Council directs staff to pursue annexation study to meet state sales‑tax credit deadline

Assistant City Administrator Harold and staff told the council Lynnwood faces a narrow window to capture a state sales‑tax credit tied to annexation. Harold said the state incentive can amount to a 0.2 percentage‑point sales‑tax credit for jurisdictions that complete qualifying annexations and that staff estimates roughly a 21‑month study and process window to meet the state deadline.

"It takes about 21 months in order to be able to, potentially explore and go through all of the paperwork and have an annexation plan," ACA Harold said, noting the city is about 23 months from the July 1, 2028 expiration for the credit and that piggybacking on Everett's consultant contract could reduce study costs. Staff estimated a study would range from about $100,000 to $250,000 depending on scope and whether Lynnwood can leverage Everett's procurement.

Councilors raised budget, staffing, police‑service and infrastructure questions and asked staff to explore cost‑share opportunities and the financial sensitivity of annexation scenarios. Several members said a study is necessary to determine whether economies of scale and additional sales tax would offset near‑term costs. Council directed staff to pursue the study and report back with funding sources and a proposed scope.