Snoqualmie mayor, tribal chairman spar over House bill

HB 2230 would amend tribal property tax exemption.

The Snoqualmie Tribal Council Chairman Robert de los Angeles has requested a formal apology from city of Snoqualmie Mayor Matt Larson over emailed remarks to state elected officials.

A state House bill that amends property tax exemptions for off-reservation tribal properties has passed the state House. The topic has been a point of contention for the city of Snoqualmie for years.

Larson sent an email Jan. 7 to state senators and representatives urging them to join the city in opposing House Bill 2230 as well as Senate Bill 6080. He copied members of the Snoqualmie Tribe on the email as well as various community members, city councilmembers, city staff, county representatives and regional officials.

The mayor noted many areas of concern for the city regarding tax exemptions for off-reservation tribal properties, however in a letter responding to the email de los Angeles noted inaccuracies and inflammatory language in the mayor’s statements.

Larson remains unapologetic.

HB 2230 passed 83-13 in the state House on Feb. 13. At the Senate, it was in committee as of the Feb. 17 print deadline.

The bill removes the expiration date for property tax exemptions on off-reservation tribal-owned property used for economic development purposes. It also expands the property eligible for exemption by eliminating a purchase date restriction.

Currently, the economic development property tax exemption is set to expire in 2022. The exemption additionally only applies to off-reservation properties purchased before March 1, 2014.

In 2014, the state passed Engrossed Substitute House Bill 1287 (ESHB 1287). The bill expanded the types of tribal properties eligible for property tax exemption to include off-reservation land used for economic development. Property owners, instead of paying property taxes, negotiate and make a Payment in Lieu of Tax (PILT) to the county in which the property resides. Some of those funds then are redistributed to the city in which the property is located.

Larson’s original message

Salish Lodge Spa on Feb. 19, 2020. Natalie DeFord/staff photo

Salish Lodge Spa on Feb. 19, 2020. Natalie DeFord/staff photo

In an email, Larson voiced concerns about a potential shift in property tax burden and implications to local economies across the state.

He invoked, to everyone CC’d on the email, recent history and “significant controversy” regarding the passage of ESHB 1287. He said the controversy was “significantly mitigated” by the amendment that restricted exemption eligibility to properties purchased before March 2014.

“You may also recall that the city of Snoqualmie strongly opposed this legislation as unfair and inequitable since it allowed for wealthy tribes to shift property tax burdens onto the poor, those with low income and competing (less wealthy) businesses,” Larson wrote in the email.

The city of Snoqualmie succeeded in filing suit against King County and challenging ESHB in Superior Court, stating that the PILT was nonuniform and unconstitutional because tribes get to negotiate the rate of payment. But the city later lost at the State Supreme Court and the law was upheld.

Larson addressed the current situation with the Salish Lodge and Spa (Lodge) in his email.

The Snoqualmie Tribe purchased the Lodge and surrounding property in fall 2019 from the Muckleshoot Tribe for $125 million. The Tribe not only secured some of its most sacred land but also put an end to the Salish Lodge and Spa expansion plan, a development that the Tribe petitioned against for years.

Since the Lodge purchase came after 2014, the property does not qualify for the property tax exemption under current state law.

“Consequently, and as feared, we just learned that the Snoqualmie Tribe has successfully lobbied the Legislature to advance HB 2230 and SB 6080,” Larson wrote in the email.

“These apparent ‘minor’ amendments would pose a significant threat to retail and commercial properties in every city throughout the state,” he continued in the email. “Hundreds of millions of dollars of current retail and commercial revenue could ‘shift’ onto all other property tax owners in all our cities. I believe this to be a fundamental threat to local sovereignty and fiscal sustainability. Please note that the Snoqualmie Tribe did not consult with or inform the city about these proposed amendments.”

Tribe’s response

On Jan. 10, de los Angeles sent a letter via email back to all who were on the original email on behalf of the Tribe.

The letter was provided to the Record by Larson. In the message, which is three pages long, de los Angeles requests a formal apology from Larson and addresses particular aspects of the latter’s original email.

In the letter, de los Angeles wrote that Larson’s message was offensive, sent without any prior discussion with the Tribe and, “filled with inaccuracies and fear-mongering that are damaging to the diplomatic civic discourse we would like to foster with our governmental partners.”

De los Angeles also wrote that it is not unique from past interactions with Larson.

“This ugly letter is consistent with the disrespectful and panic-stoking tone of much of our communications with Mayor Larson over a period of years, so perhaps it is a healthy opportunity for us to shine a light on the inappropriate manner with which his office approaches tribal issues, and to call on our other partners to foster a more progressive, mature and appropriate dialogue,” de los Angeles wrote in the letter.

“The disrespect the mayor showed by writing this inflammatory message to countless distinguished recipients accusing the Tribe of intentionally hiding our legislative advocacy — without once contacting us — is embarrassing for an elected official in 2020,” he continued.

De los Angeles wrote that the accusation of the Tribe lobbying in support of the bills was false and that many of them had not heard of the proposed amendments before the mayor’s message. He also called out some the mayor’s use of language, particularly Larson’s reference to “local sovereignty.”

De los Angeles also noted the mayor did not mention the PILT paid by the previous tribal owners of the Lodge, or that those owners did not pay normal taxes. Additionally, he said the mayor and the city have no right to tell the Tribe what to do with their affairs.

“The mayor’s groundless fear-mongering about Native American nations conspiring to remove ‘hundreds of millions of dollars of revenue’ is the sort of panic-stoking rhetoric that would be explicitly called prejudiced if it were directed at any other community of color,” de los Angeles wrote, calling on the other email recipients to condemn Larson’s language.

De los Angeles said the language is more offensive in the context of the city having supported the Salish Lodge and Spa expansion plan despite the Tribe’s, “passionate and longstanding opposition.” He said the project would have, “desecrated our sacred burial grounds beside our Tribe’s most sacred site, Snoqualmie Falls.”

Snoqualmie Falls and the Salish Lodge Spa on a sunny day, Feb. 19, 2020. Natalie DeFord/Staff photo

Snoqualmie Falls and the Salish Lodge Spa on a sunny day, Feb. 19, 2020. Natalie DeFord/Staff photo

De los Angeles wrote that the Tribe’s only way to stop the development was to ultimately purchase the property themselves and terminate the development agreement, despite other extensive efforts through litigation and conversation.

“The Tribe’s purchase was motivated by spiritual and moral values, not business concerns — but we are viewed solely through a monetary lens by Mayor Larson,” he wrote.

De los Angeles said that rather than celebrate with the Tribe, like many others had, Larson, “has chosen to utilize this opportunity to attack us in this message,” focusing on financial fears.

“To call this culturally insensitive would be a grave understatement — he is slandering our Tribe because he is afraid he will not be able to profit sufficiently from inappropriately taxing our most sacred lands,” de los Angeles wrote.

He also said Larson’s use of the term “local sovereignty” was disrespectful and “an imaginary term used to undercut the meaning and sanctity of our Tribe’s actual sovereignty.” He went on to explain how sovereignty applies to their Tribe and not the city.

“The city of Snoqualmie is a local government within King County, the state of Washington, and the United States of America — it has no sovereignty, and no jurisdiction over us,” de los Angeles wrote. “To imply that ‘sovereignty’ is shared by our Tribe, which has existed since time immemorial, and the recently established small town government that has adopted our Tribe’s name, is cultural appropriation and historical erasure at its worst.”

He went on to say that the Tribe is, “not another local business to be leveraged into sustaining the city of Snoqualmie’s budgetary decisions.”

“We are a sovereign Nation — and our Tribe’s courtesy and patience in diplomatically humoring the mayor’s pretensions have unfortunately misled him into thinking we can be publicly maligned and bullied,” de los Angeles wrote. “We hope this letter draws a clear line in the sand that we will no longer abide by this type of damaging rhetoric or be silent about the treatment we receive from the mayor’s office.”

He concluded by saying that after reviewing HB 2230 and SB 6080, the Tribe will approach the topic with a focus on defending its sovereignty “from the interference and greed of any local government.” De los Angeles said the Tribe would soon issue a statement on their position and would meanwhile bring public any further attempts from the mayor or the city to leverage the Tribe or to sway their position.

“Hopefully, we can move forward in the near future after this episode has been appropriately addressed, and we can all work together on the basis of respecting the unique history, rights, and jurisdictions of all the governments that work together to make Washington State a better, healthier and happier place for all of its Peoples,” de los Angeles wrote.

Larson unapologetic

Larson responded to de los Angeles’ letter over email on Feb. 7. He said his staff did not see it until Feb. 5.

“I believe the intimidating, profoundly disrespectful, hyperbolic and caustic response largely speaks for itself,” Larson wrote in response.

He said he did not accept the Tribe had been unaware of the proposed bills, recalling previous conversations. Larson also called it “reckless” to classify a business operation as government, noting every nation consists of government, private businesses and nonprofit functions. He said, for example, that a hotel or casino operation is not a local government but rather a “private business enterprise overseen by a local tribal government.” He argued that those business enterprises do not need protection from “tribal nations…being inappropriately taxed” because it is the business and not the nation that would be taxed.

“To treat all tribal sovereign nation activity as ‘government’ activity is disingenuous and dangerous,” Larson wrote. “I stand by my former comments. As a duly elected mayor of a community of 14,000 citizens, I reserve my right to petition my state elected officials to protect the interests of my citizens.”

Larson again expressed concern over property tax burden shifts onto residents and small businesses who do pay property taxes.

In an interview with the Record, Larson said he does not think his original message was offensive, nor his reply. Rather, he thinks that advocating for an equal playing field — not allowing any parties to have large, wealthy business ventures without having to pay property taxes — is about equality.

Larson said he does not regret his original message and intentionally used the word sovereignty “with a small ‘s’” to get people’s attention. He said that he used the familiar term to convey his concerns.

Larson said in 2014 most people’s fears surrounding ESHB 1287 were about a loss to cities, but he is more concerned about residents and small businesses. He explained that the city still will collect the same total amount of property tax revenue regardless. What could happen instead is some residents may pay a larger share, if some properties become exempt, since fewer parties will split the total tax burden.

He said the PILT was the “sweetener” that made most cities “okay” with ESHB 1287, since in many cases cities receive the same amount of revenue or more. The 2014 date restriction also minimized the impact on many cities. But in the city of Snoqualmie, they have the Snoqualmie Tribe in their community and the Lodge was then-owned by the Muckleshoot.

“We were having to work with and respond to the needs and issues of both Tribes,” Larson said.

Each year the city can take the total amount of property tax collected from all the properties in the city and increase that total amount collected by up to 1 percent, according to state law. The new total then gets averaged out and distributed, with different properties paying different amounts based on their property value.

Snoqualmie is a city largely dependent on property taxes, since there is not a great deal of commercial activity. Since state law only allows for up to a 1 percent increase on the total levy amount, he said the city can’t keep up with inflation. But still, the city is pressured to provide the expected level of services.

“The puzzle is trying to keep the burden on taxpayers as low as possible while at the same time providing the level of city services they expect,” Larson said.

The city’s goal is to diversify revenue, thus relieving some tax burden from residents, by drawing more funds from retail and commercial activity. He said that is why proposed developments, like the Mill Site Property and the Salish Lodge and Spa expansion, are so important.

Larson said the more long-term threat now if the date restriction is removed is that any property could be subject to tribal purchase and exemption. He said it would be a shame to spend years on a development project, to bring revenue diversification, only to have a tribe buy the retail property and apply for exemption so there is a further shift onto property taxes.

“It sort of makes you think, ‘Well why did we trouble ourselves with all of it to begin with if the burden is still going to fall on property taxpayers?’ It’s completely undermined a decade’s worth of work, and it upends our ability to do planning because there’s no way to predict if suddenly a property could get bought out,” Larson said.

Larson said one could argue that the city is likely to get another PILT if the Tribe applies for Lodge property tax exemption, but he’s concerned about properties across the state and being able to plan as they grow and aim to diversify revenue sources.

“I think it has a potential corrupting influence on the politics and the business environment of Washington state,” he said, speculating that private developers may take interest in partnering with tribes to develop large projects and evade some tax costs.

“I think it’s extremely alarming and yet little attention is being given to it,” he said. “There’s something kind of scary going on here, folks, and no one’s really paying attention to this.”

Larson said he understands that for tribal communities in distress being exempt can help provide jobs and strengthen the economy. But in the case of the Salish Lodge, he said no one could reasonably argue that the exemption is the only way they are able to operate.

Sightseers at a Snoqualmie Falls viewpoint adjacent to the Salish Lodge Spa on Feb. 19, 2020. Natalie DeFord/staff photo

Sightseers at a Snoqualmie Falls viewpoint adjacent to the Salish Lodge Spa on Feb. 19, 2020. Natalie DeFord/staff photo

Larson said that when the city had previously challenged the law, they felt there were two aspects that were unconstitutional: the universality clause of the bill and how tribes get to negotiate their PILT amount with the county.

“[Tribes are] obviously given a special status if they’re within a sovereign nation within the boundaries of a reservation, but to come outside that reservation and into any other jurisdiction of a city or county and be able to play by a different set of taxation rules we thought was unconstitutional,” Larson said.

He also said he thinks legislators are hesitant to address the issue because they are afraid of the repercussions, as demonstrated by the tribal letter.

“I don’t think my tone is nearly as strong or disrespectful as they suggest, but the hyperbole with which they respond, I think is indicative of the way that legislators and others will be treated if they stand up to or oppose tribes,” he said. “They tend to do this sort of over-the-top hyperbole response to something we said where no offense was intended.”

In regards to “local sovereignty,” Larson said he wanted, “to get everyone’s attention to sort of say, ‘Hey, these kinds of actions and regulations and laws are going too far.’”

“I get that everybody’s trying to redress the crimes and the injustices that were inflicted on tribes going back for the last century or more, but there’s got to be a balance,” he added.

He said the city is tasked to attend to the safety and welfare of its residents, but it can get complicated.

“How can I do that when they give another nation the ability to profoundly disrupt our ability to govern our own affairs in a local community, outside of that sovereign nation’s jurisdiction and boundaries?” he said. “They’re saying — not only will we give you all of these independent sovereign rights within your nation, but now we’re going to give you a bunch of rights to go into the jurisdiction of another local government and tamper and play with their rules … or play by a different set of rules.”

“This is, frankly, I think, unfair and not representative of my local community,” he added.

Larson said it shouldn’t be offensive to anyone that he would petition his state officials in the interest of his residents and he wouldn’t be offended by the Tribe doing so.

He said he remains hopeful that with time and further dialogue, the two governments can come to a solution and work together. Larson mentioned examples of successful intergovernmental work in the past, including the Tribe’s recent $1 million contribution to the state for state Route 18 safety improvements.

Bill testimony

In a statement emailed to the Record, Rep. Debra Lekanoff, D-Bow, who is a sponsor of HB 2230, said, “I honor the sovereign relationship between Washington state and Washington tribes, and will continue to support relationship building and actions that sustain our economies and communities.”

At a Jan. 16 House Finance Committee public hearing, several people testified both for and against the bill. Supporters said it is a tax equity issue, since other governments do not pay property tax. The opposition cited indeterminate economic impacts and said counties rely on property tax revenue.

Colville Business Council Chair Rodney Cawston testified on behalf of the Colville Tribes, stating the bill would complete work started in 2004, putting federally recognized tribal governments at the same level as state and local governments in regards to the, “essential governmental service of economic development.”

He said that in Eastern Washington, particularly where the Colville Reservation resides in Okanogan and Ferry counties, economic challenges are well documented.

“Those challenges have contributed to increasing numbers of Colville tribal members moving away from the reservation. Without access to economies that support employment, that trend is likely to continue,” he said.

He also said eliminating the 2022 expiration, that discourages people from applying for the exemption, would decrease uncertainty and help Tribes with planning future investments. He noted that PILT and other agreements are a better tool to make sure Tribes are provided with services they need while also providing funding to other local governments needed to provide those services.

Anita Mitchell, Muckleshoot Indian Tribal Councilmember, echoed Cawston’s sentiment and said it has been an effort of the Muckleshoot Tribe for 15 years so they are ready to get it settled. She noted their large community impact.

“The Muckleshoot Indian Tribe takes great pride in the role we play in the state and the region. The Tribe has grown to become one of the largest employers in southeast King County and our economic impact of our business ventures is significant,” she said. “Through our charity fund and community impact contributions the Tribe provides almost $3 million annually to local governments, schools, churches and nonprofit organizations. In addition, the Tribe’s role as co-manager of the natural resources in this area benefits the entire region.”

She said for them, it is a tax equity issue.

“We really just want federally recognized Indian tribal governments on the same level as state and local governments when it comes to property taxes and the essential government service of economic development. We believe that sovereign government should not be treated differently from state and local governments when it comes to taxations.”

Like other local governments, Mitchell said the Muckleshoot Tribe provides essential services like education, health care and housing for its community.

“So we just wanted to have the same equal footing to keep providing for all of the communities that we believe in and we believe that HB2230 will remove uncertainty for Tribes as they seek to provide those essential government services by removing the expiration date on property tax equity,” she said. “In addition, the legislation will also remedy the unfair treatment that is currently in place by removing the arbitrary March 2014 ownership date that’s restrictive on economic development land. And finally this legislation will continue to protect state and local governments by maintaining lease hold provisions and the PILT provisions that were included in the 2014 legislation.”

Dylan Doty, who also testified on behalf of the Muckleshoot Tribe, said only three tribes have been able to use the exemption due to the March 2014 purchase date restriction – the Muckleshoot, Puyallup and Suquamish Tribes.

Mellani McAleenan testified on behalf of the Washington State Association of Counties, stating she was, “in the unfortunate position of being in opposition to this bill.”

She said counties have limited resources and a specific set of obligations they have to fulfill, both controlled by the state, with no real ability to raise funds on their own. Therefore, she said they rely on property tax revenue, already limited to increasing 1 percent per year, and councilmembers and commissioners are typically worried whenever property tax is discussed.

“In this instance, adding to that existing level of concern and caution, you have a great fear of the unknown,” she said.

She said she found it difficult to find any data on how this is working from the three counties where this is happening. She also said tribal PILT negotiations are kept confidential.

“So it’s not really easy to be able to tell the other 36 counties what this will look like for them,” McAleenan said.

She also said the bill is premature because a factual report is due for December. With that, and the sunset set for 2022, she said they have some time and they’d like to see the decision put off until next year so more data gathering can occur.

With the elimination of the purchase date restriction, she said things would be more open-ended as it could affect any property owned by a tribe for economic development now or in the future.

“When you combine all of that together you end up with a great level of concern from those counties about potentially losing a revenue source that is by far their biggest source of revenue,” she said.

She also stated that the bill saying this brings tribes to the same conditions as other local governments is a bit of a “misnomer” to an extent.

“When we’re talking about treating all governments equally, county governments don’t operate retail establishments in the same way that’s being discussed here with economic development. They don’t operate hotels, they don’t operate gas stations, or restaurants or anything like that,” McAleenan said. “So they don’t have that same aggressive economic development strategy that you see with the tribes.”

Candice Bock with Association of Washington Cities said she shared McAleenan’s reservations about the unknown nature of potential impacts. She also expressed concerns about how city projects could be affected. She said cities appreciate the PILT but would like to be more involved.

“This obviously has a big impact on more than just counties — it’s the cities in the counties as well and perhaps other taxing districts. We would like to have a seat at the table in those negotiations,” Bock said. “Given that usually if a city is impacted by a project the impacts may be large, we think that they should be part of those negotiations and those impacts being considered by the county.”

“So we’d like to be part of that process, at least consulted in it, not just waiting to see how it works out and getting whatever information we can,” she added.

Primary bill sponsor Rep. Mia Gregerson said, “Washington State has tried to make our tax system more fair for our federally recognized tribal governments since 2004, which is 16 years ago, and in 2014 we made major, significant change, but it had an expiration date. So this gets rid of the expiration date and we’ve had eight years to really see what’s happened and I know that you heard today about the fiscal impact, it’s indeterminate, but I think it’s pretty safe to say that the three counties that had negotiated the PILT with a tribal government came out in a positive. There are no complaints and it feels like it’s the right thing to do. This is a tax equity issue.”

The state legislative session began Jan. 14 and will conclude March 12.

By print deadline, the Snoqualmie Tribe had not yet responded to multiple requests for comment from the Record.

Hannah Saunders contributed to this article.