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Yelm City Council was misled on Real Estate Excise Tax (REET II) vote –
Foster omits inviting public comment for Yelm’s 2nd REET tax assessment,
Transparency should not be promised if not delivered.

Photo credit: City of Yelm Government Facebook

– Story Highlights:
* Yelm City Council voted a Real Estate Excise Tax (REET II) Sept. 26,
* In answer to specific questions, council was told this is a new tax for Yelm.
* Foster said sellers pay $700 with new tax, omitting they pay a $700 REET I now.
* Council was told only Yelm and Rainier did not collect REET II tax in the county.
* While correct, County Assessor verified this vote DOUBLES Yelm’s REET assessments.
* In reviewing the video dialogue, the council was clearly misled prior to voting.
* Councilor DePinto specifically was told this was a new tax before vote, while true,
* Council was not told that Yelm has already been assessing a REET I of .25%.
* While council can raise taxes without public discourse, disingenuous not to do so!
* Interim Mayor Foster side-tracked any public hearing on raising his voters’ taxes.
* The public could not make comments to the council on-the-record about REET II,
* Study Sessions, Council Agendas allow no public comment for items on those agendas.
* Yelm’s military families relocating elsewhere to be hard-hit and not consulted.

– Written on every City Agenda and Council meeting comment card:
Please complete a blue speaker’s card and present it to the meeting recorder.
Comment topics should not appear elsewhere on the agenda.
Time (three minutes per speaker) and the number of speakers (five)
are limited and may be adjusted to meet agenda requirements
Click here

The public was not permitted to address the council meeting on REET II as this was on their agenda.

– From the Yelm City Council meeting, Sept. 27th:
The Yelm City Council was told the Real Estate Excise Tax (REET II) would be used to fund part of the Six Year Transportation Improvement Program (STIP) and Wastewater Facilities plan. City Administrator Michael Grayum said the tax would generate up to $140,000 per year but will vary depending on cost and number of homes sold. Interim Mayor Foster added a property seller within the city limits would pay $700 on a home being sold for $280,000 as an example, with the tax voted on Sept. 26th, yet he failed to mention this amount has already been assessed by Yelm, and this vote would bring the total REET to .50%. Prior to this REET II passing, the total excise tax a city of Yelm seller paid on a home sales price of 280,000 was at 1.53% = $4,284. With the REET II passing, the new total assessed amount is 1.78%, meaning Yelm sellers will now pay a $4,984 property sales tax, of which approximately $1,400 will go into Yelm’s coffers. This is alot of money for our military families who have invested in our town’s real estate and then are transferred or leave for other locales.

– Bottom line:
There is nothing wrong with raising taxes, however the way this was presented to council is the issue. This information was not upfront. Omissions skewed the councilors’ voting. Their questions were indicative they were NOT clear, nor well-informed. A councilor called me the next day after reading my blog entry and they had a totally different understanding in the council session and when I explained the issue, the councilor said, “We clearly were not given all the facts.”

– A prominent Yelm Real Estate Agent contacted the Yelm Blogger to report on REET II,
while technically a new real estate tax as Foster reported to the council, was actually a doubling of the current amount Yelm receives from REET I. In answer to Councilor DePinto, he was told the “new” .25 tax was the maximum allowed to be assessed, which is true, since the city already collected .25%. Yelm’s maximum REET rate allowed IS .50%. The Thurston County Assessor reported that Yelm real estate sales are assessed a total county/city REET I of 1.53%, where 1.28% of that goes to Thurston County and .25% to Yelm. Therefore, Yelm’s council voted an additional .25%, making the new REET II total to be collected on Yelm property sales = 1.78%. While city leaders are technically correct calling this a new tax, this is disingenuous when the council was not informed publicly that Yelm already was receiving .25% from REET I, and according to the Assessor, Yelm receives a monthly remittance check from Thurston County for their .25% REET I tax. Yelm home sellers will now pay a total of $1,400 (Yelm’s .50% REET amount) on a home sold at $280,000 as an example, and not the $700 as councilors were told by Foster, as the $700 is only the additional amount to be collected from REET II.
Would councilors have voted differently is this was made clear?!
Can you see how omission of key facts can skew councilors to vote in a certain prescribed manner?

Further, “Cities and counties that choose, but are not required, to plan under GMA may also impose the (REET) tax, but only with voter approval,” the Washington Research Council (1993) on REETs in Washington State. Since the city of Yelm Comprehensive Plan adheres to the GMA (Growth Management Act), the city should verify that omitting a public vote on this tax if used for GMA infrastructure improvements is not out-of-line.
Read more

– Editor’s Note:
While some on social media railed at my September 27th Blog entry and did not care if taxes were raised on property sales, they said I was anti-tax, which is not true.

I am not against raising taxes, rather I am for responsible taxation AND for city leaders to reach-out to involve the public in the process when the city assesses MORE taxes and fees.

The public was omitted from this added tax discussion with the collective council members. The Study Sessions are not open to citizen dialogue and the Sept. 12th council meeting video was not working for the public to view, live or recorded, to respond and send in comments.

Yelm’s Council just raised storm-water fees and is considering extensive multi-year increases to water/sewer fees and now council doubled the real estate excise tax rate to the max. without discourse?

Interim Mayor Foster has done little to inform and involve the public in the Public Works funding crisis and what is going to be necessary for Yelm property owners to shoulder in expenses amidst few and diminishing grant opportunities.

Transparency should not be promised if not delivered!
Mr. Foster has had a whole year to educate his residents on the hits coming to their pocket books, and get them to join him in understanding why. And isn’t Foster being disingenuous when he said the public could have contacted council members if they objected to the REET II, yet giving them zero opportunity to address the council in a public forum?

So much for transparency and inviting public dialogue!

– UPDATE: October 5, 2017
I was not clear about the provisions in the RCW, as I ascertained there was a provision about public involvement in REET II, which was verified in a call to Thurston County Commissioner Gary Edwards’ office. REET II can be authorized by the municipality (Yelm’s City Council) and the tax revenue can ONLY be spent on infrastructure improvements, that was correctly mentioned to the council. However, the difference between REET I and REET II is that the public can repeal a REET II via a referendum if put to a public vote, which was omitted to the council.

Posted by Steve on October 2, 2017 at 12:03 am | Permalink

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