A dispute over golf course water hazards is keeping the city of Sumner from cashing in on a multimillion dollar windfall and forcing the city to raise property taxes at a record rate.
The disagreement is also preventing construction of new industrial warehouses that could add hundreds of jobs to the local economy and millions of dollars of property value to Sumner’s tax rolls.
At issue are ponds on the city’s failed Sumner Meadows Golf Course, which the City Council decided to sell nearly four years ago. The city has lost money on the course, opened in 1995, for all but one of its 17 years as the golfing business saw flagging interest and rising costs.
“Sumner Meadows made money for the operator, but not for the city,” said Sumner communications director Carmen Palmer.
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When the city put the 150-acre course in the White River Valley on the market in 2013, some 30 potential developers expressed interest, according to brokers hired by the city. The winner of a bidding war was Iowa-based Principal Financial Group. Principal agreed to pay $57 million for the land, which the city had purchased in the early 1990s for $5 million. It also agreed to contribute $9 million to a bridge project that would have provided additional access to the tract.
Principal planned to market the land for warehouses, distribution facilities and light manufacturing.
“Our brokers told us that the course was the largest piece of available land left for development between the ports of Seattle and Tacoma,” Sumner City Administrator John Galle said.
But three years after Principal made its bid, the sale has yet to close. The legal status of several golf course ponds is standing in the way, according to the city.
Sumner officials say the Army Corps of Engineers, which has regulatory jurisdiction over lakes and rivers in the United States, contends those ponds originated from natural wetlands on the former farmland that was converted into the golf course. The city maintains those ponds didn’t exist until it created the golf course and built the small lakes to catch natural runoff and to provide decorative and competitive elements to the course.
If the Corps’ theory proves correct, Galle said, and the ponds are declared “waters of the United States” they will fall under regulation of the Clean Water Act, said the Corps.
If the developer wants to fill in the ponds, the city will have to mitigate their destruction, said Galle, by creating other water bodies elsewhere to replace them. Creating those replacement ponds elsewhere could be both time-consuming and expensive, Galle said.
“The general rule is that the replacements must be better than the areas that were filled in,” he said.
“We believe the Corps is basing its decision on incorrect information. We plan to submit additional information that supports our contention that there were no wetlands or ponds there before the golf course was built.”
Among the evidence: Aerial photographs of the area when it was a turf farm that don’t appear to show water bodies.
To keep the water levels in the golf course ponds at normal levels during the dry summer months, the city had to divert water from the flume that feeds nearby Lake Tapps. “The city has water rights on that source,” Galle said.
A Corps spokeswoman declined to comment on the dispute.
The disagreement has taken its toll on Sumner’s financial plans. The city had several plans for spending the sale proceeds, among them paying back the loans it had made from city funds to purchase the land decades ago and build the course. The state auditor has noted the city’s failure to repay the loans.
Sumner also had hoped to use the sale proceeds to fund its $5 million contribution to the construction cost of the Gordon Family YMCA in Sumner. That money had to be allocated from other city revenues.
Likewise, the city had planned to put some of the golf course money toward providing additional flood protection for industries in the northern part of Sumner near the White River. The city is studying how to provide that protection, possibly by rebuilding levies or buying land to serve as flood plain areas for the river at high flows.
The shortage of funds led the usually conservative Sumner City Council late last year to raise property tax collections from $1.2 million to $2.7 million. The increase helped drive up the average Sumner resident’s property tax bills this year by 10 percent or $271.50, the highest in Pierce County, according to Pierce County Assessor Mike Lonergan.
The council was able to boost property taxes so much because it had not raised tax collections by the full amount, 1 percent annually, allowed by state law in previous years. The city had banked those unused increases for future use.
“There’s no doubt that if we had closed that sale, we would have been able to impose lower taxes,” said Earle Stuard, a city councilman who heads the city’s finance committee.
Even after the large tax increase, Sumner’s tax rate, which jumped from 59 cents per $1,000 of assessed valuation to $1.22, remains below neighboring cities. Bonney Lake residents, for instance, pay $1.36, Puyallup $1.90, Edgewood $1.33, Auburn $2.05 and Fife $1.55.
In addition to undercutting Sumner’s financial plans, the delayed sale closure has cost the city potential jobs and tax revenues from the new businesses that would have been built on the tract. Principal had projected it would begin building on the land in early 2015 if the sale had closed in late 2014.
But the stalled sale isn’t all bad news for the city or its residents.
Although the former golf course is posted with “No trespassing,” the course’s cart paths are normally populated by locals walking, running or exercising their dogs.
The city isn’t actively enforcing the trespassing prohibition, the city administrator said.
Galle had no firm estimate when the land sale might close.
“I hope that we can soon work it out,” he said.
John Gillie: 253-597-8663