FREELAND — Although the city’s boundaries have been shrunk, supporters of Freeland’s incorporation say the loss of property taxes will not sink the new city’s budget.

The new boundaries of the proposed city of Freeland no longer include the Mutiny Bay and Menlo Beach neighborhoods. The loss of taxes from those high-value properties won’t spell doom for the new city, supporters said this week.

Dean Enell, chairman of the incorporation committee, said the loss of tax revenues will not be significant.

“Our biggest contributor is sales tax, and that won’t be affected at all,” Enell said.

Smaller tax base

The Island County Assessor had earlier estimated the 2008 property tax revenues for the proposed incorporation area at $680,870; property taxes are projected to increase to $785,750 in 2021. The study projects $690,000 in sales tax in 2009.

Financial data that was gathered for the new city will be revised to match the new, smaller boundaries.

“The net difference won’t be that great. There is a loss of income, but overhead costs will also be reduced,” said Chet Ross, chairman of the incorporation boundary committee and president of the Freeland Chamber of Commerce.

Although the total amount of property taxes will be lower, the cost of providing city services will also shrink.

“I don’t expect that the loss of income, versus expenses for the Mutiny Bay area, will have a significant impact,” Ross said.

Since the incorporation boundaries were pulled back to include only the urban growth boundaries of Freeland, authors of Freeland’s incorporation feasibility study are collecting new financial data.

The group expects to have an updated feasibility study in 30 days.

And with the county taking steps to formalize the Freeland boundary as a “non-municipal urban growth area,” the November vote that was planned to form the city will now be pushed off until next year. Ross estimates they will need about 90 signatures to get incorporation on the ballot.

Study offers details

The 46-page draft incorporation study is the culmination of two years of work and was prepared by a group of volunteers who support incorporation. They gathered data on Freeland’s economic base, potential growth, future design standards for new development and various other issues. The study also included a budget.

Gaining cityhood, supporters say, is the first step to guarantee that growth and economic development come without diminishing the existing quality of life in Freeland.

According to the study, the city will have an operating budget of $2.1 million and expenses of between $1.4 to $1.7 million. Those figures will be updated to match the new, smaller boundaries.

Cityhood proponents say the study shows that Freeland can become a city and should.

Controlling growth and maintaining the rural character of Freeland have been the main selling points for incorporation. Critics have said that once the town incorporates, farmland and other low-density properties can be developed at urban levels in the future.

The study says incorporation will give the city of Freeland “local control” over land use and development.

The study suggests building apartments and condos to increase the density of people living in the downtown area. It also suggests the expansion of the industrial area near Nichols Brothers Boat Builders.

“By developing in the core area, we can slow down urban sprawl in the outlying area thus, protecting the rural area around us,” said Ross.

Enell said he expects the city to be less aggressive than the county in zoning.

“The city would have a design review board that would affect what type of commercial development would be allowed,” Enell said.

Enell said the city’s zoning would differ from that proposed by the urban growth area study in some areas.

“We would review the industrial area they’ve proposed, more slowly upzone residential areas, create more urban reserve zoning and initiate design review for building within many of these zones, especially the commercial area,” he said.

“If Freeland remains an urban growth area and is not incorporated, the county is not going to entertain design review,” Enell said.

Freeland’s future as a city will depend on growth and planning costs to partially fund it, according to the incorporation study.

The city’s proposed operating budget is built on $372,000 in fees for development services and building permits. Development fees are the third highest revenue stream in the study’s proposed budget, after sales tax revenues and property taxes.

The study also suggests assessing impact fees on new development, although an exact estimate of potential impact fees are not included in the budget. Impact fees are paid by developers to lessen the strain on roads and schools by owners of new homes or businesses.

Dori Hallberg, a Freeland business owner, said it’s time to incorporate.

“It makes sense to keep our sales taxes here in Freeland,” she said.

Hallberg said a city government would give residents more say in local matters. “We need to establish our own identity.”

Through her business, Island Tea Company, she sees the increase in population.

People are going to need more services, she said.

Hallberg lives in rural Langley, but said Freeland is much more her neighborhood than Langley.

“I do my grocery shopping and banking in Freeland,” she said.

According to the incorporation study, Island County would continue to offer many of the services it provides now, even if Freeland voters decide to incorporate.

Cityhood supporters said the new city would contract with the county for police protection, and the county would also be hired to maintain and fix roads for one to three years.

Planning and building services would be provided by the city of Freeland. A rented storefront would likely serve as city hall.

Holmes Harbor resident Robert (Mac) McCloskey, who retired to the island four years ago, said he likes Freeland the way its is.

Like others in the established community of Holmes Harbor, he wants his neighborhood left out of the new city.

“Go ahead with incorporation but leave our community out of the boundaries,” he said. “We won’t see any benefit from the city.”

“I don’t have a problem with the services provided by county government,” McCloskey added. “Maybe some people do, but I don’t.”

Gayle Saran can be reached at 221-5300 or gsaran@south

whidbeyrecord.com.