Last week, 24 notices were sent by the Snohomish city attorney's office to homeowners in two housing developments in a neighborhood at Kendall Court, west of Highway 9.
The notices said the homeowners owed connection fees and school impact fees. These should have been paid by the developer before putting the houses on the market.
The letters said the 24 homeowners owed $6,029 in school impact fees. Eight of them owed an additional $13,317 in sewer connection fees.
"We can't say it's a crime at this point," city manager Larry Bauman said Wednesday.
A homeowner provided the city a copy of a certificate of occupancy, which has the signature of the city's building official that indicates the fees have been paid.
"The signature initials are suspicious. It does not look to be original and it could have been scanned," he said.
Snohomish Police Chief John Flood said his department has been informed of the situation, and the city is talking with its attorney.
So far, the police department has not been asked to investigate, he said.
"We are waiting for some direction," he said. "If there is something that might be criminal, then we certainly will take appropriate action. If it's all civil, then the police department won't be involved."
At this point, the city cannot say who is responsible or who should pay the $239,174 in unpaid fees. The properties involved were built in 2008 by a local company, Dynasty Homes. A phone number to the business was busy during multiple calls Wednesday.
The city is also investigating the status of the developer and the title company, Pacific Northwest, but the title firm has been sold to another company, Bauman said.
The city, however, should have handled the notices differently, Bauman said.
"The bottom line is that the letters the property owners received were premature, and the tone was inappropriate," Bauman said.
The city plans to send apology letters to the homeowners and outline future steps this week, Bauman said.
Mayor Karen Guzak understands the anger, and says the city will need to fix how the process was handled.
"We are trying to make it right and get to the bottom of how all of this happened," she said.
"It was very poorly handled," said Ric Suarez, a homeowner who received one of the letters. "This is between the builder and the city and we were caught in the middle."
Suarez was one of 18 people who attended a Snohomish City Council meeting on Tuesday night and spoke to the council about the notices.
"We are hoping to figure out who dropped the ball," neighbor Jamie Kemper said.
Eric Stevick contributed to this report.
Alejandro Dominguez: 425-339-3422; firstname.lastname@example.org.
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