by Richard Uhlhorn
TIF NEWS 5-2-2023
At its workshop on May 2, the Council and Staff received an update from City Administrator Wade Farris regarding the issues surrounding the City’s proposed Tax Increment Financing program.
“John (Ajax) has been working on the TIF issue,” said Farris. He encouraged everyone to go to the new City website where there is an incredible amount of information on Tax Increment Financing. https://cityofchelan.us/CivicAlerts.aspx?AID=30.
Farris stated that even though the City has gone through all of the necessary legal rules and procedures to pass a TIF ordinance to be on the safe side of the issue, Farris said he was taking the issue off of the May 9th agenda.
There will be a Special meeting on TIF on Wednesday, May 24 where the Council could approve the program. “You are not approving the District and we have five years to consider it. It gives us another opportunity for another meeting with the Junior Taxing Districts,” said Farris.
The City has been up against a barrage of negative rhetoric regarding the proposed program. The new meetings will look at the impact of the program on Citizens. “We need to put the fear to rest,” said Farris. “They are still not going to be happy.” The impact will be assessed and the program adjusted.
Councilman Marc Ericks suggested that the affected parties be told the ramifications if the TIF isn’t passed. The public has been actively trying to derail the plan.
“Our vote on the 24th will not approve a loan,” said Farris. “The Council has the next five years to move forward. We are working really hard with the Dept. of Revenue to make the right decision for the community.”
Tax Increment Financing:
The battle lines have been drawn! The City of Chelan and local taxing districts are in a battle over whether or not to implement a Tax Increment Financing district (TIF).
The City has proposed financing the construction of a new water reservoir and water delivery system on the north eastern side of Chelan. The new reservoir and water lines would facilitate planned growth in the area.
The designated area or TIA (Tax Increment Area) would enable the City to capture a portion of property tax revenue generate from new construction within its boundary. The City would issue bonds to construct a new water reservoir which would be paid back from the taxes generated by new construction over a period of 25 years or when the bonds are paid off. While the reservoir and booster pump station are primary, the planned four water main extensions from the reservoir to surrounding neighborhoods will allow the City to meet the demands of private development and provide redundancy during emergency shortages.
The Junior Taxing Districts that would be most affected by a TIF are the fire district, hospital and Emergency Medical Services.
New developments within the TIA would have their property taxes tied directly to the proposed TIF and a portion of the property tax revenue from future new construction would be allocated to the City instead of the taxing districts until the TIF is paid off.
Fire, hospital and EMS services would continue to receive property taxes generated from assessed valuation that existed prior to the private development. If the TIF is activated, the taxing districts would lose any additional property taxes over what is currently being collected until the TIF is paid off.
At the April 25 Council meeting, Hospital CEO Aaron Edwards asked the Council to consider having another meeting on the proposal for a better understanding of its implications.
Edwards wrote a white paper on the implications of a TIF for the Hospital District. Lake Chelan Health has struggled financially and is currently has an operating loss of $837,096, but is $147,000 on the positive side financially because of grants and tax revenue.
“We depend on growing property values to grow with our service areas to protect and serve the public,” wrote Edwards.
Chelan Fire and Rescue Commissioner Russ Jones is equally concerned at the potential loss of new development revenue and said that the construction of some 800 new housing units could very well increase the departments call out by 30 percent.
Jones stated at a recent Fire Commission meeting that, “There was a lot of inaccurate information. For instance, the City’s consultant used old tax rates for his presentation. That there is no negative impact is absolutely not the case.”
Since that request, the City has held separate meetings with each Junior Taxing District and is currently making adjustments to the numbers associated with the proposal. City Administrator Wade Farris said, “There is a lot of misinformation being put out there. We are trying to do the best for the community.”
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