The potential annexation of unincorporated territory in the Chehalis urban growth area (UGA) as been an idea kicked around for decades.
That is until 2025, when the Chehalis City Council made a number of moves to evaluate the possibility of annexing the entire UGA into the city municipal boundaries. Now, the council is weeks away from potentially voting to officially declare annexation.
In Chehalis, annexation may take a number of forms as there are numerous different factors that will dictate how the action moves forward. The most notable of these factors is the potential merger of the Chehalis Fire Department, the Lewis County Fire District 5 and Lewis County Fire District 6.
In order to understand the specific impacts of potential annexation in Chehalis for both affected residents and city staff, a breakdown of the basics of annexation is necessary.
What is annexation?
Annexation, in this case, is the process of bringing land outside of city limits into the municipal boundaries. If the Chehalis City Council decides to move forward with annexation, affected residents in the UGA would be considered residents of the City of Chehalis. Each residence would receive a notice of annexation if the move is approved.
The City of Chehalis began negotiations regarding the possibility of annexation with Lewis County in the spring. Each jurisdiction has received public comments about annexation, including most recently at a joint public hearing on Oct. 20.
The urban growth area
Chehalis city staff have yet to conduct a census to determine the exact population of the UGA, but City Manager Stacy Denham estimated in September that the city’s population would grow by approximately 2,200 to 2,500 residents.
The city’s comprehensive plan update included in its Nov. 3 special council meeting agenda packet states that an estimated 2,044 people live in the approximately 3,634 acres of the UGA, bringing the city’s combined population to 9,444 if annexation is approved.
An updated map shows the proposed annexation area. A patch of land north of the Yard Birds Family Shopping Center and a very small section north of Northeast Kresky Avenue along Salzer Creek are included.
Another small section of land down south near the Chehalis River and Lintott/Alexander Park is planned for annexation. The largest section of the current UGA planned for annexation is heading southbound on Jackson Highway down near the Newaukum River.
Denham said that some “cleanups” will happen during this annexation and potentially next year. Some areas, he said, should have been included in city limits but were missed, including half lots. While those “cleanups” would have to go through the annexation process with council discussion and public hearings again, Denham said very few residents, if any, would be impacted.
“It’ll be very, very small and probably won’t impact anybody. I’m certain that people who have property don’t want their property half in and half out. We’re just cleaning that up,” Denham said. “If where they’re supposed to be is out [of city limits], then they’ll be out. If they’re supposed to be in, they’ll be in.”
A complete list of the affected sites is included from pages 97 to 119 of the city’s Oct. 20 joint public hearing agenda packet at https://tinyurl.com/yc7zxprc.
Changes for annexed residents, businesses
The exact impacts for UGA residents preparing to be city residents are not universal. Changes will be dependent on where one lives within the UGA and the services they currently receive.
The potential merger of the fire departments is another factor, as well. All of these factors are why Denham has explained at multiple council briefings that any numbers he provides are estimates because actual numbers can vary with so many moving parts.
Water services will not look the same for every affected residence. If a new development is going to be put in the current UGA, the development will be required to hook up to city water or the city sewer system and would be responsible for the costs associated.
The majority of UGA residents have one of four water setups: city sewer, city water, Lewis County Sewer District 4, and private wells or other options not using city sewer or city water.
A residence with a private well or septic tank will only be required to hook up to city water or city sewer if their system fails and they live within 200 feet of an existing line. For those not using city water, sewer or wastewater services, they will no longer pay the county’s road tax but will instead be paying city tax. Additionally, after Jan. 1, 2027, they wouldn’t pay the county’s fire and EMS levy but would pay the city’s levy. If a residence is solely using city water, their price will go down 10% on the water and they would not have to pay the county road tax or the county levy after Jan. 1, 2027, either.
If a residence just has city sewer, their price will drop 30% and the tax avoidances apply. If a residence has both city water and sewer, their sewer price will decrease by 30% and their water rate will drop 10%, with the tax and levy factors applying.
Denham said Lewis County Sewer District 4, which includes about 1,100 hookups, wants to be annexed and would be included if the council approves annexation. For residences in Sewer District 4, rates may differ. If a residence is within the sewer district and has city water, their water rates will decrease 10% but their sewer rate will likely increase once the annexation goes through. In the case of a residence within the sewer district not having city water and opting for a private well, their sewer and wastewater rates will likely increase and they can maintain their well unless it fails, in which case they would be required to hook up to city water.
“The City of Chehalis currently is the one that maintains their system now. It’s not a huge annexation for us, but we would take in those people and the people in that sewer system,” Denham said of Sewer District 4. “There are some businesses, but mostly residences that are currently in Sewer District 4. In all transparency, once that’s taken in, then the people who are paying really low rates in Sewer District 4 will have to be brought up to the city standard for using the wastewater system like everybody else.”
One resident at the city and county joint public hearing asked about the capacity of Sewer District 4’s system and if it could handle the additional hookups. The City of Chehalis currently has a contract with the sewer district, where the district has purchased into the city’s wastewater facility and how much it can use. According to Denham, the sewer district is currently maxed out on how much usage it has of the wastewater facility. However, its system can take in another 1,000 hookups.
“It’s maxed out for what it can do right now, but once it’s taken into the city, we now can utilize that for an additional 1,000 hookups,” Denham said. “That’ll cover a big chunk of the annexed area, but most of that is all south.”
Businesses will be minimally impacted by the annexation, depending on the kind of business. For retail or point-of-sale businesses, they will continue to abide by sales taxes, but annexation would mean the City of
Chehalis would receive a small portion of the sales taxes coming from those businesses. Property taxes would remain the same for businesses, Denham said, while businesses would likely see savings in wastewater and water rates.
However, once annexation goes through, the city would impose a property tax of $1.20 per $1,000 of property value that would be applied to the annexed area. If annexation is approved, Lewis County’s road maintenance tax would go away for UGA residents, according to Denham.
Fire and EMS services
The City of Chehalis Fire Department, Lewis County Fire District 5 and Lewis County Fire District 6 formed a cooperative interlocal agreement (ILA) committee to develop draft ILA terms for consolidation of operations between the three agencies. A merger has not been made official, but the intent of the agency cooperative planning is to explore the possibility of a potential merger in the future.
The annexed area includes the coverage areas for all three fire departments. However, a merger between the three departments is not required for the City of Chehalis to annex its UGA.
If the departments choose not to pursue a merger in the future, the Chehalis Fire Department would have to supply services to the annexed area, which would start Jan. 1, 2027, assuming annexation is approved by the city council.
In the event that a merger doesn’t take place, the city would have to put in a south precinct and a substation in the area to improve response times for emergencies. An additional firehouse may be required as well, and approximately seven additional firefighters would be required.
Although the city would be able to handle the costs of those impacts, Denham hopes it doesn’t get to that point and sees the future merger as the best option moving forward.
“We do have the means to do it, although I’d rather not spend that money because I don’t like spending money when we actually have another option,” he said. “I don’t want to burden any of those community members to help pay for something when there’s another potential solution that’s pretty close to free.”
Another reason Denham advocated for the merger is that annexation would result in significant hits to the revenues of Lewis County Fire Districts 5 and 6. In rough numbers, he estimated that District 6 would lose somewhere in the ballpark of $700,000 to $750,000 of its current $2.5 million budget. District 5 would lose roughly $500,000 to $550,000 of its current $2.8 million if annexation goes through.
“If we merged everything, in all, we would actually save our community money and potentially provide a better service,” Denham said.
Denham added that Chehalis Fire Department currently employs 14 firefighters with a goal of getting to 16. Lewis County Fire District 6 has 10 firefighters, and District 5 has 11. If the three agencies merged, the combined department would have nearly 40 firefighters.
The fire and EMS levies will also come into play with annexation. If the departments choose not to merge and annexation takes place by Jan. 1, 2027, the fire districts’ levies within the annexed area would be replaced by the Chehalis fire and EMS levy, which is up for renewal next year.
If the council votes in favor of annexation this month, there would likely be a period where the city has to increase its own fire and EMS services anyway just because the joint operations or merger haven’t taken place within the fire departments yet.
Denham said the city should be able to handle those costs and can support the community regardless of the fire departments’ decision.
“As far as I’m concerned, what I have to do as my required duty is to ensure that if we annex, no matter what decision they make, the City of Chehalis is ready to step forward and take care of the community that we promise that we’re going to serve,” he said. “If annexation happens, we are in a position to take care of that community, and if the merger occurs, great. We will support it 100%.”
Why annex the whole UGA?
Commenters during the joint public hearing asked why the city is deciding to annex the entire UGA rather than in small portions, casting doubt as to whether the city had the capacity to handle more than 2,000 new residents all at once.
Denham said the city has to bring in a variety of areas, including areas that bring in sales tax revenue, features residential areas, warehouses and other structures to create “equal portions.” Responding to some comments about the move to annex being just a “money grab” by the city, Denham noted that the move would only be a “money grab” if the city exclusively chose to bring in areas that would bring in tax profits for the city.
Additionally, each time annexation is on the table, no matter the scale, city staff time is used. By pursuing annexation of the whole UGA, minus the couple “cleanup” spots, city staff time is saved.
“Am I being the best steward of the public’s money by making it convenient for everybody else to take in these three or four sections, or do I pay one time, do it in one shot and be done?” Denham said. “It makes sense with the developers, the community members, the sewer district, the Port of Chehalis, with everybody. It only makes sense to do it all in one shot.”
Costs and revenues for the city
Denham estimated during the Oct. 13 council meeting that the city, without the fire and EMS levy revenues, would receive about $1.8 million in revenues from annexation. The levy, which would kick in in 2027, would boost the total revenue to $2.2 million, and stormwater funds would increase it another $500,000.
Total expenditures, dependent on the hiring of firefighters, would be about $1.67 million.
For more information on projected costs and revenues, visit previous Chronicle reporting at https://tinyurl.com/4zz7dx87.
What’s next
The Chehalis City Council hosted an annexation workshop on Monday, Nov. 3 and will likely proceed with a vote on first reading on Monday, Nov. 10 before the second and final reading and vote on Monday, Nov. 24.
