Community Government Health & Wellness

Voters to weigh pocketbooks, performance in PenMet taxing measure

Editor’s note: This story has been updated since it was first posted. It now includes additional responses from PenMet to statements made by opponents of the lid lift, specifically about overtime costs associated with the end of the parks host program. It also clarifies that the state Auditor’s Office issued a “finding” in a PenMet audit, instead of saying PenMet “failed” the audit; and that the district is the subject of a wrongful termination complaint before the Equal Employment Opportunity Commission, not a lawsuit.

PenMet Parks has placed on the ballot a measure to again raise the state lid on property taxes it can collect.

A proposition on the Nov. 7 ballot seeks to restore the district’s property tax levy rate to 75 cents per $1,000 of assessed value in 2024 and allow increases of up to 6% for the five succeeding years.

Though levy lid lifts are convoluted workings, financial impacts can ultimately be projected. Residents must then synthesize the numbers with their value of parks and recreation and confidence in PenMet’s ability to deliver them.

The numbers

$0.75 — Local residents voted to create Peninsula Metropolitan Park District in 2004 and pay 75 cents per $1,000 of assessed property value to fund it.

1% — Washington voters approved Initiative 747 in 2002 to restrict junior taxing districts to collecting no more than 1% more in property taxes than in the previous year, plus new construction.

Among projects tackled with the 2017 lid lift was returfing the multiuse field at Sehmel Homestead Park. Vince Dice

6% — Initiative 747 allows districts to exceed the 1% state lid via a majority vote. Often, they raise the lid to 6% for six years, as PenMet did beginning in 2018.

$0.58 — When property values increase to where .75 cents per $1,000 would push tax collections beyond the 6% lid, the tax rate must be rolled back to stay within the limit. PenMet’s rate fell to .58 this year.

$876,314 — Average price of a Gig Harbor-area home in 2023, according to the Pierce County Assessor, for determining 2024 property tax bills.

$144 — Cost to the average homeowner in 2024 to restore PenMet’s tax rate from $.58 to the full $.75 per $1,000.

$657 — The total PenMet bill for the owner of an average home in 2024, if voters approve the lid lift.

$17.7 million over 6 years

$17.7 million — Additional property tax revenues PenMet could collect over six years with a 6% levy lid lift, assuming a 2.5% annual increases in assessed value. Values fluctuate wildly in the Gig Harbor area, spiking 24.5% in 2022 only to plummet 0.8% in 2023. But Pierce County Assessor Mike Lonergan says 2.5% is a good guess. Values at 6% or more would generate $24.9 million; remaining flat would yield $15.5 million.

$1,424 — Total additional amount an average homeowner would pay in PenMet property taxes over the course of the new six-year lid lift.

80% — More than 80% of PenMet’s operating budget derives from property taxes.

The arguments

Three-person teams wrote statements for and against the measure in the Pierce County voters guide. The pamphlet will be mailed soon. In the meantime, it can be viewed on the county elections website.

The “for” group states that PenMet responsibly used funds from the levy lid lift that expires this year “to preserve land, modernize aged facilities, improve accessibility and increase programs.” A replacement is needed to satisfy a growing population. “Failure to restore this levy will lead to reduced park and recreation services,” it concludes.

Foes say lid lift not needed

The “against” trio writes that PenMet has not managed the funds responsibly and doesn’t need another lid lift. “A renewal? This is a tax increase!” they state. “30% in 2024. Possibly another 33% over 5 years. … PenMet is not disclosing the facts … don’t reward a lack of transparency. We value parks, but PenMet needs to get its house in order first.”

The “against” group states PenMet highlights tax rate while downplaying dollars. They acknowledge the rate fell from 75 cents to 58 cents during the current lid lift period. But tax collections increased each year as property values rose, from $4.4 million in 2017 to $8.4 million in 2023.

A similar scenario would play out with a new lid lift. Restoring the rate from 58 cents to 75 cents in 2024 would cost the average homeowner an extra $144, 30% more than reverting to a 1% lid. Tax revenue would climb each year from $8.4 million in 2023 to $14.6 million in 2029 — an increase of 74%.

PenMet’s Peninsula Gardens property has been sitting idle for years. It could benefit from a levy lid lift. Ed Friedrich / Gig Harbor Now

Inflation, for voters and the district

Household incomes increased only 35% since 2017, said Craig McLaughlin, a retired Fox Island attorney who headed the “against” statement-writing team. Food and gas prices rose. School and fire department bonds and levies already bumped up tax bills.

“At least look at affordability to taxpayers,” he said. “Just because the law says you can take up to this amount doesn’t mean it’s the right thing to do. When an entity has the ability to take money to a certain limit by law, it comes with the obligation to be open, honest, manage that money wisely and take into effect how that’s going to impact us.

“Every time you pass one of these lid lifts (the fire department passed two recently) you’re digging deeper into wallets than before. A smaller percentage of a much bigger number can give you a bigger product, and history proves that to be the case.”

If voters reject the lid lift and PenMet is limited to a 1% gain each year, its tax revenues would increase by just $511,000 over six years, according to its figures. That would be eaten up by inflation that has averaged 3% since 2004. The district would benefit from taxes on new construction that have averaged about 1.5% countywide in recent years, said Lonergan.

“The thing that bothers me is stating if they don’t get the lift, they’ll have to decrease the level of service and operations,” McLaughlin said. “Well, if income will be about the same as last year, why do they have to cut back what they do this year?”

The quote

The ”against” group offers a March 2021 quote from interim Executive Director Hunter George as evidence that PenMet doesn’t need another lid lift. George said: “The review of these (cash flow) scenarios shows the district is in a strong financial position. Even if voters do not renew the lid lift, the district expects to maintain a cash cushion that would enable other investments to be made in the system.”

George, now policy and government relations manager with Metro Parks Tacoma, doesn’t remember the study or the quote.

McLaughlin concedes that much can change in 2½ years, but if so, the public should be made aware.

Development of the community recreation center has changed PenMet’s needs. Courtesy of PenMet Parks

PenMet Executive spokesperson Zemorah Murray called the quote outdated and no longer relevant. The district underwent a transition the past three years as it emerged from the COVID pandemic and prepared to build and operate a $31.6 million community recreation center.

“Over the next six years, these levy funds would allow the district to fulfill the needs identified by the community in open forums and surveys during the development of the PROS plan, including access to trails, forests, saltwater shoreline and park amenities, programs for all and new recreation opportunities,” she said.

PenMet says it was a good steward of the $15.5 million it received from the 2017 lid lift that expires this year. It directed funds to community priorities such as: new lights and turf at Sehmel Homestead Park field; Arletta Schoolhouse renovation; buying the former Performance Golf Center and designing the community recreation center that will be built there; saltwater beach access and water-based recreation; acquiring 75 acres adjacent to McCormick Forest Park for conservation and trails; senior programs and specialized recreation.

Couldn’t sustain services without it

Without a new lid lift, PenMet says it couldn’t sustain parks and basic services at current levels or keep up with growth and community demand for more parks and programming. Capital investments would stall, resulting in a larger deferred maintenance backlog.

New lid lift dollars would allow it to: continue to provide clean, well-maintained, safe and secure parks; offer more high-quality programs for all ages and abilities, including free community events, senior programs, adult sports, youth camps and classes, teen programs, and programs for people with special needs; and improve undeveloped or underdeveloped parks like Peninsula Gardens, Maplewood and the Cedrona Bay boat launch.

Lid lift proceeds could go toward enhancing the Cedrona boat launch on Fox Island.

“PenMet is responsive to our community needs, providing growth and improvements to our parks and programs and meeting the needs our citizens,” said Heather Maher, the Swim Safe Gig Harbor co-founder who led the “for” statement writers. “For example, less than two years ago, there were no PenMet programs available to senior citizens. The request for senior programing was heard by PenMet and there has been almost 5,000 senior program participant hours this year. The 2023 renewal levy will provide up to 14,000 participant hours for senior programs in 2024.

Opponents question management

The “against” statement urges voters to hold PenMet accountable for irresponsible management and spending. It lists “child safety (rats, bats, mold), poor employee treatment, toxic culture, high turnover, unnecessary spending, massive debt, exorbitant consultant and legal fees. State auditors: ‘material weakness in internal controls,’ six-figure discrepancies in financials! Example: Peninsula Gardens suffers decline and neglect while PenMet looks to buy more! PenMet, get your house in order first!”

McLaughlin claims PenMet: is involved in a wrongful termination suit and is at odds with a contractor it fired for delays with CRC Phase 1; ended a park host program that he says cost about $12,000 a year and is instead spending around $60,000 in maintenance overtime to fill the role; and failed its last state audit, in which the auditor stated its internal controls were inadequate for ensuring accurate financial reporting.

“The bottom line is I’m not against a ‘yes’ vote, not against an informed vote,” McLaughlin concluded. “If we get the word out that revenues are going up dramatically, that there are management issues, and you vote ‘yes,’ God bless you. That’s democracy.”

PenMet says it isn’t involved in a wrongful termination lawsuit or any other lawsuit. The probationary employee who was fired for performance concerns filed an EEOC discrimination complaint, and the parks district is participating in the investigation. It said  fired Phase 1 contractor Grenlar disputes the termination and it has hired a replacement contractor to complete the unfinished and deficient work. Costs associated with the delay will be paid from the outstanding contract balance, Grenlar’s performance bond and liquidated damages.

Regarding the host program that was ended in 2021, PenMet says it has spent about $18,000 in maintenance staff overtime so far this year and only a fraction of that has gone to close gates each evening at the two Fox Island parks where it had been performed by hosts. Almost all overtime costs in 2023 are the result of vacancies. Maintenance department wages for 2023 are forecast to be at or below the budgeted amount by the end of the year. A new Teamsters Local 313 collective bargaining agreement stipulates that closing duties can only be performed by district employees or contractors, not by volunteers such as hosts.

PenMet states that it didn’t fail it’s last state financial audit but was issued a finding for inadequate internal controls for ensuring accurate financial reporting. The state simultaneously performed an accountability audit that found that “district operations complied, in all material respects, with applicable state laws, regulations and its own policies, and provided adequate controls over the safeguarding of public resources.” The financial audit was for the period from Jan. 1, 2019 through Dec. 31, 2020. Since then, PenMet has hired a new executive director and finance employees and addressed the concerns identified by the state auditor, it says. The audits can be viewed at https://sao.wa.gov/reports-data/audit-reports by searching for “Peninsula Metropolitan Park District.” The parks district board reviews financial reports each month and they are posted on the PenMet website.

More programs

Maher, the “for” statement writer, rebutted that: “The opposition presents misleading and out-dated information about current park and recreation funding needs. PenMet has been transparent about the needs for levy dollars going forward. This information can be found on PenMet’s website. PenMet is focused on the safety and security of our community and well-being of its employees.

PenMet has added much programming the past couple years for seniors like these pickle ball players at Sehmel Homestead Park. Vince Dice

The park district is accountable to citizens for its use of public dollars, Murray said. Its credit rating was upgraded in 2021 because of responsible planning and fund management. It increased its reserves 19% the past two years. And it secured more than $3 million in grants.

At the same time, it has grown its offerings. In 2010, for example, 474 people participated in its recreation programs. Twelve years later, the number had risen to 9,500. Senior programming went from zero in 2017 to more than 4,870 hours by the end of this year.

Community meetings being held

Murray claims the district had 14% employee turnover this year as compared to the national average of 47.2% in 2021. All staff members undergo mandatory annual background checks. Recreation staff must take child safety and protection, CPR, first aid, blood-borne pathogens, disaster/emergency response and anti-harassment training.

“I will say that I cannot imagine our Gig Harbor without PenMet Parks,” Mauer wrapped. “PenMet Parks has directly enhanced the quality of life for my family, and pours into the quality of life for all in Gig Harbor. The safety, health and vibrancy of our community is absolutely worth investing in, and I am so proud to support our town and families through supporting PenMet Parks.”

PenMet is hosting community meetings about the lid lift. The next two are from 1 to 2 p.m. Tuesday, Oct. 3, at the Arletta Schoolhouse; and from 6 to 7 p.m. Wednesday, Oct. 18., at Volunteer Vern Pavilion in Sehmel Homestead Park. The district also has a levy page on its website.