Can Mukilteo afford Rosehill?

Published 12:01 am Tuesday, August 9, 2011

MUKILTEO — A new Rosehill Community Center is now part of old town Mukilteo, but the dust hasn’t yet settled over the debate on whether to construct a new building instead of renovating the old one.

Some council members

and people in town worry that officials won’t have enough money to pay off the 20-year bond they took out to finance the $12.9 million center.

The city needs to pay a little more than $900,000 each year through 2029. Once paid, the total with interest will come to about $18 million.

If revenue growth continues to lag behind projections, officials will have to sacrifice other projects to make the annual Rosehill payments.

The new center, which opened in February, took the place of an old schoolhouse built around 1930 and demolished in December. It’s always been the heart of the community where hundreds of Mukilteo residents take classes, hold meetings and attend events.

The money for the renovation comes out of the real estate excise tax funds, which are added on property sales and used for capital improvements. Since real estate sales have slowed, these capital funds have taken a hit.

Mukilteo financial director Scott James predicts that revenues will grow 5 percent a year — an average number with the good and bad years averaged out. That’s conservative compared with the past 20 years, where revenues had been growing 14 percent a year, he said.

James’ estimate is not realistic, said Charlie Pancerzewski, a retired accountant and Mukilteo resident of more than 40 years. Pancerzewski, 71, has served on the City Council twice.

The 14-percent growth started in 1991 and was recorded at a time when the Harbour Pointe area was being heavily developed, he said. The city likely won’t see that level of development in the next 20 years.

Estimates are prepared to show council members what’s in city coffers so they can decide which projects to fund, James said. Predicting revenues in 2029 is somewhat like predicting the weather.

“Once you have a projection, that doesn’t mean it’s set in stone,” he said. “It’s not meant to be a precise model.”

Pancerzewski argued against a new Rosehill. He believes the city’s revenues projections in 2009 caused the majority of council members to agree to build the community center — the largest and most expensive capital project in Mukilteo’s history.

The 2009 projections used to make a decision on Rosehill showed that real estate excise tax revenues would total $1.9 million in 2017, said Councilman Tony Tinsley. An estimate council members received at a recent meeting puts the 2017 income at less than half that amount.

“In my view, the financial projections provided to the council by the mayor and city staff at the time we were deciding the community center issue were dishonest,” Tinsley said.

He voted against building a new center.

The real estate excise tax is estimated to generate a total of $700,000 this year and the next. A reserve of $2 million built into the bigger fund is available to pay the Rosehill bond.

Pancerzewski is one of a handful of people attending council meetings regularly. He often comments on budget issues, including Rosehill bond payments.

“Council members need to do their jobs and ask hard questions about the city’s finances,” he said.

Katya Yefimova: 425-339-3452; kyefimova@heraldnet.com.