Washington communities have a new tool to stimulate economic development: tax increase funding. Sometimes called “TIF”, this mode of financing allows local governments to self-finance public improvements that encourage development without imposing new taxes. The 2021 Washington Legislature passed a TIF program and Governor Inslee signed it on Monday, May 10, 2021.
Under TIF legislation, a local government may designate one or two target areas for development, and may incur debt or issue general bond bonds to finance public improvements in the area or areas. Certain limits direct the development of the TIF towards areas in which infrastructure investments are particularly necessary. For example, the imposed values of designated TIF areas cannot exceed the lesser of $ 200,000,000 or more than 20 percent of the sponsoring jurisdiction’s total assessment. Thus, a local government must carefully demarcate the geographic boundaries of a TIF zone.
The legislation also sets requirements that can maximize the public benefits of FIT programs. A sponsoring government entity must hold public briefings and pass an ordinance that specifies the public improvements involved, and it cannot add further improvements after the ordinance is passed. The local government should expressly state that it expects the improvements to encourage private development that would not otherwise occur in the designated area. He should also find that the assessed value of the TIF zone will likely increase more with the improvements than without them, thus increasing the tax revenue generated in the zone. This revenue increase – the “tax markup” – is earmarked to pay or reimburse costs associated with public improvements.
Until the TIF legislation, communities in Washington did not have this funding source used by 48 other states and Washington, DC The city of Milwaukee, WI, for example, used TIF funding to redevelop an old yard that is remained vacant for 20 years. A TIF program financed the demolition, site remediation, improvement of stormwater and new roads, utilities and landscaping. As the light industry zone with over 60 acres of recreational space was revitalized, the development created 5,000 new jobs and increased property values by over 1,400%.
Washington’s new TIF legislation gives localities a new ability to renovate public spaces in ways that attract new development, eliminating a competitive disadvantage that cities in Washington previously faced compared to neighboring municipalities in Oregon and the United States. ‘Idaho.