As part of an effort to help Flaura’s Acres homeowners association in Sequim update its failing septic system, City of Sequim staff have asked city councilors to consider adding a formal process to its city code to create Local Improvement Districts (LIDs) and Utility Local Improvement Districts (ULIDs).

The potential new districts could help neighborhoods finance, for example, road or sewer line extensions, and residents would work on an agreement with the city to pay it back rather than through a private loan.

Paul Bucich, Sequim’s Public Works director, said at the Aug. 11 city council meeting that Sequim’s Municipal Code currently doesn’t have a path to form and regulate local improvement districts, and to correct that staff proposed adding “Chapter 20.40 – Formation of Local Improvement Districts.”

City councilors agreed to add the new chapter in a 6-0 vote, with Mayor Brandon Janisse excused, for staff to bring back a resolution for inclusion in the council’s consent agenda on Sept. 8.

Bucich said that Local Improvement Districts are not common locally, and that city staff learned of the lack of city code from residents in Flaura’s Acres.

The 54 single-family development sits south of East Washington Street and East Hammond Street, and resides in unincorporated Clallam County.

If Flaura’s Acres has a Local Improvement District approved, project funds would go through the homeowners association to the city and then the county.

The homes could be eligible for annexation into Sequim with updates made to the sewer, water and roads.

According to city and county officials in previous reporting, the development’s septic conveyance system needs to be replaced, the drain field is failing with no backup, sewage is leaking into groundwater, and there are no hydrants for fire suppression.

“It’s the worst I’ve ever seen,” Bucich told Sequim city councilors earlier this year.

Flaura’s Acres residents have a sewer replacement design with funding through the Clallam Conservation District, and a loan through the Department of Energy with sizable forgivable principle.

Bucich previously said that the city wouldn’t have gotten involved, but the DOE loan cuts down the cost significantly for residents, along with additional funding sources and reduced fees through the city as the properties would be annexed into Sequim.

He said Sequim would in turn add more utility customers and accrue the development’s water rights.

Residents would also have lower water rates as they’d be city residents rather than out-of-city customers who pay 50% more.

Bucich said with the development in the Urban Growth Area, the project may need to go before the Clallam County Board of Equalization for consideration.

District creation process

To create a Local Improvement District in the city, a public hearing must be held either through the city council, planning commission, or a hearing examiner. The city council would make the final voting decision on any proposed district.

Bucich said staff recommended the planning commission to hold any public hearings as the requests will be rare and likely with little scrutiny as the residents will either be following city code, or not.

Using a hearing examiner could also be costly, he said.

Deputy Mayor Rachel Anderson shared a concern about the planning commission’s capacity to take on new duties, but Bucich said the commission would not see a request for several months as city staff are still awaiting an interlocal agreement from Clallam County officials about the project, and construction isn’t anticipated to begin until spring 2026.

A public hearing might also be needed if the city adopts a new fee for processing Local Improvement District applications/petitions, but staff report in Aug. 11 planning documents that it could be included in the city’s annual hearing for Rates and Fees during budget approval each November.

Staff report that if costs exceed the deposit, city staff can either require more funds to proceed, or include the additional costs in the repayment plan of the Local Improvement District between the resident(s) and the city.