Malaga tax-increment proposal heads to public meetings amid debate

WENATCHEE — At the “Partners in Economic Development Fall 2025” breakfast inside the Wenatchee Convention Center on Sept. 24, public finance consultant Nick Popenuk explained why the Port of Chelan County is considering a tax-increment financing district in Malaga — and why he believes it should matter to residents across the region.

“Tax increment financing is not a new tax. It’s a division of existing taxes,” Popenuk said. A message like that is crucial in a community like the greater Wenatchee area, where new taxes are anathema to many residents. Thus, it’s important to note that no matter what comes of this proposal, taxes paid by residents will not be increased by any amount related to the TIF. It just changes where they go, and where they’ll be legally bound to be spent is on infrastructure only.

That means that no money set aside from this “redirection” of taxes can be used to, say, fund other Port projects, or used for operations at the Port, or any other purpose than specifically projects within the TIF district or businesses that directly benefit the TIF district that are agreed on in advance and made public.

Under the proposal, today’s assessed value inside the district would be frozen. As new development raises property values, the additional tax revenue would be reinvested into public projects inside the Malaga area for up to 25 years. School funding is exempt — absolutely no education funding will be redirected under this proposal — and no properties outside the district would be affected.

The aim, he argued, is infrastructure first: Sewer, water, road, bridge, utility, and park projects that make the 2,800-acre former Alcoa property and surrounding land usable again. Without those investments, he said, large tracts of land sit idle. “There are millions of acres of rural industrial land with no infrastructure,” Popenuk said. “If you want to attract new development, this land needs infrastructure to support that.”

Early signs, he added, show the model can work. A nearly $90 million substation project tied to new data centers has already generated more than $3 million in sales taxes. Over 25 years, sales-tax growth countywide is expected to outweigh the property-tax growth temporarily redirected to Malaga. “Out of every dollar, about 65 cents would be going to the county and 35 cents to the tax increment area,” Popenuk said.

The long-term vision is far larger. With infrastructure in place, forecasts show up to $2 billion in new investment and more than 6,000 ongoing jobs, generating over $500 million annually in labor income. “You don’t want to just be dividing revenue that would already be there,” Popenuk told the audience. “This is the tide that raises all boats.”

At the same time, he acknowledged Chelan County commissioners’ concerns about near-term revenue tradeoffs. “Budgets are tight… they have some concerns about the project. Rightfully so,” Popenuk said, noting that Port staff are meeting with county staff to refine numbers. “We want to collaborate and make sure the investments grow the tax base for everybody long-term.”

Indeed, Chelan County Commissioner Shon Smith was present at the breakfast and spoke up during the question-and-answer period. He clarified that “the county is not in favor of the TIF,” noting that commissioners had just formalized “our six-month moratorium on the creation of any TIFs in our unincorporated areas… That’s any TIFs. That includes the county as well.”

Smith said the pause is tied to Chelan County’s 20-year comprehensive plan update, which is still underway. “We have to produce that in order to find out what the proper land uses are, especially out in the Malaga area, since that seems to be the booming area,” he explained. He added that “TIFs are intended for areas that are in distress, and if you’ve driven out to Malaga lately, there’s two big projects going on out there that show that Malaga is not in distress.”

He emphasized the county’s mandate to fund state- and federally required services, saying, “Ours are not wants. Ours are mandates that come down from the state and the feds that we have to perform, we have to produce. Without that tax revenue… the county is going to be hampered for the services that we’re actually able to provide.”

Smith also urged the Port to consider Douglas County’s experience with its Wenatchi Landing TIF, and said Chelan County would “love to be a partner” if that were possible. “Other TIFs that have been put in have become partnerships with cities, counties, towns. And so it is possible,” he said. But he added that “to hear comments like, ‘We don’t need your permission to do this’ isn’t working towards a partnership.”

The Port’s timeline calls for two public meetings ahead of any decision: The first will be on November 18 at 9 a.m. and the second on November 25 at 5 p.m., both at the Confluence Technology Center. Details and meeting notices are posted at www.cdrpa.org/pocc-tif-district. The Port Commission is scheduled to vote on the Malaga tax-increment financing proposal on December 9, 2025.

Andrew Simpson: 509-433-7626 or andrew@ward.media