The city of Bellingham and Whatcom County Fire District No. 4 have struck a deal regarding fire coverage in the Dewey Valley and King Mountain areas, another step in the city’s annexation plans.

For the district, which covers approximately 44 square miles northeast of the city, the potential annexations mean the loss of approximately $115,000 of tax revenue — more than 10 percent of the department’s $1.3 million annual budget.

For a rural, volunteer-based district, that means drastic changes — either a cut in services or a tax hike for the remaining residents of the district, Fire Chief Bill McLaughlin said.

But an interlocal agreement signed Wednesday by district and city officials will give the district three years to rearrange its finances if the annexations are approved.

For those three years, the $115,000 in revenue from the annexed areas will be reimbursed to the district, though the Bellingham Fire Department will provide most fire and emergency response coverage.

District No. 4 will be responsible for responding with its tender trucks to provide water in the event of a structure fire, since there are no hydrants in the areas.

Bellingham also will cover approximately a dozen residences on Gooding and Frances avenues, even though they are north of the Bakerview annexation, since the homes are only accessible from annexed roads.

City Council member Gene Knutson called the deal “equitable for both parties,” saying it allows the district to “wean itself off” the tax revenue and that these deals are common when a city annexes surrounding areas.

“For rural fire districts, (annexation) would be very difficult without some sort of agreement,” he said. “That’s the nature of dealing with different governments. There has to be a certainty of funding.”

McLaughlin said the district would have liked more time in the deal, since the annexations mean major restructuring for the district.

If the annexations are approved, one of the district’s stations, 1295 E. Bakerview Road, would be outside its boundaries.

McLaughlin said the station “made a lot of sense” when it was constructed in 1974 to cover the areas between Hannegan Road and Meridian Street north of Interstate 5 and Mount Baker Highway. The district will have to look at relocating that station or building a new one if the annexations are finalized.

Bellingham Fire Chief Bill Boyd said he plans to add staff to the department’s outlying stations, including the Deemer Road station, which will cover the King Mountain and Bakerview Road areas if the annexations are approved.