County focuses on TIF opposition during community meeting

LAKE WENATCHEE — Chelan County leadership met with Upper Valley residents on Oct. 16 for the county’s annual fall community meeting. While speakers took some time fielding localized questions, much of the discussion centered on the county’s opposition to the Chelan Douglas Regional Port Authority’s consideration of a tax increment financing (TIF) district in Malaga. 

“It sounds like Malaga is far away. It sounds like this is not going to impact you. This is going to impact you,” said Chelan County Public Information Officer Jill FitzSimmons.

The Port is in pursuit of establishing a TIF district, also referred to as a tax increment area (TIA), in a roughly 3,300-acre portion of Malaga that encompasses the Microsoft development, incoming Helion fusion plant, and the former Alcoa plant.

In Washington state, a city, county, or port can establish a TIA to fund public improvements that spur private development. When formed, the current property value – the “base value” – within the TIA is frozen; property taxes on that base value continue going to existing taxing districts. As development increases property values, the additional tax revenue from the higher “increment value” is reinvested in projects within the TIA for a duration of 25 years.

The proposal has resulted in a public dispute between the county and port. In July, the Chelan County Board of Commissioners passed a six-month moratorium on any TIF establishment in the county; the Port filed a lawsuit challenging its enforcement.

“It will, in the future, benefit Chelan County. We don't deny that one bit. The commissioners are very concerned, though, because in the early proposal of this it's looking to take quite a bit of tax dollars that we're planning on using for our general fund in the future,” said Chelan County Commissioner Shon Smith.

During the community meeting, Smith and other county representatives explained the economic impact the TIA could have across the county, estimating roughly $200 million of property tax revenue being diverted from the county and local taxing districts, such as the County General Fund, NCW Libraries, Port Authority, County Road District, Flood Control Zone, and Wenatchee Valley Fire District over the next 25 years. County leaders cautioned that this loss could potentially lead to higher levy rates or future tax measures to maintain services.

The county also told constituents that more time was needed for it to complete the process of updating its Comprehensive Plan and Transportation Element, as well as establishing an urban growth area plan for Malaga.

Meeting attendees mostly asked procedural questions, including whether the TIF would require voter approval – which it does not – and how the public could provide feedback. Only one person offered an opinion, commenting that “it doesn’t sound like a fair deal.”

The Port has maintained that the financial tool is necessary to fund infrastructure improvements needed to support current and future growth in one of the region’s few remaining areas suited for large-scale industrial development. The Port anticipates that the investment would not only serve Malaga, but drive long-term economic growth throughout the county.

The Port said in an August press release that any revenue the county would forego under the proposed TIA would be offset by Malaga’s projected growth over the next 25 years. The release cited an estimated $150.8 million in sales tax revenue and $71.1 million in property taxes from new machinery and equipment, which would remain outside the TIA. The Port added that once the TIA expires, Chelan County could receive an additional $4 million or more per year from property taxes.

The Port has public meetings scheduled for Nov. 18 at 9 a.m. and Nov. 25 at 5 p.m. The Port plans to vote on the proposal on Dec. 9 at 9 a.m. All meetings will be held at the Confluence Technology Center.

“I would encourage all of you to go to these, if you're able to, and listen to what the Port is proposing, and hear their side of how this area is going to impact their finances, their plans, their dreams, the mission that they're on, and the area that we're talking about out there in Malaga,” said Smith.

Taylor Caldwell: 509-433-7276 or taylor@ward.media