Bringing a Costco to Ridgefield received more attention last week as the city council considered the establishment of a special taxing zone that would funnel anticipated collections into improving infrastructure.
During its Oct. 27 meeting, the Ridgefield City Council heard from consultants and city staff about the potential declaration of a “tax increment finance area” on properties to the west of the city’s junction with Interstate 5. If enacted, the assessed value growth of the properties would be earmarked specifically for development of infrastructure in the growing region.
The area in question includes land sought to be developed into a Costco, the first retail warehouse to be placed in city limits.
At the meeting, Nick Popenuk, of Tiberius Solutions, presented a “tip of the iceberg” overview of what the taxing area would entail. The Washington State Legislature approved the funding method during its 2021 session, and Popenuk added his firm already worked on implementation of a similar taxing structure for the Port of Vancouver.
The funding structure does not impose a new tax, rather it uses property tax growth in the specified area to fund infrastructure improvements specifically in the designated zone, Popenuk explained. The base is established and those funds go to the respective taxing districts, but new funds through increased valuation or other development are focused on whatever project the funding is directed to.
Popenuk noted the rate collected for taxing jurisdictions will decrease as assessed valuesrise because of how Washington assesses its property taxes.
Addressing concerns on the impacts the approval of such an area would have, Elaine Howard, a consultant on the project, said the area “will not have a negative impact on schools.”
“Their tax revenues are specifically exempted,” Howard said about school funding.
Each jurisdiction is allowed to have two tax increment areas with a combined assessed value at the time of creation not exceeding $200 million, Popenuk said. City finance director Kirk Johnson said the proposed area had about $36 million of current assessed value.
Popenuk explained the formation of the tax increment finance area would help solve the age-old problem of funding streets to facilitate growth.
“A lot of times when we see cities working on economic development, there’s a catch-22. We know that once development occurs in the area, it can generate a whole lot of tax revenue, but in order for the development to occur, there needs to be public investments made,” Popenuk said.
The establishment of the zone would also ensure work actually gets done, he added.
“Things can sit sort of stagnant for a long time because there’s just no way to jumpstart development in the area,” Popenuk said.
Projects involved in the tax increment finance area include widening Pioneer Street, and improved access, which would include a secondary route. Without the improvements, Pioneer Street would fail to handle the anticipated increase of traffic.
Specific projects included building North 51st Avenue and 56th Avenue as industrial collectors, South 51st Avenue as a minor arterial, extending South Sixth Way, widening Pioneer Street to two lanes in each direction, constructing a roundabout at Pioneer and 51st streets, and building an east-west collector to the south of Pioneer Street, Popenuk said.
The city council did not formally vote on the program since it is a work in progress. City Manager Steve Stuart noted Costco plans to first put its warehouse and a gas station on the property.
Stuart mentioned the city adopted an “economic catalyst” program in 2018, which was designed to “create an economic uplift” in the project area. It was used to bring Rosauers, Ridgefield’s first supermarket, which opened in 2019.
A full buildout of the land in question could lead to about $670,000 in sales tax revenue, Stuart mentioned. The city currently relies on one-time construction sales for its sales tax.
“And we know that that is not sustainable in the long haul,” Stuart said.
John Ellingsen, with Costco Real Estate, mentioned the warehouse is set to bring 275 jobs at the beginning, with increases likely. Ellingsen said the average wage would be $30 an hour plus benefits.
“We’re really thrilled to be coming to this community and putting our best foot forward with the design,” Ellingsen said.
