The stakeholder tax increment financing (TIF) bill passed the Senate without further amendments.

HB 2451 passed out of the Senate on March 5 and now will be forwarded to the Governor to be signed into law.

The bill was the result of a large stakeholder process convened by AWC last year to balance the concerns of special districts with the needs of TIF sponsors to ensure that existing TIF areas relying on this financing tool for ongoing projects are not impacted and that this important economic development tool is retained.

The bill also includes the intent that changes will not impact existing TIF areas or those formed by June 1, 2026.

Tax increment financing stakeholder bill passes House, heard in Senate committee

February 20, 2026

The stakeholder tax increment financing (TIF) bill passed the House and was heard in the Senate Local Government Committee.

HB 2451 passed out of the House on February 13 and was heard in the Senate Local Government Committee on February 19. The bill is moving quickly, with a committee vote scheduled for February 23.

AWC has worked with stakeholders on technical provisions that balance the concerns of special districts with the needs of TIF sponsors to ensure that existing TIF areas relying on this financing tool for ongoing projects are not impacted and that this important economic development tool is retained.

The bill also includes the intent that changes will not impact existing TIF areas or those formed by June 1, 2026.

Date to remember

HB 2451is scheduled for an executive session in the Senate Local Government Committee on Monday, February 23, at 1:30 pm.

Tax increment financing stakeholder bill ready for House floor

February 16, 2026

The stakeholder tax increment financing (TIF) bill is ready to be brought up for a vote by the House. HB 2451 moved out of the House Finance Committee on February 9 and the Rules Committee on February 12.

AWC has worked with stakeholders on technical provisions that balance the concerns of special districts with the needs of TIF sponsors to ensure that existing TIF areas relying on this financing tool for ongoing projects are not impacted and that this important economic development tool is retained. The current version of the bill includes technical clarifications related to:

• Levy lid lifts;
• EMS levy exemptions;
• The applicability of new tax exemptions for property in existing TIF areas; and
• Bond retirement deadlines.

Tax increment financing stakeholder bill moves out of committee

February 6, 2026

The stakeholder tax increment financing (TIF) bill is moving through the process with continued refinements to address concerns from some TIF sponsors and special districts. HB 2451 passed out of the House Local Government Committee on January 30 and was heard in the House Finance Committee on February 6.

AWC continues to work with stakeholders to clarify technical provisions around bond retirement, tax-exempt property in TIF areas, and exempting emergency medical services (EMS) levies that will provide increased notice and transparency while balancing the needs of TIF sponsors by ensuring this important economic development tool is retained. Importantly, any changes are not intended to impact existing TIF areas or those formed by June 1, 2026.

Dates to remember

HB 2451 is scheduled for an executive session in the House Finance Committee on Monday, February 9, at 8 am.

Stakeholder bill with revisions to tax increment financing gets hearing

January 23, 2026

A stakeholder bill with proposed revisions to tax increment financing (TIF) authority would resolve outstanding concerns from some special districts while ensuring this important economic development tool is retained. The proposal is sponsored by Rep. Davina Duerr (D-Bothell), the sponsor of the original 2021 bill that established authority for cities, ports, and counties to use property tax-based TIF. HB 2451 is the result of a stakeholder workgroup convened by AWC last year to discuss how TIF works, what the impacts are, and potential revisions to the tool.

The revisions in the bill would make a number of changes, including:

• Exempting future levy lid lifts from TIF increment calculations;
• Exempting EMS levies from TIF increment calculations;
• Expanding the “but for” test that is necessary to determine that the development wouldn’t happen without the public infrastructure investments funding through TIF;
• Strengthening the requirement that any public improvements that are funded are directly tied to the development need;
• Expanding notice requirements to inform and consult with impacted jurisdictions; and
• Enhancing the existing requirement to negotiate with all impacted taxing districts regarding potential service impacts and mitigation for those impacts. Those negotiations would be subject to binding arbitration if agreement isn’t reached.

AWC will be testifying about the importance of retaining this economic development tool for our state’s economic growth, but we are supportive of compromise revisions that make the tool more workable for the participating districts and have more certainty to address any unintended impacts. There may be additional technical changes needed to accomplish the intent of the stakeholder group outcomes as the bill moves through the legislative process.

Dates to remember

HB 2415 is scheduled for a hearing in the House Local Government Committee at 10:30 am on Tuesday, January 27.

Stakeholders reviewing Tax Increment Financing tool

December 12, 2025

One of the big legislative accomplishments from the last several years was the passage of a property tax-based Tax Increment Financing (TIF) tool. Cities for decades had sought authority to use tax increment financing to fund crucial economic development projects. Washington was one of only two states that didn’t have such a tool. In 2021, the Legislature finally granted the authority for cities, counties, and ports to use the property tax growth in the designated TIF area to fund the necessary public infrastructure that made development possible.

However, other taxing districts have been expressing concerns and attempting to revise and significantly limit the authority since its passage. They are concerned that they will lose revenue. Most of these concerns stem from a lack of understanding or trust about how the TIF tool works. The tool relies on revenue that would not otherwise exist without the growth and development generated by the investments funded by TIF.

In order to resolve some of these outstanding concerns and ensure that the TIF authority is retained, AWC convened a stakeholder workgroup of interested jurisdictions to discuss how TIF works, what the impacts are, and potential revisions to the tool.

The workgroup began meeting in July and has met seven times. It has identified some areas where there may be consensus for some changes to clarify aspects of the statute. However, some counties, fire districts, ports, and others continue to advocate for changes that cities are concerned will make the tool unusable. Cities have expressed willingness to make significant changes, including the following:

• Exempting future levy lid lifts from TIF increment calculations;
• Exempting EMS levies from TIF increment calculations;
• Expanding the “but for” test that is necessary to determine that the development wouldn’t happen without the public infrastructure investments funding through TIF;
• Strengthening the requirement that any public improvements that are funded are directly tied to the development need;
• Expanding notice requirements to inform and consult with impacted jurisdictions; and
• Enhancing the existing requirement to negotiate with districts regarding potential service impacts and mitigation for those impacts.

Cities have also expressed interest in expanding the TIF authority to increase the total assessed value of land that may be included in a TIF area. Currently the total assessed value is capped at $200 million and no more than two TIF areas.

AWC remains optimistic that the workgroup can reach consensus on some of these provisions, but some of the other jurisdictions continue to insist on the ability to opt out of TIFs and other changes that we are concerned would make the tool unworkable.

AWC anticipates legislation this session to address these items. Other proposals may go further and include provisions that cities have concerns with.

If your city is using TIF or interested in using this powerful economic development tool, we encourage you to be engaged with this process.