Legal appeal could cost taxpayers millions

By Robert G. Zimmerman

On March 7, spokesperson Diane Elliott announced that the group Friends of North Kelsey, with financial support from Teamsters Union Local 38 and UFCW Local 21, would be appealing the Snohomish County Superior Court decision supporting the City of Monroe’s development agreement with Walmart.

People have very strong opinions with regards to Walmart. This opinion piece does not intend to debate the issues for or against. Rather, it describes the fiscal impact this appeal will have on the taxpayers, specifically the property owners, within the City of Monroe.

Some history: The purchase and sale agreement between Sabey Corp. (Walmart’s representative for real estate purposes) and the City of Monroe is scheduled to close no later than June 30. The buyer has the option to terminate the transaction if they are unable to secure all “discretionary approvals” from the City of Monroe.

The adopted development agreement completed the “discretionary approval” and was approved by the Monroe City Council, pending any Superior Court action. This agreement was in fact challenged last May in Snohomish County Superior Court by the group called Friends of North Kelsey. The Superior Court entered its decision in January, ruling in favor of the city. This ruling allowed for the early closing of the transaction pending further appeals.

On March 7, Friends of North Kelsey, with financial support from the Teamsters Union Local 38 and UFCW Local 21, filed an appeal to the Washington State Court of Appeals. This action effectively stops the transaction from closing early and puts doubt on the transaction closing by June 30.

The sale of this property is important to the taxpayers of Monroe. The city moved forward to purchase property in the North Kelsey area in 2004 for the purpose of development and to enhance economic sustainability. Bonds have been issued in the amount of $11.3 million to facilitate this purchase. On Nov. 1, the first bond in the amount of $6.5 million comes due and the city will be required to pay this amount at that time.

The sale of the property to Sabey will result in a payment to the city of $7.5 million, which will be sufficient to retire the first bond repayment. Should the sale be delayed or, worst case, not close, the taxpayers of Monroe will be required to foot the bill to retire the bond due in November.

The current financial position of the city will likely require a substantial property tax increase of approximately 30 percent should this happen.

The city finance director estimates that refinancing the existing bond with new long-term bond financing will cost $4.4 million in additional interest payments. If the city is able to secure new short-term bonds, the cost to the taxpayers of Monroe will still reach $1.4 million in additional interest payments. Additionally, the city’s bond rating will be negatively impacted, affecting future bond rates.

Winston Churchill once stated — “However beautiful the strategy, you should occasionally look at the results.” The city was correct in moving ahead with this proposed development agreement and the Snohomish County Superior Court agreed. I believe, as the mayor of Monroe, that in the current economic climate, given the tortured history of this project and the failed attempts to develop this property over the past decade, it is time to set aside the activism and allow for economic progress in our fine city to move onward.

The question I leave you with: Is it appropriate and fair for the taxpayers of Monroe to potentially pay millions of dollars in additional taxes, and to potentially lose hundreds of thousands of dollars in sales tax revenue each year (revenue that would be used for infrastructure improvements, like roads and city services such as police and parks) just because a small group of protestors, funded by union activists, seeks to stall or delay the opening of a Walmart in the city of Monroe? I believe that these tactics are unacceptable.

The city is prepared to close this transaction and welcome Walmart to our business community. The outcome of the appeal will determine when or if that takes place. And who pays for it.

Robert G. Zimmerman is mayor of the city of Monroe. His email address is rzimmerman@ci.monroe.wa.us.