After years of effort, Washington is poised to become one of the last states in the country to adopt Tax Increment Financing (TIF).

TIF is an economic development tool that captures a property’s appreciated value by using its increased property taxes, generated by the increase in assessed value, to finance infrastructure improvements that benefit a designated area. Local jurisdictions that have implemented TIF report improved public infrastructure, increased economic activity, and local job growth.

One of the reasons for the bill’s success this year is the new approach taken to establishing TIF in Washington. In years past, proposed TIF programs would have had an impact on state revenues. By contrast, the TIF method proposed in HB 1189 does not impact the state’s property tax rate or revenue.

After passing through the Senate last week, HB 1189 is just a few steps away from becoming law. The bill now needs to return to the House one more time for concurrence before it can head to the Governor’s desk for signature.

While in the Senate, the bill picked up several technical amendments and a few policy amendments, including:

• Reducing the number of allowed active increment areas a local government can create from three to two.
• Clarifying that public improvements include park and ride facilities as well as other transit facilities.
• Specifying that a sponsoring jurisdiction cannot add additional improvements to the project after the creation of the ordinance, but still allowing the jurisdiction to expand, alter, or add to the original public improvement.
• Clarifying that local governments cannot receive more revenue from the increment area than is necessary to pay or repay costs directly associated with the public improvements.

While there is no guarantee the bill will go all the way to the Governor’s desk, AWC is thrilled with the progress we made this year educating our state representatives about TIF. We greatly appreciate everyone who took the time to testify for or contact their state delegation about this important economic development tool for cities.