Mill Creek council frames ‘‘financial viability’’ test, asks staff for targeted analyses on annexation, taxes and South Town Center

Mill Creek City Council met in a planning retreat session focused on defining and testing ‘‘financial viability’’ and directed staff to return targeted financial analyses on annexation options, tax measures and several development projects.

The retreat — billed by the facilitator as a second night devoted to ‘‘financial viability’’ — centered on a working definition of viability (recurring general‑fund revenue that routinely covers operating costs, maintains a policy reserve and leaves room for strategic investments) and on which levers the city should study next to close an identified multi‑year gap.

Why it matters: Council members said the city faces a short‑term budget gap and longer‑term pressure from rising costs, and that they need a clear, comparable evidence base before choosing among options such as new taxes, annexation, operational efficiencies, project‑area taxing districts or targeted development. Staff will return quantitative estimates so the council can weigh timing and cumulative impacts across levers.

Rob, the session facilitator, opened the night by saying, “tonight is all about financial viability,” and framed the retreat as a data‑gathering exercise rather than a decision night. Council members and staff then discussed a list of nine levers ranging from existing and new taxes to annexation and project‑level financing for the South Town Center and the DRCC site.

Key items the council asked staff to analyze: - Annexation: council asked staff to evaluate 3–4 plausible annexation scenarios (broadly described as north, east, south and a west/Interstate‑5 option) and return a financial analysis that lays out projected property‑tax and sales‑tax gains, the additional operating costs (police, public works, stormwater, street maintenance) and timelines for when revenues would begin to accrue. - New taxes / tax districts: staff should provide a 101 briefing plus a feasibility and revenue range analysis for (a) a citywide utility tax (options and rate ranges were discussed), and (b) project or area‑specific taxing districts (for example a parks/facilities district tied to DRCC or the South Town Center). The briefing should list allowed uses, governance forms and whether a public vote would be required. - Fees and new fee‑based services: finalize and present the pending fee study (benchmarked to neighboring jurisdictions), and identify fee‑based services the city could reasonably add or expand without eroding policy goals. - South Town Center: produce a back‑of‑the‑envelope scenario model now (not wait for a full economic impact study) that shows plausible tax‑revenue and timing ranges under several development assumptions so council members can compare this lever with others. - Attracting businesses / zoning gaps: identify high‑impact business types the city currently does not permit (or is losing to neighboring jurisdictions), and estimate the potential sales‑tax or employment impact of targeted recruitment or zoning changes. - DRCC (civic campus): council asked that DRCC be studied as a potential civic and revenue generator but cautioned many members that any revenue case is likely long term; one member of the public, Anna Skobiaski, said, “I think a civic campus at the DRCC is a fantastic idea.”

Council members emphasized that the analysis must distinguish short‑term measures (those that could move the needle within one biennium) from longer‑term strategies that take years to yield revenue. Several speakers urged that the general fund be treated as the priority lens for viability — for example, recurring general‑fund revenues should exceed recurring general‑fund expenses, reserves should meet a specified policy level, and general‑fund dollars should not be used to subsidize non‑general‑fund activities without explicit direction.

The council asked staff to return with recommended sequencing and an estimated calendar for deliverables and to present the materials in ways that allow the council to ‘‘stitch together’’ multiple levers (a short‑term bridge plus longer‑term growth measures) into a single financial picture.

What the council did not decide: No new taxes, annexations or bond measures were approved at the session. Members agreed only on study topics and on directing staff to develop the analyses needed for later decisions.

Next steps: Staff will prepare the annexation financial scenarios, a utility‑tax/taxing‑district briefing with revenue ranges and governance options, the fees study findings, a short‑form South Town Center model and a targeted business‑attraction analysis. Council members were asked to prioritize which three items they most want staff to investigate further; staff will return with a proposed schedule and recommended sequencing.

The retreat closed with an agreement to use the studies to craft a coordinated plan showing when each lever would be expected to affect city finances and how they add together to close the projected short‑term gap while supporting long‑term sustainability.