There are two ways by which the boundaries of a public hospital district may be shrunk: (1) the withdrawal of territory, and (2) dividing a district into two smaller districts. This section describes the procedures for withdrawing territory.

A graphic representation of the withdrawal of territory is the following:

There are two practical reasons to consider withdrawing territory currently located in a district. First, it may permit the district to avoid the proration of its regular property taxes. (The negative effects of prorationing are described in Chapter Four, “Property Taxes.”) Second, territory may be withdrawn simply because the district cannot, for some reason, adequately serve the needs of the persons residing in that territory.

Also, keep in mind that a district may reannex territory previously withdrawn. [See “Expanding A District: Reannexation” above.]

The procedural steps for the withdrawal of territory are detailed in RCW 70.44.235 and explained below.

The withdrawal of territory from a public hospital district is authorized upon the passage of two (2) resolutions. The first resolution is passed by the district commissioners. The board must adopt a resolution that: (1) finds that inclusion of this area within the public hospital district will result in a reduction of the district’s tax levy rate, and (2) formally requests the withdrawal of that area.

The second resolution that must be passed must come from either one of two legislative bodies:

• Resolution by Appropriate City or Town Council (If Any): If the area proposed to be withdrawn is located within a city or town, the council of that entity must also adopt a resolution approving the withdrawal.

• Resolution by Appropriate County Legislative Authority (If Any): If the area proposed to be withdrawn is located outside of a city or town, the legislative authority of the county within which the area is located must approve the withdrawal of the territory by resolution.

After the series of two (2) resolutions is adopted, the withdrawal is effective at the end of the day on the thirty-first day of December in the year in which the adoption of the second resolution occurs. For purposes of establishing boundaries for property tax purposes, however, the boundaries are established immediately upon the adoption of the second resolution.

The withdrawal of an area from the boundaries of a public hospital district does not exempt any property in that area from taxation for the purposes of paying the costs of redeeming any indebtedness of the public hospital district that existed at the time of the withdrawal.