Cities bring attention to tax increment financing, but more work is needed

This session, cities focused on bringing attention to the need for additional local economic development tools, particularly tax increment financing to fund public infrastructure to support economic development.

AWC supported two proposals. The first, HB 2804, would have reopened the successful Local Revitalization Financing (LRF) program first created in 2009 to new applications. HB 2804, sponsored by Rep. Davina Duerr (D–Bothell), got off to a late start, but unanimously passed out of both the House Local Government and House Finance Committees. Unfortunately, it stalled for a bit waiting for a vote by the full House. When it was brought for a vote, the House passed it with overwhelming bipartisan support. But, by then there was only about a week left in the session and it wasn’t enough time to get through the Senate. It also became clear that the state was headed for some kind of economic downturn due to COVID-19, so Senate budget writers were concerned about the cost of the program which would have been $15 million per year for 20 years. While the outcome was disappointing, we are heartened by the strong support for the bill coming out of the House and by renewed interest of some Senators. We feel that in 2021 we can make more progress and help legislators better understand that the cost of the bill is small in comparison to the economic benefit to the state and local economies.

The second proposal would have authorized a form of property-tax based Tax Increment Financing (TIF). HB 2778 and the corresponding constitutional amendment, HJR 4212, sponsored by Rep. Pat Sullivan (D–Covington), would have allowed for the creation of apportionment districts to capture the value of the property to pay for infrastructure improvements. TIF is a complex proposal and most legislators are not very familiar with the concept. The bills were heard and passed out of the House Finance Committee but didn’t move further. However, the good news is that there is a broad coalition of supporters from cities, counties, ports, and the business community that would like to continue working on the concept and bring it back again in 2021.

We really appreciate the support we received from cities on these economic development proposals. It is important for you to continue to educate your legislators about the benefits of these tools so we can make more progress in 2021.

City priorities – Outcomes

The Legislature:

CON: Failed to pass HB 2804 reopening the Local Revitalization Financing program for new project funding.

CON: Failed to pass HB 2778 and HJR 4212 allowing for property tax-based TIF.