A few years ago, BP Cherry Point Refinery officials concluded their property appraisal from the Whatcom County Assessor’s Office was too high and they were paying more property taxes than they needed to. So they filed an property appraisal appeal with Whatcom County and as a result paid less property taxes for a few years while the dispute went on.
The smaller BP tax payments were significant enough to cause property tax rates in tax districts such as Whatcom Fire District 7 (WCFD7) to increase noticeably to make up for BP’s smaller than anticipated contribution.
The County reached a property valuation settlement with BP in mid-2016. That meant, with BP back returning to paying their full property tax obligations, those tax districts with higher rates before would likely see lower rates in 2018.
Another result of the BP settlement, back taxes, owed by BP for those years when they were not paying their full obligation, arrived as a windfall for those tax districts that had been impacted. This means even lower tax rates are expected for 2018.
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Click for more informationThat’s the simple explanation. It gets more complicated when considering the City of Ferndale (COF) was annexed into WCFD7 in 2016. Prior to that, the COF had been contracting for and paying, like any other property owner, for WCFD7 services on behalf of the citizens of Ferndale.
The COF says while they were contracting for WCFD7’s services, they paid $160,000 more to WCFD7 than needed due to BP reduced tax payments. Now with the settlement in place, COF officials feel they should recoup this overpayment. According officials involved, Washington State law prohibits WCFD7 from simply writing a check to COF for the overpayment.
So, at tonight’s City Council meeting, COF staff hope the Council will approve the 2018 Property Tax Ordinance that includes not only the standard increase of 1% (approximately $11,000) but also an additional one-time $160,000 increase. The justification being property tax payers within the COF tax district will be seeing a net reduction in property taxes in 2018. This net benefit to taxpayers throughout the WCFD7 tax district includes the COF’s overpayment to WCFD7 and this will result in getting that portion back.
This additional ‘discretionary amount’ added to the property tax levy will recoup the $160,000 from City tax district taxpayers while leaving them with the remaining net reduction to property taxes influenced by the BP settlement.
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Click for more informationThe COF does not have jurisdiction to implement such a tax levy upon the whole WCFD7 tax district where the net benefit of the $160,000 overpayment by COF plus millions in back taxes from BP will result in the tax rate decreases. But they can do so within the COF tax district.
Looking even further into the future, since such windfalls happen only once, the property tax rate decreases are not likely to reoccur in the next year. As a result, there will be another correction (presumably an increase) to effected tax district rates as they return to ‘normal.’
Update: 11/21/17
City Council voted last night to approve the ordinance allowing the discretionary amount be included with the standard 1% increase in the property tax.