or council, "whichever is appropriate," to prepare, or, in a council-manager city, the council to direct the interim manager to prepare a preliminary budget "in detail."62 In a mayor-council city, the mayor is the appropriate person to prepare the preliminary budget. The statutory scheme for budget preparation after the first year budget provides for preliminary budget preparation by the "chief administrative officer," which, in a mayor-council city, is the mayor. RCW 35A.33.052. Of course, much of the budget preparation will typically be delegated by the mayor to a finance officer or consultant hired for the interim period.

    The preliminary budget is to be made public at least 60 days prior to the official incorporation date "as a recommendation for the final budget." Id. The individual (mayor or interim manager) or body (the council) that prepares the preliminary budget must also prepare and submit, as part of the preliminary budget, a budget message that contains the following:

    • An explanation of the budget document
    • An outline of the recommended financial policies and programs of the city or town for the ensuing fiscal year, and
    • A statement of the recommended appropriation to such policies and programs.

  • Budget hearing. "Immediately following the release of the preliminary budget," the council must publish once each week for two consecutive weeks a notice of a public hearing "on the fixing of the final budget." RCW 35.02.132. The budget hearing must be held at least 20 days before the official incorporation date. Id. "Any taxpayer may appear and be heard" regarding the proposed final budget. Id.

Adoption of budget.
Following the budget hearing, the council may make any adjustments or changes in the proposed budget as it deems necessary. The council may adopt the final budget (by ordinance to be effective on the official incorporation date) at the conclusion of the public hearing or at any time before the official incorporation date.

Important considerations in budget development process.

  • Official incorporation date. The official incorporation date chosen affects both the revenues and expenditures of a new city. It will be helpful to analyze the revenues and expenditures based on a few alternative incorporation dates to compare the advantages of one over the others. See also the section in this publication entitled "Choosing the Official Incorporation Date," at pages 65-68.

  • Vision statement. What is the city's mission or vision? It is important to develop a vision of the city's future based on citizen views of that future. This vision should help guide, among other things, the city's budget priorities and development, the city's organizational structure, its operating procedures, and its plan for community development.

    How does a city determine its vision for the future? It can do this best through some type of survey or questionnaire that seeks to solicit the views of city residents concerning the components of that vision. Often some type of public opinion survey of the residents of a potential city will be conducted in conjunction with an incorporation study or by a transition group prior to election of an interim council.

    Once a new city council and its mayor have some sense of a future direction for the city, a statement of budget issues and priorities can be more readily developed. However, it may take one or two years or more before the city can truly determine its long-range direction.

  • Revenue forecast. Based on estimated state-shared revenues, tax and fee revenues (pursuant to ordinances adopted to take effect upon the official incorporation date), the city must make a good estimate of its first year revenues.

  • Level of services. What services and programs does the city intend to provide? How will they be provided? Will the city contract out for some services? What mix of services is consistent with the city's vision, if any?

    Clearly, it is advisable, if not necessary, to develop a process for evaluating alternative methods of providing services and their respective costs. The determination of which services will be provided, at least initially, by contract will have a significant impact on the size of the city's initial staff. A factor in this determination of which services will be provided by contract is the fact that it simply takes time to get organized and to recruit staff.

  • Level of reserves. The official or officials in charge of financial matters should develop a proposal on the level of reserves the city will need. The purpose of reserves is to provide for (a) revenue shortfalls resulting for either overestimation or economic downturn, (b) any emergency or unanticipated expenditures, (c) catastrophic losses, and (d) to ensure the city's future financial solvency.

  • Capital needs assessment. A number of questions need to be addressed concerning capital project needs,63 such as:

    • What are the city's capital project needs?
    • How will these projects be ranked?
    • What are the estimated operating costs of each desired capital project?
    • How will these projects be financed?
    • If debt financing is considered, what is the city's debt capacity?
    • What is the proposed debt service level and how will it affect future budget years?

    The new city may wish, however, to delay the development of the capital improvement program and budget until sufficient information exists and deliberation time is available to the new city officials.

  • Contracts. The financial consequences of contracts entered into for the first budget year will need to be incorporated into the proposed first year budget.

Providing Municipal Services

When a new city is incorporated, it becomes the primary service provider to residents within its boundaries. Presumably, one of the basic reasons that an unincorporated area incorporates is the desire for more local control over basic services. Nevertheless, a new city cannot possibly provide all at once all the services that it may want to eventually provide. Thus, critical decisions must be made by the interim council concerning what services the city will initially provide, what level of services will be provided, what services will be provided by contract, and with whom the city will contract for those services.64

In addition to the administrative and legislative "services" provided by the mayor or manager and the executive branch and by the city council respectively, a city government commonly provides services in the general areas of public safety, public works, land use planning, and parks and recreation.

Some of these services, such as police, fire, and land use planning, may have been the focus of much debate during the incorporation process, and issues relating to them will likely continue to generate controversy during the interim period and beyond. The very fact of incorporation as well as decisions by the new council concerning certain services may have significant impacts upon special purpose districts such as fire protection and water-sewer districts. The following discussion will summarize the basic considerations involving and the legal and other impacts of service delivery decisions by the new council.

Overview of Service Provision Decisions

The following chart lists, without regard to timing or priority, basic categories of services that a city may provide, who has provided such services prior to incorporation, and the choices for future service delivery:

Service

Pre-Incorporation Provider

Post-Incorporation Provider

Legal (City Attorney)

County

City, by either: establishing city attorney position, or contracting with private firm.

Land Use Planning and Zoning

County

City, although may contract with county for transitional period

Police

County

City or contract with county or with another city; contract may be for short-term during a transition period or be long-term/permanent

Fire Protection

Fire protection district

Options:

· City
· Contract with fire district or another city, for transition, or
· Annex into fire district

Public Works

    

Roads

County

City or contract with county until city attains ability to provide such services at level provided by county or for longer period upon agreement (RCW 35.02.225)

Surface water management

County, special purpose district, or PUD

City either through use of own public works departments or through creation of own surface water drainage utility (can adopt county policies and regulations on interim or permanent basis) or contract with county, or with other city, or private contractor

Solid waste collection

Private hauler

City or contract with private hauler65

Solid waste recycling

Private recycler

City or contract with county or private provider

Building code review, inspection, enforcement

County

City or contract with county or another city or private contractor

Municipal Court

District court

City (creates own municipal court - ch. 3.50 RCW) or through municipal department established in district court (facilities and salaries of judge and personnel paid by city), or contract with district court, contract with another city for municipal court services, or provide no judicial services (have no criminal code or traffic code necessitating such services)

Public Defender

County or contract

City may provide own public defender department, contract with a private firm or organization, or contract with county

Jail

County

City may provide own jail or contract with county for jail services or combination of both 66

Water

Water-sewer district, another city, county, PUD, public corporation, private water association, community water system, other private water purveyors, or individual property owners

· If territory of new city encompasses all or part of water-sewer district, city may assume jurisdiction of that part within its boundaries (see discussion below) and provide own water service, or water district continues providing service, or

· If new city does not overlap water-sewer district, city may provide own water service or provide no water service, or it may contract with another city or with a water-sewer district

· If all or part of territory of new city is served by another city, the latter could continue to provide water service, and new city could provide its own water service in that area not served by other city, or new city could purchase facilities of other city and provide its own service

Sewer

Water-sewer district, another city, county, PUD, metropolitan municipal corporation (e.g., METRO), or individual septic systems

· If territory of new city encompasses all or part of water-sewer district, city may assume jurisdiction of that part within its boundaries and provide own sewer service, or water-sewer district continues providing service, or

· Provide its own sewer service, or contract with another city or a water-sewer district, or become part of metropolitan municipal corporation, or provide no sewer service or

· If all or part of territory of new city is served by another city, the latter could continue to provide sewer service, and new city could provide its own service in that area not served by other city, or new city could purchase facilities of other city and provide its own service

Animal Control

County/humane society

City or contract with county/humane society

Public Health Services

County board of health or multi-county health district

County board of health, multi-county health district, or city with population of 100,000 or more may establish a combined city and county health department, upon agreement with the county

Human Services

County or private non-profit

Provide own human services, contract with county or private group, or provide no such services (private groups, if any, would provide)

Library

County library, regional library, rural county library district, intercounty rural library district, or island library district

Provide own library services, contract with public library or library district, annex into library district,67 or not provide library services
Major service delivery issues.
The following discussion addresses what are typically the major service delivery issues confronting an interim council. The choices involved with these issues generally concern: (1) whether to continue pre-incorporation service delivery either by contracting out for continuation with the existing provider, by not taking the steps necessary to assume jurisdiction over the particular service, or by annexing to a special district providing that service; (2) whether to establish the city's own service delivery; or (3) a combination of (1) and (2). The primary factors involved in making these choices are typically those of cost and affordability and the level of service desired by the community.

The incorporation statutes proclaim the legislative intent that the citizens of a new city receive "uninterrupted and adequate" services prior to the new city "attaining the ability to provide such service levels." RCW 35.02.225. In authorizing a county or counties to contract with a new city for continuation of essential services,68 RCW 35.02.225 provides that such a contract should

be negotiated on the basis of the county's cost to provide services without consideration of capital assets which do not continue to be amortized for principal or interest or depreciated by the county. The exception for not considering capital assets which are no longer amortized for principal and interest or depreciation is recognition of the preexisting financial investment of citizens of the newly incorporated city or town have made in county capital assets.

The incorporation statutes also provide that a successful incorporation election does not remove the responsibility of a county or special district to continue providing services until the official incorporation date. RCW 35.02.220. Special statutory provision is made for continuation of police and road maintenance services beyond the official incorporation date for a period of up to 60 days. Id.

Police.
There are basically two options concerning police services: (1) contract with the county or with a neighboring city for continuation of or provision of police protection at a negotiated service level and cost; or (2) establish a city police department and provide police services at a level consistent with the community's needs, desires, and financial resources. Of course, a new city may decide to initially contract with another jurisdiction for police services and then to establish its own department after the city is comfortably established, or it could establish its own department while contracting with another jurisdiction for certain specialized police services.69 The issues or factors concerning the provision of police services include:

    • Community view of current (pre-incorporation) level of police service
    • Crime rate and public perception of crime rate
    • Economies of scale provided by county police services
    • Start-up costs involved in establishing city police department
    • Liability insurance necessary for city police department
    • Level of experience of city police personnel
    • Continuity of police protection

If the council decides to establish its own department, it will be required to establish a civil service system if the number of full-time police department employees is three or more, including the police chief.70 RCW 42.12.030. (The council may, however, exclude the police chief from civil service when the police department has six or more commissioned officers, including the chief. RCW 42.12.050.) Establishing a civil service system involves appointing a civil service commission, consisting of three persons who serve without compensation. RCW 42.12.030. The commission appoints a secretary/chief examiner and adopts rules and regulations for carrying out the provisions of the statutory civil service system. The council must make an appropriation from the general fund (in an amount not to exceed .4 percent of the total payroll of those included within the jurisdiction and scope of the civil service laws) to fund the civil service system.

Although not necessarily immediately, the council should adopt a criminal and traffic code, assuming it desires to. It is not required that a city have a criminal code, although there may be, depending upon circumstances (such as city size), good reasons to enact one. A city also has the option of providing for civil infractions for violations of city ordinances, rather than criminal sanctions.

The city may adopt by reference the Model Traffic Ordinance (MTO), chapter 308-330 WAC, as its traffic code. RCW 46.90.005, .010. The MTO is a set of statutes, including statutes that incorporate other statutes, that represent together a comprehensive traffic code for local adoption, by reference. All future amendments and additions by the Department of Licensing to the MTO are automatically incorporated into the locally adopted MTO. The MTO essentially eliminates the need for a city to adopt its own lengthy traffic code or to adopt each of the various state statutes individually. A city may specifically exclude certain statutes from the MTO adopted locally.

MRSC has compiled and reproduced the statutes in and incorporated into the MTO, as of April 1998, in a publication entitled Washington Model Traffic Ordinance, MRSC Report No. 41 (April 1998). This publication, along with statutes since added to the MTO, or its equivalent should be filed, after authentication by the city clerk, in the clerk's office along with the ordinance adopting the MTO by reference.

Fire protection. Fire protection outside of incorporated areas is provided by fire protection districts.71 A fire protection district is a type of municipal corporation that is established through an election process and is governed by an elected board of three commissioners. It has the power to levy a property tax, issues bonds, create local improvement districts (LIDs) with voter approval, and exercise the power of eminent domain.

Legislation enacted by the 1993 legislature significantly altered the consequences of an area incorporating as a new city that is a part of one or more fire protection districts. In that common situation, the area of a new city included within a district or districts, which would likely be all of the city, is automatically deemed to have been annexed, at least temporarily, by that district or districts, unless the interim city council passes a resolution precluding annexation by the district or districts. RCW 52.04.161. Under this statute, the city would, absent a resolution precluding annexation, remain annexed to the fire district or districts for the remainder of the year of incorporation, or through the following year if the city council and the board or boards of fire commissioners by resolution provide for that extension. ?The city will be withdrawn from the district or districts at the conclusion of that period unless the voters of the city and a fire protection district approve of annexation of the city to one of the districts involved or of annexation of only that area of the city located within a district or districts. See RCW 52.04.161.72

If the city is withdrawn from the district or districts at the end of the year of incorporation or at the end of the following year, what happens with the district's or districts' assets and liabilities is dictated by the incorporation statutes and is based upon the percentage of the district(s) included within the new city. The following scenarios are possible:

  • City incorporation includes entire area of a fire district. The result in this situation is that the fire district will effectively cease to exist if, after the initial period of annexation discussed above, the city does not annex to the district. RCW 52.08.025. However, for purposes of imposing regular property taxes, the fire district will continue in existence until the first day of January in the year in which the initial property tax collections of the newly incorporated city will be made, if a resolution precluding annexation is adopted under RCW 52.04.161. If no such resolution is passed, either the fire district would continue to exist until the city is withdrawn from the district because the ballot proposition to annex is not approved, or the fire district will continue to exist as it would otherwise (i.e., indefinitely) because a ballot proposition to annex is approved.

    If a resolution precluding annexation is adopted or if no ballot proposition to annex is approved, all the fire protection district's assets and liabilities would become the property of the new city as of the date on which the district ceases to provide fire protection services under RCW 52.04.161. RCW 52.08.025. Under this scenario, the new city may be able to effectively establish its own fire department upon incorporation. It may, of course, also contract with another fire district.

  • City incorporation includes at least 60 percent of assessed value of district. When the area of the new city includes at least 60 percent of the assessed value of the real property of the district and the city does not annex to the district, all the assets of the district become the property of the new city. RCW 35.02.190. The new city must within one year of the date on which the city withdraws from the district, however, pay the fire district in cash, properties, or contracts for fire protection services an amount representing the percentage of the value of the district's assets equal to the percentage of value of the real property in the entire district remaining outside of the city limits. Thus, if, for example, the value of all of the assets of the fire protection district totaled $1,000,000, and 40 percent of the assessed value of the real property in the entire district remained outside of the newly incorporated area, the city would be obligated to pay $400,000 in cash, properties or contracts for fire protection services to the fire protection district.

    A proportionate share of liabilities of the district are transferred under this scenario to the city, equal to the percentage of the total annexed valuation of the district that has been incorporated. RCW 35.02.190.

    However, RCW 35.02.190 goes on to provide that the fire protection district may, by a majority vote of those remaining in the district, require the incorporating city to assume responsibility for fire protection throughout the remaining district, and for the operation and maintenance of the district's property, facilities, and equipment. The district would be obligated in that instance to pay a reasonable fee for such fire protection services.

  • Delay of transfer of assets under the two above scenarios. Under RCW 35.02.202, the interim council and the fire commissioners may, by written agreement entered into during the interim period, delay the transfer of assets and liabilities and the city's responsibility for fire protection under either of the above scenarios for up to one year after the official incorporation date. Under this statute, the fire district may, during this period, annex the city and retain the responsibility for fire protection. This statute, however, may no longer have any practical effect in light of the 1993 legislation discussed above.

  • City incorporation includes less than 60 percent of assessed value of district. If the city incorporates an area equal to less than 60 percent of the assessed value of the fire protection district's real property, pursuant to RCW 35A.14.400 and RCW 35.02.200, the district would retain ownership of all assets of the district, but the district would be required to pay the city (in cash, properties, or contracts for fire protection services) a percentage of the value of its assets equal to the percentage of the value of the real property in the district that has been incorporated into the city. The district is required to make this payment within one year or within such period of time as the district continues to collect taxes in the newly-incorporated area.

  • City incorporation includes less than 5 percent of area of district. If less than 5 percent of the area (not assets) of the district is included in the area incorporated, no payment shall be made to the new city. RCW 35.02.200(1). The fire protection district must, however, provide fire protection to the incorporated area for such period as the district continues to collect taxes levied in that area. Nevertheless, a distribution of assets from the district to the city must occur in this situation if, within 60 days of the official incorporation date, the city adopts a resolution with a finding that the incorporation "will impose a significant increase in the fire suppression responsibilities of the city or town with a corresponding reduction in fire suppression responsibilities by the fire protection district," and the district concurs in the finding within 60 days of when a copy of the resolution is submitted to the board of fire district commissioners. RCW 35.02.205(1). If the district does not concur, the issue goes to arbitration, as detailed in RCW 35.02.205(3). An agreement for the distribution of assets in this situation must be entered into within 90 days of either the concurrence by the district in the town's finding or of the arbitration decision. If the agreement is not entered into within this 90-day period, arbitration is mandated unless the parties agree to an extension of that period. The distribution of assets is to be based upon "the extent of the increased fire suppression responsibilities with a corresponding reduction in fire suppression responsibilities" by the district, and must consider the impact of any debt obligation concerning the property incorporated. RCW 35.02.205(2).

Fire protection alternatives.
There are three basic options for a new city regarding fire protection services.

  • Operate own fire department. It is possible for a municipality to operate its own fire department, either with fully-paid fire fighters, volunteers, or a combination of paid fire fighters and volunteers. Approximately 174 cities and towns in the state utilize volunteer fire fighters in some capacity in the operation of their fire departments.

    For the most part, the level and nature of fire services is determined by the city council. State law does not contain specific requirements concerning levels of fire service that must be provided by a city. However, if the city does establish its own fire department and has at least one "full-paid" fire fighter, the city is required to establish a civil service system for the fire department. RCW 42.08.050. Civil service would apply then to all full-paid employees of the department. Also, it appears that any full-time municipal fire fighter will be covered by the LEOFF retirement system.

  • Contract with a fire protection district or another city. A contractual arrangement could, as with all such service contracts, be on a short-term or long-term basis. Whether it is advisable for the new city to contract, at least initially, with a fire protection district would depend on a number of factors, including the assets of a fire district the new city would own pursuant to the above statutory scheme. This issue should be thoroughly addressed in the context of an incorporation study.

    There are a variety of possible contractual funding arrangements. A common approach has been to base the amount of payment on some fixed proportion of the city's assessed valuation. However, when this approach is used, the city could, in view of the 101 percent property tax lid, be placed in situation where its contractual liability would be increasing at a faster rate than its property tax revenues.

    As an alternative to determining payment on the basis of assessed valuation, some contracts provide for payment based upon the dollar amount of the regular property taxes collected annually by the city. This approach appears to avoid the problems that might be encountered where the payment is based upon the city's assessed valuation since it takes into account the revenue-limiting effect of the 106 percent property tax lid.

    Another (and perhaps more desirable) type of funding arrangement, not based on either assessed valuation or the amount of property taxes collected, consists of a slightly more complicated cost-based approach, such as is found in a fire protection contract between the city of Bellevue and the town of Clyde Hill. Under the terms of this contract, Clyde Hill pays Bellevue "an annual sum of money which sum shall be computed as the proportionate amount of the respective service year's total annual cost of operating the Bellevue Fire Department equal to the portion of Clyde Hill's share of the total housing units and their equivalents within the total service area of the Bellevue Fire Department." "Housing unit equivalents" are computed by dividing the total square footage of nonresidential structures by 1,500 square feet.

  • Annexation to a fire protection district. This option represents a more or less long-term decision by the city not to provide its own fire protection services.73 The city would annex to a district through an election as authorized in RCW 52.04.161, and as governed by RCW 52.04.071.

    If the city annexes to a fire district, the annual property tax imposed by the district would apply throughout the district, including the city. The maximum regular levy that a district may impose is $1.50 per one thousand dollars of assessed value. RCW 52.16.130. The maximum levy that a city may impose, which is $3.60 per thousand dollars of assessed value when a city is annexed to a fire district, is reduced by the amount of the fire district levy, which commonly is the entire $1.50 that could be levied.

    The shift in financing of and the responsibility for fire protection functions from the city to the fire protection district that would result from annexing to a fire district can be viewed as a potential benefit. This would, of course, result in the fire district's tax levy being applied to the taxpayers of the city who would then be included within the boundaries of the expanded fire protection district. However, the city would not then need to tax to finance fire protection services.

    It might also be argued that annexation to a fire protection district would be beneficial from the standpoint of avoiding duplication in the provision of fire protection services, for one agency can provide the same level of fire protection services in a given area at a lesser cost, rather than having two agencies providing such service. Whether or not the consolidation of fire protection service areas would actually result in any economies of scale or cost saving could only be determined upon an analysis of each particular case.

    Another point that bears some consideration would be the loss of control by the city over decision-making as to fire protection services to be provided within the city if the city is annexed into the fire protection district.

Road maintenance/transportation planning and improvements.
County responsibility for road maintenance must continue beyond the official incorporation date for a period not to exceed 60 days or until the new city receives 40 percent of the anticipated annual road tax distribution, whichever is the shorter period. RCW 35.02.220(2). The new city has the following options for road maintenance after this period:

(1) form a public works department and contract with the county, neighboring cities, or private contractors for road-related services;

(2) form a public works department and hire personnel and purchase equipment necessary to provide its own road-related services; or

(3) a combination of the above.

Smaller cities in particular may wish to contract with the county for the planning, construction, and maintenance of city streets. RCW 35.77.020-.030 provides a method for contracting with a county for such services.

A detailed discussion of the transportation planning requirements applicable to cities is beyond the scope of this publication. However, it should be noted that, upon incorporation, the new city will have the responsibility for planning and capital programming for local road improvements, as well as for completion of county street projects not completed upon incorporation. A newly-incorporated city should coordinate with the county concerning road projects that are either underway or are planned, and contract, as necessary, for completion of projects and for dealing with road planning issues. All cities must, after holding one or more public hearings, adopt a comprehensive six-year street program. RCW 35.77.010. This street plan should be developed in concert with the requirements of the GMA, if applicable, relating to development of the transportation element of the city's comprehensive plan. See RCW 36.70A.070(6).

Solid waste collection, disposal, and recycling.
There will most likely be, at the time the city incorporates, at least one garbage collection company servicing the area under a franchise with the county. Under RCW 35.02.160, the incorporation of the city will cancel any public service franchise,74 such as one involving garbage collection, but the city must "forthwith" grant the franchise holder a new franchise to continue the business within the incorporated area for a period of not less than the remaining term of the franchise or seven years, whichever is shorter. The city may not provide or contract for competing garbage collection "except upon a proper showing of the inability or refusal of [the franchisee] . . . to adequately service said incorporated territory at a reasonable price." Id. The city also has the option of purchasing the franchise or of acquiring it by condemnation. Id.

Amendments to RCW 35.02.160, adopted in 1997, complicate this scenario. After any incorporation, the Washington Utilities and Transportation Commission (WUTC) will continue to regulate garbage collection within the city until such time as the city notifies the WUTC in writing of its decision to contract for garbage collection or provide collection itself.75 This notice appears to trigger the cancellation of an existing franchise, including a franchise that was issued pursuant to the procedure in the paragraph above. The city must issue the cancelled franchisee a new franchise to continue the business within the incorporated area for a period of not less than the remaining term of the franchise or seven years, whichever is shorter the same result that occurs upon incorporation itself. As with the procedure above, the city also has the option of purchasing the franchise or of acquiring it by condemnation. Presumably, a new city could, upon incorporation, notify the WUTC of its intention to contract for garbage collection or to handle garbage collection itself, then issue one new franchise to any existing franchisee, and thereby comply with both procedures in RCW 35.02.160.

So, when the term of any franchise(s) granted by the city under RCW 35.02.160 expires (or after it had been purchased or condemned), the city may, following WUTC notice and issuance and expiration of another new franchise, choose to provide its own garbage collection service under the authority of RCW 35.21.120, either by using its own facilities, equipment or employees or by contracting with one or more haulers for collection in the city. Or it may allow the WUTC to continue to regulate garbage collection in the city.

If the new city decides to provide garbage collection services by contract, it need not do so through competitive bidding. If the new city decides not to go through a bidding process for this service, it may follow a statutory negotiation procedure set out in RCW 35.21.156.

Disposal of solid waste will remain the responsibility of the county to the extent it maintains landfills that serve the area incorporated. Disposal fees can be negotiated with the county in the event the city provides its own garbage collection service.

The city will be responsible for complying with the statutory solid waste planning requirements in chapter 70.95 RCW. These requirements include development of a city comprehensive waste management plan in coordination with a county plan. RCW 70.95.080. The city can, however, authorize the county to prepare a plan for the city's solid waste management for inclusion in the county plan. Id. The plan is to include waste reduction and recycling strategies and programs. RCW 70.95.090(7).

Surface water management.
 A municipality in this state does not, in general, have a legal obligation to provide storm drainage services.76 It is, theoretically, a discretionary decision to provide storm water facilities and services; as a practical matter, a new city will inherit the obligation. An area that incorporates will probably include all or part of an existing storm water drainage system operated by another governmental or public entity. Since most storm drainage facilities are constructed in conjunction with roads, an area that incorporates will assume ownership of such facilities along with its acquisition of county roads with its boundaries as provided in RCW 35.02.180.

Storm water drainage facilities, in general, may statutorily be considered part of a sewerage system or other system that deals with the control of surface waters. It is thus within the authority of a number of governmental or public entities to provide storm water drainage facilities in the context of their authority to provide sewer or other facilities that encompass storm or surface water management. Such entities include a county, a water-sewer district, a public utility district, an irrigation district, a drainage district, a flood control district, and a diking district.77 In most cases, however, storm water facilities, if they are provided at all within the area of a new city, will be provided by a county in the context of its road system. Although issues may arise with respect to storm drainage facilities operated by other public entities with the area incorporated as a city, they will not arise in most cases and will not be considered in this publication.

Specific responsibilities of a new city with respect to storm drainage would include:

  • The development of city drainage/hydraulic policies (dealing with, for example, the allowable rate of storm water runoff from new development), or adoption, on a temporary or permanent basis, of county policies;
  • The preparation of regulatory controls implementing these policies, or adoption of county controls;
  • Review of development plans to ensure compliance with adopted regulatory controls, and conducting of inspections during construction process; and
  • Construction and maintenance of storm drainage facilities.

The city may, in undertaking the latter two areas of responsibility, contract with the county, a neighboring city, or with private contractors.

Municipal court.
A city requires access to a court of limited jurisdiction (district or municipal court) to legally enforce municipal ordinances.78 The county superior courts do not hear cases involving violations of municipal ordinances, except on appeal from municipal or district courts. A city is responsible for "the prosecution, adjudication, sentencing, and incarceration of misdemeanor and gross misdemeanor offenses committed by adults in their respective jurisdictions, and referred from their respective law enforcement agencies, whether filed under state law or city ordinance." RCW 39.34.180. A city may carry out these responsibilities either using its own court, staff, and facilities, or by contracting with another jurisdiction for those services. So, a new city has a number of options with respect to judicial services:

  • Establish a municipal court under chapter 3.50 RCW, with its own municipal court judge
  • Petition the county to establish a municipal department within the county district court
  • Contract for all judicial services with the county district court
  • Contract with another city with its own municipal court

Which option is most beneficial to a new city depends, as usual, upon local circumstances. Obviously, need is an important factor. A small city may need only occasionally to enforce its ordinances in court; the cost of establishing its own municipal court or a municipal department within the district court could not be justified in such circumstances. For a small city with only occasional need for judicial services, a contract with the district court where the city pays a certain fee to file cases involving ordinance violations in that court would be most appropriate.79 A filing fee is required by RCW 3.62.070, and the amount of the fee would be determined by interlocal agreement between the county and the city pursuant to RCW 39.34.180. If the city and county cannot reach agreement on filing fees or other services included with an agreement under RCW 39.34.180, binding arbitration can be invoked by either party. RCW 39.34.190 identifies principles that must be followed in negotiating interlocal agreements for criminal justice services under that statute.

If a new city will likely have a need for either its own municipal court or a municipal department within the district court, the primary factors to consider in making the choice between the two are cost, convenience, and local control. If a city chooses to establish its own municipal court, under the authority of chapter 3.50 RCW, it will control, through a mayor-appointed (part-time) or elected (full-time) judge, the financial and administrative affairs of the court. Some basic features of the municipal court scheme under chapter 3.50 RCW are as follows:

  • The municipal court has exclusive original jurisdiction over traffic infractions and criminal violations arising under city ordinance. RCW 3.50.020.
  • Full-time judge positions must be filled by election. RCW 3.50.055. Part-time judges are appointed by the mayor and are subject to council confirmation, although the council may provide, by ordinance, that the judge be elected.80 RCW 3.50.040-.050. The judge's term is four years. RCW 3.50.040.
  • The city is responsible for the judge's salary and for all operating costs of the court. RCW 3.50.080.
  • The judge has appointment authority over court employees, who are deemed city employees and who serve "at the pleasure of the court." RCW 3.50.080.
  • All fees, fines, costs, and forfeitures imposed by the court for violation of a city ordinance are deposited in the general fund or "such other fund of the city," except those portions which goes to the state by statutory mandate. RCW 3.50.100.

Establishment of a municipal court may result in greater convenience as the local court may be better able to schedule trials at times convenient to city police and the city attorney, and the location may simply be more convenient for city employees and residents in general. While a district court may also attempt to accommodate schedules, there may perhaps not be the same dedication by the court to that end as there would be by a municipal court, unless the district court provides a full-time municipal judge for the city.81

A municipal department of a district court shares many of the basic features of a municipal court under chapter 3.50 RCW. These features include:

  • A municipal department has exclusive jurisdiction over "matters arising from ordinances of the city." RCW 3.46.030.
  • Establishment of the municipal department is initiated by a petition from the city council to the county legislative body. The petition must indicate the number of full- and part-time judges needed, the amount of time a part-time judge will be required, and whether full-time judges will be elected or appointed.82 RCW 3.46.040.
  • Full-time positions must be filled by an election. RCW 3.46.063. In court districts having more than one judge, part-time judges are appointed by the mayor from existing district court judges. RCW 3.46.060. The municipal judge of a district court serves a four-year term, as do all district court judges. RCW 3.46.080, 3.34.070.
  • The city pays the salary of a full-time judge and a pro rata share of the salary of a part-time judge. RCW 3.46.090. Salaries of district court judges are set by the Washington Citizens' Commission on Salaries for Elected Officials. RCW 3.58.010, .020. The current salary for a district court judge is $105,972. RCW 43.03.012.
  • The city furnishes all courtrooms, offices, facilities, and supplies for the operation of the court. RCW 3.46.130. The city pays the salaries of court personnel, who are deemed city employees. RCW 3.46.140.
  • The city receives all money received by the municipal department, including penalties, fines, forfeitures, fees, and costs, and retains such moneys, except for that mandated to be remitted to the state. RCW 3.46.120.

Under the statutory schemes for a municipal court under chapter 3.50 RCW and a municipal department of a district court under chapter 3.46 RCW, the relative costs of these two options would not appear to be much, if at all, different. One aspect of these costs, however, that can make some difference is the fact that the salaries of full-time and part-time district court judges are determined by the Washington Citizen's Commission on Salaries for Elected Officials. The city council, on the other hand, determines the salary of a chapter 3.50 RCW municipal court judge.83 RCW 3.50.080.

There are some important timing issues with respect to establishment of a municipal department or a municipal court. Under RCW 3.46.040, the petition to establish a municipal department of a district court must be filed with the county legislative body not less than 30 days prior to February 1. To establish a municipal court under chapter 3.50 RCW for the coming calendar year, the city must pass the appropriate ordinance on or before December 1. RCW 3.50.060. Thus, there may be some delay in a new city's ability to operate under either of these two options.

Jail facilities.
There are four options for a city with respect to jail facilities: (1) contract with the county, (2) contract with a nearby city having jail capacity, (3) provide its own facilities, or (4) a combination of the above. Cities, towns, and counties are authorized to acquire, build, and operate holding, detention, special detention, and correctional facilities,84 as well as farms, camps, and work release programs and facilities. RCW 70.48.180, .190, .210. Although many cities have some kind of holding facility, only the larger cities operate detention facilities. Few, if any, operate correctional facilities.

In most if not all cases, it would appear advisable for a new city to contract, at least initially, with the county for jail facilities. RCW 70.48.090 authorizes and sets certain requirements for contracts for jail services between a city and the county within which it is located. This contract must, among other things, specify the applicable charges for custody of prisoners, as well as the basis for adjustments in such charges.

If a new city considers establishing and operating its own jail facilities, of whatever type, it should look at such factors as the cost of establishing and maintaining the facility, the possible liability exposure due to operation of a city jail, and issues relating to continuity of service through the transition phase while the city facility is being built and the corrections department developed. The experience other cities have had in providing jail facilities should be tapped by new cities contemplating operating their own facility.

Water/sewer services.
Prior to incorporation, the provision of water was either the responsibility, in part or in whole, of a water-sewer district,85 another city, the county, a community water system, a private water association, or individual property owners. A city does not have a legal obligation to provide a municipal water service. However, if a city undertakes to provide municipal water service, then it has, as a general rule, the responsibility to provide such service to those within the city who request it. This general rule is, however, subject to exception in such situations where a city, exercising its discretionary powers, has a valid, good faith basis not to extend its water system to all areas of the city. See 12 McQuillin, Municipal Corporations, §35.35.25 (3rd ed. rev. 1995). Whether to provide its own municipal water service is thus not a decision that interim or new council need make initially. The same basic considerations apply to the provision of municipal sewer service.

Where water and/or sewer service is being provided to all or part of the area incorporated by a water-sewer district, the city may either allow the district(s) to continue operations, or it may assume jurisdiction over the district(s) in whole or in part. Unlike with a fire protection district, nothing happens automatically when a new city includes all or part of a water-sewer district. If any part or all of a water-sewer district lies within the boundaries of a newly incorporated city, the city may, at any time, assume jurisdiction over that portion of the district lying within the city. If the city totally encompasses a water-sewer district, assumption of jurisdiction by the city would mean that all property, franchises, rights, assets, taxes levied but not collected, water and sewer lines, and other facilities and equipment of the district become property of the city, "subject to all financial, statutory, or contractual obligations of the district for the security or performance of which such property may have been pledged." RCW 35.13A.020. The city would take over operation of the district's facilities, subject to the outstanding indebtedness and contractual obligations of the district. Id.

If 60 percent or more of the area or of the assessed value of real property in a water-sewer district lies within the city, the city may also assume jurisdiction of the entire district (except that portion that may be within another city) under the provisions of RCW 35.13A.020, discussed above. RCW 35.13A.030. Or, the city may elect only to assume jurisdiction of the district's property, facilities, equipment, and responsibilities within the city's boundaries under the provisions of RCW 35.13A.050. Id. If, however, the city chooses to assume jurisdiction only of that portion of the district lying within the city, the district itself may elect, by majority vote, to require the city to assume jurisdiction over the entire district. In that instance, the district is required to pay a reasonable charge. RCW 35.13A.050.

The provisions of RCW 35.13A.050 allowing the district to elect to have the city take over the entire district would also apply if less than 60 percent of the area or of the assessed value of real property in the district lies within the city and the city decides to assume jurisdiction of the district lying within the city.

The above is but a very general discussion of the statutory provisions relating to assumption of jurisdiction over all or part of a water-sewer district. The advisability of assuming jurisdiction is dependent, of course, upon the particular circumstances concerning the city and the district(s) involved. A new city may not be inclined to assume jurisdiction even if it is able to. At some point, however, the new city should evaluate the consequences of assuming jurisdiction to guide future decision-making.

If the county operates a water and/or sewer system within the new city's boundaries, the county may transfer the property, facilities, and equipment of the system that lies within the new city if the transfer will not "materially affect the operation of any of the remaining county system." RCW 36.94.180. If such a transfer occurs, the city would assume the county's obligations relating to such property, facilities, and equipment, under the procedures in chapter 35.13A RCW relating to assumption of jurisdiction of a water-sewer district.

There is no statutory guidance with respect to the situation where there is no water-sewer district within the area incorporated but an adjacent or nearby city has extended such utility service outside its boundaries into the area incorporated. It would appear that the new city could assume ownership and operation of the other city's facilities, to the extent that would be feasible, but only by agreement with (and payment to) the other city.

If no other governmental entity provides water or sewer service to the area incorporated, the city may choose, at its discretion, to establish a municipal water and/or sewer system. However, if the new city is in a county that plans under the GMA, chapter 36.70A RCW, urban growth supported by urban services is statutorily encouraged within the urban growth boundary that will, at the very least, be coextensive with the new city's boundaries. Thus, if the new city will be subject to growth pressures, it will be accordingly "subject to" the statutory intent of the GMA to provide urban services such as water and sewer services.

Animal control.
In many cases, this may not be an especially high priority, but in most all communities it is an issue that will at some point need to be addressed. Initially, the new city may wish to contract for county continuation of animal control services. The city may, however, enact its own animal control ordinance dealing with such matters as licensing, leash requirements, potentially dangerous and dangerous dogs, and the like. An animal control officer position should be established to enforce the provisions of this ordinance. MRSC can provide cities with information and sample ordinances from other cities on this issue.

Public health services.
Counties are responsible for providing public health services through countywide local boards of health, although cities with a population of 100,000 or more may, with county agreement, establish a combined city and county health department. RCW 70.05.030, .035. Two or more counties may establish a health district, which would function as the local board of health for all the territory within the district. RCW 70.46.020, .060.

Library services.
There is no statutory requirement that library services be provided by a local government, and not providing any library service is certainly an option for a new city. Public library services in this state are provided either by cities, counties, regional libraries (established by two or more counties or other governmental units), rural library districts, intercounty rural library districts, or island library districts. A library district is a quasi-municipal corporation that has the power to levy property taxes in an amount not to exceed $.50 per thousand dollars of assessed value. RCW 27.12.050, .060. Excess levies are also authorized for library districts. RCW 84.52.052.

If all or part of the area incorporating is part of a library district, that area is automatically withdrawn from the district upon incorporation. However, the new city, as a whole, may annex to the library district, with the consent of the district board of trustees and city voters. See RCW 27.12.360-.395. If a city annexes to a library district, its levy lid becomes $3.60 per thousand dollars of assessed value, less any regular levy (up to $.50 per thousand dollars assessed value) of the library district. RCW 27.12.390.

Instead of annexing to a library district, a new city may contract for library services with a library district or it may establish its own library, using city property tax revenues for this purpose. A city library may be established by action of the city council or by a vote of the city electorate following the submission of a petition signed by 100 "taxpayers." RCW 27.12.030. A city library is to be managed by a five-member board of trustees appointed by the mayor with the consent of the council. RCW 27.12.190. Although the statute does not address appointment of a library board specifically in a council-manager city, it is probable that the authority to appoint the trustees rests in that case with the city manager.

Thus, a new city's options with respect to library services are:

  • Annex to a library district
  • Establish own library
  • Contract with library district for provision of library services
  • Do not provide for any library services

Building code review/inspection.
By state law, the state building code is in effect in all cities in the state and must be enforced in all cities. RCW19.27.031, .050. The state building code consists of the following codes adopted by reference:

  • Uniform Building Code and Uniform Building Code Standards
  • Uniform Mechanical Code
  • Uniform Fire Code and Uniform Fire Code Standards
  • Uniform Plumbing Code and Uniform Plumbing Code Standards,86 except chapters 11 and 12
  • Rules and regulations adopted by the building code council establishing standards for making buildings and facilities accessible to and usable by the physically disabled or elderly persons.

RCW 19.27.031. In addition to the codes adopted in RCW 19.27.031, the Washington State Energy Code, contained in ch. 51-11 WAC, is a part of the state building code. RCW 19.27A.021(1). The state building code council has the authority to adopt amendments to the uniform codes that form the state building code. RCW 19.27.074(1)(a). (See chapters 51-40 through 51-47 WAC for the building code council's amendments to the uniform codes.)

Although cities are not required to adopt the components of the state building code locally, it is advisable for a city to do so, if the city has a municipal court, so that the code can be enforced in that court. Cities also have some authority to amend the state building code, as long as the minimum performance standards and objectives of the code are met. RCW 19.27.040, .060. State building code council approval is required for any local amendments that apply to residential buildings. RCW 19.27.060(1)(a). A city may, however, adopt fees different (higher or lower) from those set out in the state building code. RCW 19.27.100.

Any city not having a building department must contract with a county, another city, or an "inspection agency approved by the . . . city" for enforcement of the state building code. RCW 19.27.050. It may not initially be financially feasible for a city to establish its own building department, and, for smaller cities, it may never be financially feasible. There are, of course, other considerations aside from cost, although they may not be as significant. Local control, timeliness of permit application processing, and accessibility of building administration services are some other factors that may or may not be of some significance.

As part of its responsibilities under the Uniform Building Code (UBC), a city is to establish a "board of appeals" to hear and decide appeals of orders and decisions made by the building official. The board is to consist of "members who are qualified by experience and training to pass on matters pertaining to building construction and who are not employees of the jurisdiction." 1997 UBC, section 105.1. If a new city contracts with a county or another city for building inspection, that county's or other city's board of appeals could serve as the new city's board.

Land use planning and zoning.
The planning and zoning requirements and authority applicable to a new city are influenced by whether the city is located in a county that must plan or that has opted to plan under the Growth Management Act (GMA).87 The Planning Association of Washington, in conjunction with OCD, puts on a workshop entitled "A Short Course in Local Planning," which can provide a valuable and comprehensive introduction to the subject. A publication by the same name has been prepared in conjunction with this workshop. MRSC recommends this course for all city officials and staff involved in the planning function.

Planning and zoning is done, in part, by a "planning agency" established by the city council and that is to serve in an advisory capacity to the chief administrative officer (mayor or city manager) or the council, or both.88 The planning agency can be any person, body, or organization designated by the council to perform a planning function, including any commission, department, or board, together with its staff members, employees, and consultants. RCW 35A.63.010(8). The planning agency is directed by statute to prepare the comprehensive plan, which is then adopted by the council, according to mandated statutory procedures. The comprehensive plan is implemented by zoning regulations that must be consistent with the comprehensive plan. RCW 35A.63.100-.105.

In addition, a code city with a population of 2,500 or more must create a board of adjustment, which is empowered to hear and decide:

  • Appeals from orders, recommendations, permits, decisions, or determinations made by a city official in the administration or enforcement of the zoning code
  • Zoning variance applications
  • Conditional use applications
  • Other quasi-judicial or administrative determinations as may be delegated by ordinance

RCW 35A.63.110. The council may, however, provide for a hearing examiner, instead of the board of adjustment, to hear and decide matters in the first three listed categories above, and to hear and decide applications for site-specific rezones. RCW 35A.63.110.170.

  • Growth Management Act compliance. If the new city is subject to the GMA, chapter 36.70A RCW imposes additional, detailed comprehensive planning requirements. Included within these requirements are timetables for compliance. RCW 36.70A.040. Although these compliance timetables do not specifically apply to a new city, they can be interpreted to give a newly incorporated city one year in which to adopt development regulations for conserving critical areas, and four years to adopt a comprehensive plan in compliance with the GMA and development regulations consistent with that plan.89 See RCW 36.70A.040(4), (5).

    Among the many additional planning requirements imposed by the GMA is that requiring designation of "urban growth areas." The county is to designate these areas by agreement with the city or cities involved. RCW 36.70A.110(2). Urban growth areas are areas "within which urban growth shall be encouraged and outside of which growth can occur only if it is not urban in nature." RCW 36.70A.110(1). Every city that is included within a county that is subject to the GMA must be included within an urban growth area. Id. An urban growth area may, however, include more than one city. Id. Urban growth areas are to include an area sufficient to accommodate projected twenty-year growth, and future annexation by a city may only occur within the urban growth boundaries. RCW 35.13.005; 35A.14.005; 36.70A.110(2). The GMA intends that the urban services to accommodate growth within an urban growth area should be provided by cities, even though not all the area within the urban growth boundaries will be incorporated.

    If a new city is incorporated in a county subject to the GMA, it already will be located within an urban growth area because new cities cannot incorporate outside such areas. RCW 36.93.150(2). The incorporation will not, by itself, mean that the urban growth area must be expanded. However, some agreement will need to be reached with the county and any other city or cities contained with the urban growth area concerning future annexation within the urban growth area. Also, some adjustment in the county-wide planning required by the GMA will likely be needed in light of a new city incorporating.

  • Project permit procedures. All cities are required by RCW 36.70B.050 to combine the environmental review process under SEPA with the review process for "project permits." "Project permits" include permits for:

    building permits, subdivisions, binding site plans, planned unit developments, conditional uses, shoreline substantial development permits, site plan review, permits or approvals required by critical area ordinances, site-specific rezones authorized by a comprehensive plan or subarea plan.

    RCW 36.70B.020(4). In addition, cities planning under the GMA must establish an "integrated and consolidated project permit process" that must include provisions identified in RCW 36.70B.060. Certain project permits may be excluded by a city from this review process. See RCW 36.70B.140.

    A new city should carefully review the requirements of chapter 36.70B RCW before establishing a process for review and approval of land use (project permit) applications. The city will need to contract with the county concerning the processing of project permit applications filed, but not processed fully, prior to incorporation.

  • Subdivision regulation. The subdivision of land in this state is governed in a fairly uniform manner by state law, chapter 58.17 RCW, and by local subdivision regulations that implement state law. Local governments are mandated by state subdivision law to adopt regulations and procedures for the "summary approval" of short subdivisions (or "short plats").90 RCW 58.17.060. Local governments may also (and most do) adopt regulations and procedures to govern subdivisions other than short subdivisions. Such local regulations must be consistent with state law requirements. If no local regulations of subdivisions are adopted, the procedures in chapter 58.17 RCW apply directly.

    The planning agency or planning commission established by the council must, under state subdivision law, be involved in the review of preliminary plats and in making recommendations to the council concerning them. RCW 58.17.110.

  • Shoreline management planning. New cities that include within their area "shorelines of the state" must also comply with the requirements of the Shoreline Management Act (SMA). "Shorelines of the state" are all water areas of the state (with some exceptions), including lakes greater than 20 acres, reservoirs, associated wetlands, rivers, streams above a certain flow, and all saltwater shorelines. RCW 90.58.030(c), (d), (e).

    The SMA and its implementing regulations, chapters173-26, 173-27 WAC (adopted by the Department of Ecology (DOE))) require local governments to develop shoreline management plans and procedures for issuing shoreline substantial development permits.91 In November 2000, DOE adopted new shoreline master program guidelines (chapter 173-26 WAC) that provide a "two-path approach" that gives cities a choice in how they write and implement their shoreline master programs. "Path A" allows cities flexibility in how they meet the standards of the SMA, while "Path B" contains specific measures for protecting shoreline functions. The National Marine Fisheries Service and the U.S. Fish & Wildlife Service have indicated to DOE that they believe local master programs that comply with Path B will be able to get an exception under the Endangered Species Act (ESA). However, on August 27, 2001, the state Shorelines Hearing Board invalidated these new regulations. Assoc. of Washington Businesses v. Department of Ecology, SHB No. 00-037. That decision has been appealed, so the validity of the SMA regulations in chapter 173-26 WAC is still an issue at the time of the publication of this guide. Meanwhile, the prior regulations in chapter 173-16 WAC are in effect.

    The shoreline master program and the substantial development permit process is to govern development along and within 200 feet of shorelines of the state. In effect, the SMA mandates a type of overlay zoning that applies in addition to the regular zoning regulations in this shoreline area. The general policy of the SMA is to require coordinated planning to protect the public interest associated with the shorelines of the state and to foster a variety of uses of the shorelines that are consistent with their protection and preservation. RCW 90.58.020.

    If the new city is in a GMA county, its shoreline master program goals and policies are considered an element of the city's comprehensive plan, and the remainder of the master program, including use regulations, are considered part of the city's development regulations. RCW 36.70A.480.

  • Initial planning and zoning decisions. Clearly, a new city cannot possibly have in place by its official date of incorporation all, if any, of the plans and regulations necessary to comply with the various planning, land use, and environmental laws with which it must comply. There are nevertheless certain actions that an interim council should take to begin complying with these laws and to give the city some breathing room in which to adopt well-considered plans and regulations. Such recommended actions include the following, in order of relative priority:

  • Adopt a moratorium on the filing of applications with the county for development permits or approvals (if warranted by circumstances). Permits and approvals subject to the moratorium should include building permits, subdivision approvals, short subdivision approvals, all types of zoning approvals (rezones, conditional uses, variances, etc.), and shoreline substantial development permits. The purpose of a moratorium is to prevent development from occurring within the area of the new city which may be inconsistent with the direction that city will be charting in the area of land use planning and regulation. Under the state vesting law, a developer/landowner has the right to have his or her development proposal considered under existing zoning, subdivision, and shoreline management regulations, and other types of land use plans and regulations in effect at the time a complete permit application is submitted. The application must be in conformity with all applicable building and zoning regulations.

    The moratorium enacted by the interim council would prevent the county from accepting applications for the permits and approval covered under its provisions. In an area where there are growth and development pressures, the interim council should enact the moratorium as soon as possible after the council takes office if it anticipates that applications may be filed for development that may be contrary to land use planning and policy choices the council may consider. The moratorium would be effective only for the interim period, after which the new city has authority over such applications (although it will likely contract with the county for continuation of land use-related services). Thus, the council may wish to enact a second moratorium, to be effective on the official incorporation date, on city acceptance of applications, or on acceptance by an agent of the city (e.g., the county where the city contracts with the county for processing of such applications).

    If the interim council decides to enact a moratorium to be effective on or after the effective date of incorporation, it will be subject to certain procedural requirements set out in RCW 35A.63.220. If the council does not hold a public hearing on the moratorium before it is enacted, it must do so within 60 days after enactment, and it must adopt findings of fact justifying the moratorium. The moratorium may be effective for no longer than six months, although it may be made effective for a year if "a work plan is developed for related studies providing for such a longer period." RCW 35A.63.220. The moratorium may be renewed for one or more six-month periods if a hearing is held and findings of fact are made prior to each renewal. Id.

  • Adopt SEPA policies and procedures. Since all but certain minor land use decisions are subject to review under SEPA, it is necessary to have in place before enacting any planning or zoning legislation SEPA policies and procedures that must be followed in the process of considering and enacting such legislation. As noted above, RCW 35.02.130 provides the interim city council with explicit authority to adopt SEPA policies and procedures to be used in making determinations under SEPA during the interim period.

    As a temporary measure, the council may wish to adopt county SEPA policies by reference or the state model SEPA ordinance in chapter 173-806 WAC. Policies and procedures that are more tailored to the new city may be adopted later.

  • Establish a planning agency.

  • Hire interim or permanent planning staff or contract with planning consultant(s) to begin performing necessary planning functions.

  • As an interim measure, adopt, in full or in part and amended or not amended, the current county comprehensive plan and zoning regulations. Even if the council adopts a moratorium to be effective on the official incorporation date, it is advisable to have some form of land use plan and zoning controls that will also be effective on this date. (If there is no moratorium, it is strongly recommended. Otherwise, the city will theoretically have no legal controls on land use.) As a practical matter, particularly where the GMA applies, the city will be unable to develop and adopt "permanent" planning and zoning controls by its official incorporation date. It will therefore be necessary to adopt, as an interim measure, the county comprehensive plan for the area incorporated, as well as county zoning controls. These may be adopted by reference, and may contain amendments that the planning agency or commission and council deem immediately necessary.

    The same recommendation applies to the shoreline master program and shoreline use regulations, if required. The county plan should be adopted until the city can develop its own.

  • Direct the planning agency or commission to begin development of the comprehensive plan and implementing controls, permanent SEPA policies and procedures, and the shoreline master program.

Parks and recreation.
Any county park property within the area incorporated remain the property of the county. The city will need to discuss with the county options concerning such property, if any. Possible scenarios include:

  • Deeding by county of park property to city. The city would then be responsible for park maintenance or could contract with county for such.
  • Enter into interlocal agreement with county for joint ownership, development, and maintenance of the park(s) in question.
  • County retains its park properties within the city and its responsibility for their maintenance.
  • Any combination of the above, such as the city taking control of neighborhood and community parks and the county continuing operation of any regional park(s) within the new city's boundaries.

Although not of the highest priority, the city, perhaps through a parks and recreation department, should develop policies and plans relating to park property in the city or acquisition of park lands and to recreation programs that it may want to establish. The city should consider whether to contract with the county for recreational programming, if only on an interim basis. Of course, the new city could vigorously begin its own parks and recreation program, hiring personnel and acquiring equipment as necessary.

Choosing the Official Incorporation Date

Perhaps the most critical decision, at least for a city's first year of operation, is the choice of the date to officially incorporate. This date can be set at anywhere between 180 and 360 days after the date of the incorporation election.92 However, since the incorporation initiators can influence when the election will occur (by the timing of the presentation of the petition), it may be that political considerations will control rather than considerations relating to the eventual incorporation date. For example, a greater voter turnout in November may be advantageous (or not) to the success of the incorporation attempt and the initiators may attempt to plan accordingly. Or, an incorporation election following closely upon an unwelcome attempt by a neighboring city to annex all or part of the area proposed for incorporation may enhance the chances for a favorable election result. If such political considerations are not a concern, the initiators can attempt to time matters so that the election occurs on a date that allows the city to incorporate at a date they may consider to be most advantageous for revenue reasons. The basic consideration in choosing the date of incorporation will most likely be maximizing the revenue flowing to the new city as soon as possible. Clearly, as discussed below, some dates are more advantageous than others. The purpose of the following discussion is to provide a general road map, some guidelines, to aid in this consequential decision.

Choosing the official date of incorporation, if for other than political reasons, is basically a four-step process. The first step in the process is to know the primary revenue sources for a new city. The second step is to know when they can become available. The third step is to understand what actions, if any, the council must take and when it must take them in order to access these revenue sources when they are or can be made available. The final step is to calculate which date results in the most advantageous use of these sources initially and for the first year of the city's operation.

The following is a listing of the primary revenue sources that will factor into this decision and when they are or can be made available:

Revenue Source

Council Action

When Available

Property tax

Adopt levy ordinance and certify levy amount by November 15

· Half of tax due April 30 next year - bulk of tax distributions from county in May and June if the county distributes on the 10th of the month April and May if the county distributes daily

· Half of tax due October 31 - bulk of tax distributed from county in November and December if the county distributes taxes on the 10th of the month, or October and November if the county distributes daily

County Road taxes

None, other than selecting incorporation date

As of official incorporation date, incorporation datebut road taxes are part of county property tax which is due half on April 30 and half on October 31 - this tax accrues to city as received by county - bulk of tax received in April and October. However, actual distribution by the county may be delayed.

State-shared

Select official incorporation date and notify OFM

At earliest, about two months revenues and notify OFM after the official incorporation date, if the city incorporates 31 days prior to the beginning of a quarterly period (beginning either January 1, April 1, July 1, or October 1).

A factor in the incorporation date choice to consider with respect to property taxes is when the county will be revaluing property. Under RCW 84.41.030, county assessors are required to "maintain an active and systematic program of revaluation [of real property for tax purposes] on a continuous basis" and must revalue taxable real property at least once every four years. This revaluation cycle should be considered if it is likely that property values in the area incorporating have been increasing. For example, assume the county in which the prospective city is located revalues every other year and that the current year (year 0) is not a revaluation year. If the city incorporates in the current year and levies a property tax in the same year, the property tax revenues received in the next year would equal the current year's assessed value (AV) times the tax rate chosen by the council (AV x tax rate). If the council chooses to incorporate in the next year (year 1), the revaluation year, and levies the property tax in the same year, the city's property tax revenues in year 2 will equal the year 1 AV (higher than year 0 AV as a result of revaluation) times the tax rate chosen by the council. Assuming the same tax rate in both years, the year 1 incorporation date has a number of advantages. The obvious one is that property tax revenues in the first full year will be higher. Another advantage is that the property tax revenues in succeeding years will be greater because the 101 percent rule will apply to a bigger base. Or the city could levy a lower tax rate but collect an equal amount of tax revenues as would be collected as a result of the year 0 levy at a higher tax rate.

However, this will only be a factor to consider if there is some flexibility in the timing of the incorporation election, because a new city does not, after the election, have, as a practical matter, a lot of flexibility as to which year it should incorporate. Thus, this is a long range planning issue for the incorporation initiators rather than for the interim council.

Another factor with financial impact, in addition to these revenue sources, is the period of time after the official incorporation date during which the county is required by RCW 35.02.220 to provide, without charge, law enforcement and road maintenance services. The former is doubtfully an issue because the county continues law enforcement services for 60 days or until the city is receiving or could have begun receiving sales tax distributions, either event being unlikely within 60 days of the date of incorporation. The period during which the county is required to provide road maintenance services, on the other hand, may be less than 60 days if the city incorporates too close to the April 30 or October 31 property tax deadlines, because it may, before 60 days are up, receive 40 percent of the anticipated annual distribution from the county road tax. Since the cost of road maintenance may in a given case be high, it may behoove the new city to ensure maximum county responsibility for such maintenance.

Given the above factors and subject to the sales tax issue discussed below, we have recommended in previous editions of The New City Guide two optimal incorporation dates: February 28 for incorporations in the first half of a year and August 31 for incorporations in the second half of the year.93 MRSC has considered these dates to generally take fullest advantage of the revenue streams that flow to a new city, while appearing to ensure county road maintenance responsibility for the full 60-day period following incorporation. Further, these dates have appeared to accomplish the following with respect to revenue maximization:

    1. Permit capture of the bulk of road tax diversion available in that half-year period;

    2. Allow time for city adoption of its own property tax ordinance for the following year; and

    3. Permit distribution of state-shared revenues as soon as statutorily and administratively possible.

However, with the elimination of motor vehicle excise tax (previously, the major source of state-shared revenues) and with the passage in 2000 of legislation prescribing when sales tax increases may take effect, March 31 or September 30 should also be looked at as possible optimal dates for incorporation. As discussed earlier, this 2000 legislation, codified in RCW 82.14.055, provides that a sales tax change can take effect only on the first day of either January, April, July, or October. This, of course, means that cities incorporating on February 28 or August 31 will receive a month's less sales tax revenue than was previously available. Elimination of the motor vehicle excise tax means that cities incorporating on March 31 or September 30 will not be foregoing as much state-shared revenue by incorporating a month later as they would have in the past. And, a city incorporating a month later will, during its first month of operation, see a greater county road tax distribution, compared to a city incorporating a month earlier.

On the other hand, a new city incorporating on either of those later dates may lose free county road maintenance services earlier, as a result receiving county road tax collections sooner.94 Also, delaying incorporation a month will result in receipt of a bit less total diverted road taxes,95 and second or fourth quarter liquor board profits, liquor excise taxes, and gas taxes.

So, while February 28 and August 31 have appeared in the past to be the optimal incorporation dates and probably still are, they are somewhat "less optimal" as a result of a new city's sales tax not going into effect until one month later and the loss of motor vehicle excise tax revenues. Each interim council will need to look at all the factors discussed above as it applies to its particular city to determine what date is most advantageous.

There may, of course, be factors in a particular situation facing a new city that would suggest varying from the above analysis. It may not, as a practical matter (particularly because of the incorporation election date), be possible to incorporate on either of these two dates. In any event, it is important that the official incorporation date be arrived at only after careful consideration of the above and any other pertinent factors. That consideration should usually include expert advice from financial and/or other consultants or officials. It goes without saying that a new city should begin its existence with its best foot forward!

Appendix A

Selected MRSC Publications

  • Annexation
    Annexation Handbook for Cities and Towns in Washington State. Report No. 19, Revised edition (available only at http://www.mrsc.org/textah.htm)

  • Appearance of Fairness
    The Appearance of Fairness Doctrine in Washington State. Report No. 32, January 1995

  • Bidding and Contracting
    The Bidding Book. Report No. 52, August 2000.
    Contracting for Professional Services. Information Bulletin No. 485, April 1994.

  • Conflict of Interest
    Knowing the Territory: Basic Legal Guidelines for Washington city and County Officials. Report No. 47, January 2002.

  • Council Procedures
    Councilmember's Handbook. Report No. 48, January 2000.

    Local Ordinances for Washington Cities and Counties. Report No. 50, May 2000.

  • Directories
    Directory of Washington City & Town Officials. (Published every other year following municipal elections.)

  • Finance
    Budget Suggestions. (Annual publication containing suggestions to assist in the preparation of the annual budgets.)
    A Revenue Guide for Washington Cities and Towns. Report No. 46, August 1999.
    A Debt Primer for Washington's Cities and Towns. Report No. 30, August 1994.

  • Housing
    Affordable Housing Techniques: A Primer for Local Government Officials. Report No.22, April 1992.

  • Incorporation
    Municipal Incorporation Guide. Report No.21, March 1992 (with September 1994 "Update" insert).

  • Intergovernmental Relations
    Municipal Cooperation Guide. Report No. 27, September 1993.

  • Legal
    Knowing the Territory: Basic Legal Guidelines for Washington City and County Officials. Report No. 47, January 2002.
    Local Ordinances for Washington Cities and Counties. Report No. 50, May 2000.
    The Open Public Meetings Act: How it Applies to Washington Cities, Towns, and Counties. Report No. 39, September 1997.
    Public Records Disclosure for Washington Cities and Towns. Report No. 34, March 1996.
    Nuisance Regulation for Washington Cities and Counties. Report No. 49, March 2000.

  • Municipal Government (Including Officials)
    Code City Handbook: Handbook for City Officials of Washington Optional Municipal Code Cities. Report No. 37, March 1997.
    Councilmember's Handbook. Report No. 48, January 2000.
    Mayor's Handbook (produced in conjunction with the Association of Washington Cities). Report No. 44, February 1999.
    Directory of Washington City & Town Officials. Published every other year following municipal elections.
    Governments are from Saturn . . . Citizens are from Jupiter: Strategies for Reconnecting Citizens and Government. Report No. 42, June 1998.
    Initiative and Referendum Powers of Cities in the State of Washington. Report No. 28, February 1994.
    Local Government Policy-Making Process. Report No. 45, February 1999

  • Municipal Services
    Municipal Service Delivery: A Survey of Washington Cities and Towns. Report No. 26, July 1993.

  • Ordinance Procedure
    Local Ordinances for Washington Cities and Counties. Report No. 50, May 2000.

  • Planning
    Affordable Housing Techniques: A Primer for Local Government Officials. Report No.22, April 1992.
    Infill Development: Strategies for Shaping Livable Neighborhoods. Report No. 38, June 1997
    Level of Service Standards - Measures for Maintaining the Quality of Community Life. Report No. 31, September 1994.

  • Traffic
    Washington Model Traffic Ordinance. Report No. 41, April 1998.

  • Utilities
    Utility Billing & Collection Issues. Report No. 40, September 1997.

Selected AWC Publications

  • Directories
    Directory of Municipal Professional Organizations.

  • Finance
    Tax & User Fee Survey. Published biennially.
    State Agency Assistance for Local Governments. Published biennially.

  • Intergovernmental Relations
    State Agency Assistance for Local Governments. Published biennially.

  • Personnel
    Washington City and County Employee Salary and Benefit Survey. Published annually.
    Washington State Public Employer Overtime Guide, by Bruce L. Schroeder, Otto G. Klein III, and Rodney B. Younker. Third edition, 1997
    Personnel Policies for Small Cities. 1997.
    Model Civil Service Rules for Washington State Local Governments, by P. Stephen DiJulio. Second edition, 1992.
    The Basics of Collective Bargaining, by Bruce L. Schroeder. 1996
Footnotes

1 Municipal Research & Services Center recommends obtaining a copy from it or AWC of the Directory of Municipal Professional Organizations, published by AWC. This publication provides information on the various professional groups in Washington State that can be of assistance to cities, including cities-to-be.

2 The "interim city council" refers to the elected council during the time period between the date on which the newly-elected councilmembers are sworn into office and the official date of incorporation, a date which the interim council will choose. It is this interim period that is the primary focus of this guide.

3 This guide does not, however, purport to provide policy advice on substantive municipal issues or to serve as a primer on municipal government. MRSC, however, has produced a number of publications that provide information on many aspects of city government. See listing of pertinent MRSC publications in Appendix A.

4 The New City Guide will address only cities established under the Optional Municipal Code, Title 35A RCW. Although a new city can, technically, become a second class city (a first class city is not a statutory option for an incorporating community, and, because of the population threshold to incorporate, an incorporating community cannot become a town), all cities that have incorporated since the Optional Municipal Code became effective in 1969 have become code cities. Second class cities do not have the broad home rule authority that code cities possess.

5 Chapter 35.02 RCW is reproduced in Appendix B.

6 For information on the differences between ordinances and resolutions and on drafting, amending, repealing, and codifying ordinances, see Local Ordinances for Washington Cities and Counties, MRSC Report No. 50 (May 2000).

7 However, as noted in the discussion of the local sales tax, such a tax can be effective only on the first day of either January, April, July, or October.

8 To save time and for efficiency, the council may adopt the state model SEPA ordinance in chapter 173-806 WAC or may adopt by reference the county SEPA procedures. More tailored policies and procedures can be adopted later.

9 The powers and duties of a city manager, other than interim, are defined by statute. See RCW 35A.13.060-.100. These statutory powers and duties of a city manager may not be diminished or curtailed by the city council. Further, RCW 35A.13.120 specifically prohibits interference by the council in the job of the city manager.

10 Annexation by a library district, while initiated by a city, requires the concurrence of the library district trustees and majority approval by the city electorate who vote on the measure. The procedures for annexation to a library district are contained in RCW 27.12.360-.395.

11 The 1992 legislature enacted statutory requirements relating to land use or zoning moratoria. RCW 35A.63.220. These requirements include a public hearing to be held within 60 days of adopting the moratorium, adoption of findings of fact justifying the action, and a six-month durational limitation (with provision for extension). However, it is doubtful that these requirements apply to the statutorily authorized moratoria in RCW 35.02.137, which applies only to an interim city council. An interim council has no authority to adopt zoning regulations to be effective during the interim period and, consequently, has no authority to adopt, to be effective during the interim period, a zoning or land use moratorium other than that authorized by RCW 35.02.137. Nevertheless, any moratoria adopted by the council to be effective after the official date of incorporation would be subject to these new requirements.

12 See Haberman v. WPPSS, 109 Wn.2d 107, 750 P.2d 254 (1987); Evangelical United Brethren Church v. State, 67 Wn.2d 246, 407 P.2d 440 (1965).

13 For historical purposes, it is recommended that the city also retain and preserve all incorporation and transition documents.

14 An MRSC publication, Knowing the Territory: Basic Guidelines for Municipal Officials, MRSC Report No. 47 (January 2002), discusses, at pages 10-18, potential conflicts of interest and ethical guidelines that apply to municipal officials.

15 See The Open Public Meetings Act - How It Applies to Washington Cities, Towns, and Counties, MRSC Report No. 39 (September 1997). Although a recent state court of appeals case held that the Open Public Meetings Act does not apply to members-elect of a governing body (e.g. councilmembers who have been elected but not yet sworn into office), MRSC recommends that a quorum or more of interim councilmembers-elect not meet together, except for social purposes, without notifying the public. See Battle Ground School District v. Wood, 107 Wn. App. 550 (2001). The letter of the law may not be violated by such a meeting, but the spirit of the law would be.

16 Some contend that the bid requirement for selecting an official newspaper in RCW 35.23.352(7) does not apply to a code city at all. In code cities under 20,000 population, the city's attorney should be consulted concerning whether the official newspaper should be obtained pursuant to a call for bids.

17 See The Bidding Book, MRSC Report No. 52 (August 2000).

18 If the council consists of only five members, a committee of three must, however, hold its meetings open to the public, with appropriate notice, in compliance with the Open Public Meetings Act. A committee of less than a quorum of the interim council will not be subject to the Act unless it conducts hearings, takes testimony or public comment, or acts on behalf of the entire council.

19 Appendix E contains minutes from the initial interim council meetings for the cities of Burien and Sammamish, as illustrations of what recent new cities have done at this initial meeting.

20 Since ordinances cannot be effective until the official incorporation date, the interim council should by motion or resolution adopt for the interim period the provisions of the ordinance establishing the time, date, and place of regular council meetings. However, most of the interim council's meetings, of which there will be many, will be special meetings that do not follow a regular schedule.

21 The selection of a city hall and meeting place, as well as of other public city facilities, must be informed by the requirements of the Americans with Disabilities Act (ADA). This comprehensive federal legislation, passed in 1990, extends federal civil rights protection in several areas to persons who are considered "disabled." As a result of the protections afforded by the ADA, public entities, in providing their services and programs, may not discriminate on the basis of disability, and, consequently, must provide individuals with disabilities the opportunity to participate in or benefit from such public services and programs. City programs and activities, including council meetings, must be accessible to the disabled. Physical barriers in existing facilities must be removed if this is readily achievable. Otherwise, alternative methods of providing services must be offered. All new construction in public buildings must be accessible. It is recommended that the advice of legal counsel or other individuals with expertise be utilized in the selection of both the initial and the permanent city facilities.

22 To adopt something "by reference" means to identify in the adopting ordinance or resolution what is being adopted (the code, statute, ordinance, or whatever else may be legally adopted by reference), without the need to reproduce it within the adopting ordinance or resolution. There are specific statutory limitations on what may be adopted by reference and statutory requirements as to the procedures that must be followed in adopting by reference. RCW 35A.12.140.

23 MRSC can provide the interim council with sample rules of procedure adopted by other cities, which may help the interim council adopt its own rules.

24 See footnote no. 16.

25 The official newspaper must be "of general circulation in the city and have the qualifications prescribed by chapter 65.16 RCW." RCW 35A.21.230. Among the qualifications required of a "legal newspaper" under chapter 65.16 RCW are the following: the newspaper must be published regularly, at least once a week (and must have been published at least six months at the time of application for approval as a legal newspaper); it must be compiled either in whole or in part in the office at the place of publication; and it must contain "news of general interest as contrasted with news of interest primarily to an organization, group or class." RCW 65.16.020. An order of the superior court of the county in which it is published is necessary for approval as a legal newspaper. Id.

26 A state court of appeals decision suggests that an ordinance passed by the council may be invalid if prior notice of the preliminary agenda is either not given or does not include the ordinance. Port of Edmonds v. Northwest Fur Breeders Cooperative, 63 Wn. App. 159, 816 P.2d 1268 (1991), rev. denied, 118 Wn.2d 1021 (1992).

27 The council may, by ordinance, require council confirmation of mayoral appointments "where qualifications for the office or position have not been established by ordinance." RCW 35A.12.090.

28 The council may, however, provide for appointment by the mayor, subject to council confirmation, of "a city planning commission, and other advisory citizens' committees, commissions, and boards advisory to the city council." RCW 35A.13.080.

29 The usual procedure is to first (and quickly) hire an interim manager. It is recommended that the staff hired by an interim manager be deemed interim staff. The "permanent" manager, when hired, can then choose his or her own staff, although he or she may choose to retain some or all of the interim staff. Obviously, the process for selecting a "permanent" city manager should be more time consuming than that for an interim manager. The Washington City/County Management Association (WCMA), which can be contacted through MRSC, can be of assistance in providing the city with the names of experienced managers, often retired, who are available and willing to be hired as interim managers. In selecting a "permanent" manager, the interim council may wish to use a professional recruiting firm.

30 The MRSC Library has information relating to recruitment of a city manager.

31 The Washington Municipal Clerks Association publishes a two-volume Municipal Clerks' Handbook that provides detailed information on carrying out the duties of a municipal clerk. This handbook may be purchased through MRSC.

32 See AGO 1997 No. 7 for a discussion of the manner in which a code city may provide for legal services.

33 As a practical matter, however, sales tax distributions will not occur within 60 days of the official incorporation date. See discussion of sales tax distribution at pages 25-26. The provision of law enforcement services by the county during this period should be at no charge to the new city. See Chapter 143, Laws of 1985, including governor's veto message.

34 AWC annually publishes its Washington City & County Employee Salary and Benefit Survey, which can be extremely helpful in developing a salary schedule. This publication provides salary data from most Washington cities and towns for a wide variety of employment positions, as well as for city officials such as councilmembers, the mayor, and the city attorney. It also provides extensive data on the types and levels of benefits provided by the responding cities and towns.

35 See RCW 35A.12.070; 35A.13.040.

36 City "elected officials" whose salaries would be subject to being set by a salary commission would be the mayor of a mayor-council city, the councilmembers, and the municipal court judge, if full-time or if required by ordinance to be elected.

37 This publication has been superseded by a newer edition (1997), prepared by Bruce Schroeder. Copies are available from the Local Government Personnel Institute at the Association of Washington Cities, or on loan from the MRSC Library.

38 See also Bulman v. Safeway, Inc., 96 Wn. App. 194,_P.2d_(2001), in which the state supreme court clarified its holding in Thompson.

39 If the council decides that city officers and employees will be covered by Social Security, it must enter into a "Section 218" contract with the Secretary of the U.S. Department of Health and Human Services. This contract provides for Social Security coverage on a voluntary basis. The Social Security Administration has a toll-free number, 1-800-772-1213, for information, or contact the OASI Supervisor at the state Department of Employment Security.

40 The "Registration UBI Number" is a Washington State identification number used to identify an organization or entity with the following: Department of Revenue; Employment Security Department; Department of Labor and Industries; Department of Licensing; and the Secretary of State's Office. This number may be obtained by calling the Department of Revenue Information Center in Olympia (1-800-647-7706) and requesting a Master Business Application, which registers an organization with all of the above departments, to the extent applicable. The federal "Employee Identification Number" is used to identify an organization or entity with the federal government. It may be obtained either by contacting the Internal Revenue Service (IRS) at 1-800-829-FORM and requesting Form SS-44. Better yet, contract the IRS "personally" at 1-800-829-1040 and ask for a "New Business Tax Kit" and discuss necessary procedures, tax forms required, and other federal tax issues.

41 Although RCW 35.02.135 authorizes an interim council to borrow from the municipal sales and use tax equalization account, there is no longer such an account following the 1999 repeal of the motor vehicle excise tax, which provided the revenue for that account.

43 At the time of this publication, 36 of 39 counties levy the full 1.0 percent rate, as do 271 of the 280 cities. "Local Sales and Use Tax Distributions," May-June 2001, Washington Department of Revenue. Thus, if a city levies the full 1.0 percent tax in a county which does not, there will be a small sales tax increase.

44 Again, reference should be made to the MRSC publication, A Revenue Guide for Washington Cities and Towns, supra, which can help explain these property tax considerations.

45 Referendum 747, approved by the voters at election limits property tax increases to 1 percent in taxing districts of less than 10,000 population, and to the lesser of 1 percent or the rate of inflation in other taxing districts. Upon a finding of substantial need by a supermajority of the legislative body, these other taxing districts, except the state, may increase property taxes 1 percent (when the rate of inflation is less). The voters of any taxing district, except the state, may approve an increase of greater than 1 percent.

46 However, if county road taxes collected were delinquent before the incorporation date, they are retained by the county and placed in the county road fund. RCW 35.02.140, as amended by Chapter 299, Laws of 2001.

47 As with the county's provision of law enforcement services during this period, the county's provision of road maintenance services should be at no charge to the new city.

48 "Capital projects" are defined in RCW 82.46.010(6).

49 Of the 230 cities and towns responding to the 2000 AWC Tax and User Fee Survey, 37 reported that they levy a business and occupation tax.

50 The state supreme court, in American Legion Post No. 32 v. City of Walla Walla, 116 Wn.2d 1, 802 P.2d 784 (1991), addressed the issue of what is meant by "primarily" as that term is used in the statute governing the use of gambling tax revenues.

51 Another source of "state-shared" revenues, albeit temporary, also exists currently. In an effort to alleviate some of the financial strain on cities, counties, and health districts after the repeal of the motor vehicle excise tax, the 2000 legislature provided some "backfill" monies. In section 729 of the 2001 budget, some money was set aside for certain contingencies, including making distributions "to newly qualifying jurisdictions as if the jurisdiction had been in existence prior to November 1999." This distribution may be used "public safety, criminal justice, public health, and other operations" - in short, for just about anything. This same language is in section 728 of the 2001-2002 budget. Incorporation groups should probably not include these funds in their feasibility study, however, without checking on the status of this revenue source. The total amounts available may not be large enough to fund incorporating cities on a par with existing cities and the legislature may not appropriate any "backfill" money in the next biennium.

52 See RCW 43.62.030. Although this statute only refers to this 30-day period in the context of city annexations, OFM also administratively applies this requirement to incorporations.

53 The estimated 2002 per capita amounts are $6.12 for Liquor Board profits and $3.25 for liquor excise tax receipts. Budget Suggestions for 2002, supra, at p. 20.

54 The estimated per capita distribution for 2002 is $0.17. Budget Suggestions for 2002, supra, at p. 20.

55 Covell v. Seattle, 127 Wn.2d 874, 905 P.2d 324 (1995).

56 This federal law was amended in 1992 by passage of the "Cable Television Consumer Protection and Competition Act of 1992." A key provision of this new legislation allows local governments under certain circumstances to regulate the rates and quality of cable TV systems in their franchise areas.

57 Most cities charge based upon the fee schedule set out in the Uniform Building Code (UBC), which is, by state law, in effect and to be enforced in all cities and towns. See 2000 Tax & User Fee Survey, Association of Washington Cities. Cities, however, have the authority to vary from the UBC fee schedule. RCW 19.27.100.

58 The state Department of Community, Trade, and Economic Development (now the Office of Community Development (OCD)) published in 1992 a manual on imposing impact fees, entitled "Paying for Growth's Impacts: A Guide to Impact Fees," which is available from OCD or on loan from MRSC. The MRSC Library also has numerous other publications, also available on loan, concerning impact fees.

59 See discussion of municipal courts at pages 51-54.

60 Note that it may be very difficult for an interim council to meet these deadlines if it is elected at the November election.

61 Following this first-year budget, it is possible for a city to provide for a biennial budget rather than an annual budget, although it must commence in an odd-numbered year. The ordinance providing for a biennial budget must be passed six months prior to the commencement of the biennium (i.e., by the end of June). RCW 35A.34.040. The statutes governing biennial budgets are contained in chapter 35A.33 RCW. There are approximately 15 cities in the state that have enacted biennial budgets.

62 MRSC publishes annually at the beginning of August its Budget Suggestions publication, which provides all cities with important budget preparation information and tips. We recommend its utilization for a new city preparing its first-year budget.

63 If the city plans under the Growth Management Act (GMA), it will be required to develop, as part of its comprehensive plan, a capital facilities plan element. This element must include, among other things, a forecast of future capital facility needs and a six-year plan "that will finance such capital facilities within projected funding capacities." RCW 36.70A.070(3). However, a new city will not be required to adopt a comprehensive plan that complies with the GMA immediately. See discussion at page 59-60.

64 Not addressed here are "privatization" possibilities: contracting with private profit or nonprofit organizations for certain municipal services. An MRSC publication, Municipal Service Delivery in Washington Cities and Towns (Report No.26, June 1993), addresses such possibilities.

65 See discussion at pages 49-50 concerning the statutory obligations concerning the incorporation of an area that includes an existing garbage franchise.

66 See AGO 2000 No. 8, which opines that a city may not contract with a nongovernmental entity for lease or operation of a city jail.

67 If a city annexes into a library district (which procedure requires a special election), the maximum amount that a city may impose in a regular property levy is raised from the previous maximum of $3.375 per thousand dollars of assessed value to a maximum of $3.60 per thousand dollars of assessed value. RCW 27.12.380. However, that maximum will be reduced by the amount of the library district levy which may be as much as $.50 per thousand dollars of assessed value, the maximum amount that a library district may levy.

68 RCW 35.02.225 states that "essential services may include but are not limited to, law enforcement, road and street maintenance, drainage, and other utility services previously provided by the county before incorporation."

69 If a city is unable to provide adequate police protection for itself, the county has a responsibility for providing some police protection and for enforcing state law within the city's limits. The county sheriff must take into account the lack of adequate police services provided by the city in allocating the resources of the sheriff's office. The county sheriff is not, however, obligated to provide a city with a certain level of police services. If the city wishes the county to provide a specific number of county officers or a specific level of service, it must contract with the county for such services. See AGO 1990 No. 4.

70 Also, if the new city establishes its own police department, county sheriff's employees may be able to transfer their employment to the city's police department under the requirements and procedures in RCW 35.13.370-.400.

71 Fire protection districts may also provide fire protection services within incorporated areas when such areas have been annexed into a fire protection district or when incorporated areas contract with a district for provision of fire services.

72 Under the latter scenario; the city could end up being annexed to more than one fire protection district.

73 However, a city that has annexed to a fire protection district may withdraw from the district after three years has passed since the annexation. RCW 52.04.101. The procedure for withdrawal requires that the council pass a resolution to put before the city's voters the proposition to withdraw. Id.

74 RCW 35.02.160 addresses "the operation of any public transportation, garbage disposal or other similar public service business or facility" within a new city's limits. So, there may be other types of franchises affected by the first paragraph of this statute that a new city must consider. See AGO 1967 No.8, which opines that this statutory language (also found in RCW 35.13.270) does not apply to the operation of a water company.

75 The WUTC regulates solid waste collection companies except companies that contract with a city; the WUTC does not regulate cities that provide their own solid waste collection. RCW 81.77.020.

76 As with most general rules, this one is subject to exception. There is an exception where drainage control is made necessary by the city's conduct. An example of this exception is where the city opens and constructs streets, causing an increased amount of water to flow onto private property and resulting damage. The city may be liable for damages if it artificially collects or channels water and discharges it onto private property in a manner different from the natural flow. See DiBlasi v. City of Seattle, 136 Wn.2d 865, 969 P.2d 10 (1998); Wilbur Development v. Rowland Construction, Inc., 83 Wn.2d 871, 523 P.2d 186 (1974); Burton v. Douglas County, 14 Wn. App. 151, 539 P.2d 97 (1975). In such circumstances, the city would be obligated to provide some system of storm drainage to prevent such a discharge onto private property.

77 A city may exercise the powers of a diking or drainage district or may be included within a diking or drainage district. RCW 85.05.260, 85.06.230. A flood control district may include, in whole or part, a city. RCW 86.09.004. Similarly, an irrigation district may construct and maintain ditches, pipelines, and other water conduits for irrigation of land within a city or for domestic water supply within a city. RCW 87.03.015(5).

78 Note that a city need not create a criminal code. The city may choose to provide for civil penalties, called infractions, for violations of city ordinances. If the city creates a criminal code, penalties can be up to $5000, one year in jail, or both. If the city adopts a criminal code, certain fiscal impacts result. The city must pay for public defender services, jury fees, and jail costs. Infractions have the following features: (1) there is no presumption of innocence; (2) proof is by a preponderance of the evidence (rather than beyond a reasonable doubt in criminal cases); and (3) there is no right to a jury trial.

79 Note, however, that there are significant restrictions on when a city may terminate such a contract. That may be done only at the end of a four-year district court judicial term, and notice must be given to the county at least one year prior to February 1 of the year in which distirct court judges are subject to election. RCW 3.50.810.

80 In cities under 5,000 population, the judge need not be an attorney. RCW 3.50.040. When the municipal court judge position is not full-time, the city (through its mayor) may appoint a district court judge as its municipal court judge and pay a pro rata share of the judge's salary. Id.

81 However, RCW 3.62.100 requires district courts to "take all steps necessary to promote efficiencies in calendaring in order to minimize costs to cities that use the district courts."

82 The district court, however, controls the number of judges and whether the judge or judges are full- or part- time. That court is constrained by its districting plan and by the statutory allowance for the number of judges it may have.

83 Under 2001 Legislation, the city council may establish an independent salary commission to set salaries for elected city officials, which may include a municipal court judge. RCW 35.21.015.

84 A "holding facility" is defined as a facility primarily designed and used for temporary housing of those charged with a criminal offense prior to trial or sentencing or during or after trial or sentencing, but in no instance to exceed thirty days. RCW 70.48.020(1). A "detention facility" is a facility designed and used for temporarily housing those charged with a criminal offense prior to trial or sentencing or for housing adults for purposes of punishment and correction after sentencing or persons serving terms not to exceed ninety days. RCW 70.48.020(2). A "special detention facility" is a minimum security facility used for housing sentenced persons who require less security than normally provided in detention or correctional facilities (e.g., those being housing for DWI). RCW 70.48.020(3). A "correctional facility" is a facility used for housing persons serving terms not exceeding one year for conviction of a criminal offense. RCW 70.48.020(4).

85 Legislation enacted in 1996 combined the statutes relating to sewer districts with those relating to water districts, and all such districts became "water-sewer" districts governed by the same set of laws, Title 57 RCW. Existing water and sewer districts would thereafter be known as "water-sewer" districts, or they could retain the name of "water district" or "sewer district." RCW 57.02.001.

86 In addition, RCW 19.27.170 sets out "water conservation performance standards" (for faucets and urinals) which apply to all new construction and all remodeling involving replacement of plumbing fixtures in all residential, hotel, motel, school, industrial, commercial uses, or other occupancies determined by the building code council to use significant quantities of water. WAC 51-46-0402 contains regulations promulgated by the Building Code Council to implement these standards.

87 This discussion of planning and zoning represents only a very brief overview of the general statutory requirements. The MRSC Library contains many reference books, guides, periodicals, comprehensive plans and zoning regulations enacted by local governments, and other source material relating to planning and zoning. In addition, the MRSC consultant staff, which includes planning consultants, is available to city and town officials and staff for inquiries relating to planning and zoning. Also, the state Office of Community Development (OCD, formerly part of what was the Department of Community, Trade and Economic Development (CTED, now the Washington State Department of Commerce) provides technical and financial assistance to help cities plan and zone and, particularly, to comply with the Growth Management Act.

88 Except for cities in counties that are planning under the GMA, it is not actually required that a city plan and zone. However, in order to do so, the city council must establish a planning agency. In most every case, if not in all cases, it is advisable for a city to engage in land use planning and zoning.

89 The Department of Ecology (DOE) has adopted regulations that provide procedures for local governments to integrate their GMA and SEPA processes to avoid duplication and inefficiencies in attempting to comply with both laws. See WAC 197-11-210 through WAC 197-11-235.

90 A short subdivision is defined by state law as the division of land into four or fewer lots, tracts, parcels, etc. RCW 58.17.020(6). A city may, however, define and regulate short subdivisions that result in the division of land into a maximum of nine lots. Id.

91 If a new city has shorelines subject to the SMA, those shorelines already should be subject to regulation under the county's shoreline master program.

92 Thus, although the decision on the incorporation date should be based on factors that maximize as soon as possible the revenue flow into the new city, it is important to keep in mind that the choice of the incorporation date may, as a practical matter, be dictated to a great extent by the date of the incorporation election. If the incorporation election takes place in February, March, April, or May, it is unlikely, for reasons discussed in this section, that the city will be ready or inclined to incorporate until the following year, although no more than 360 days from the election. Similarly, it is unlikely that the council will be ready or inclined to incorporate until the second half of the next year if the incorporation election takes place in either September or November.

93 Of the 14 incorporations that have occurred since 1990, five have occurred on February 28, seven on August 31, one on March 31, and one on September 30.

94 Road maintenance by a county must continue in the new city for a period not to exceed 60 days from the official date of incorporation or until 40 percent of the anticipated annual tax distribution from the road tax levy is made to the city, whichever occurs first. RCW 35.02.220(2). If the county distributes the road tax to the new city only once a month, paying interest on the funds it holds prior to the distribution, the city likely will not receive 40 percent of the anticipated annual distribution in the first 60 days. However, if the county distributes the funds on a daily basis, the city could receive more than 40 percent before the 60 days are up.

95 It is probable, however, that counties do not collect much property taxes in March or September, as property owners are not inclined to pay their taxes early.