A proposal to divert property taxes on new development on about 939 acres near Ridgefield’s connection to Interstate 5 has the city’s fire district concerned over how less funding than they would ordinarily get could impact their service.
Ridgefield is currently considering the placement of a Tax Increment Funding (TIF) area on land near the interstate junction to fund infrastructure improvements. Ahead of the Ridgefield City Council’s bi-weekly meeting, at 5 p.m. Thursday, July 13, the city will host a public briefing on the potential area.
In 2021 the Washington State Legislature passed a law allowing for TIF areas. That legislation allows for a city, county or port district to create up to two TIF areas of no more than $200 million assessed value or 20% of the jurisdiction’s total value at the time of creation. The areas can be set up for a maximum of 25 years.
All increases in property tax collected following the creation of the TIF area are directed to the jurisdiction that created the area to be used for “public improvements.” This includes taxing districts outside of the city, such as ports and fire districts, but has exemptions for state school levies, as well as excess levies, including local school districts, according to the Municipal Research and Services Center (MRSC).
The city is eveying a TIF area encompassing 939 acres that sprawls across properties on both sides of the Interstate 5 junction, going as far west as Royle Road and as far east as 85th Avenue. The boundary also dips as far south as South 20th Way and north to North 20th Street.
Currently, the area has about $91 million in assessed value, compared to the city’s overall $3.4 billion. Based on already planned and potential development, the TIF area assessed value is expected to increase to about $2.5 billion of assessed value through the 25-year run of the area, according to a report on the potential TIF area released last month. New construction would account for about half of that growth.
The report identified close to a dozen infrastructure projects the TIF area could fund, including widening of Royle Road and Pioneer Street, adding roads to improve circulation, and creating an overpass toward the south of the district to create another connection south of Pioneer Street across Interstate 5, according to the report. Projects estimated to cost about $95.5 million.
A consultant involved with the report previously noted creation of the TIF area won’t result in higher property taxes for others in the city, outside of what they would normally experience from other factors. Though property owners won’t be affected by taxes, the potential for the area has the city’s fire protection service worried.
The Clark-Cowlitz Fire Rescue board of commissioners have “great concern” over the impact the TIF area would have on their district, CCFR Chief John Nohr said.
“It allows a public entity to essentially take the tax revenue of another public entity,” Nohr said about the TIF area.
CCFR makes up about half of the property tax collected by jurisdictions that would be affected by the TIF area’s collection. The report estimated the district would forego $17.3 million over the 25-year course of the area, or $690,000 annually. In addition, the district’s EMS levy would forego about $45,000 annually for the four-year duration it runs, though it could be renewed.
Right now there is not much development in the TIF area as to what is expected. Nohr noted it’s those highly-developed areas where most of CCFR’s calls are directed.
“This development is going to drive demand for fire department services … but we won’t derive the revenue from those properties to help pay for those services,” Nohr said.
In instances where CCFR would ask voters for a “lid lift” of the district’s levy, an approval would not include that lift on the properties in the TIF area for fire service, Nohr said. That additional funding would go into funding the infrastructure projects.
“It just seems fundamentally unfair to have something the citizens vote for not go to what the citizens voted for it to go to,” Nohr said.
Nohr acknowledged the TIF area made up less than a percentage of the $10.9 billion total assessed value of CCFR’s jurisdiction.
“That $90 million is a pretty small amount, but as it gets developed up, it can have an impact,” Nohr said.
Should it be enacted, the area would be only one of a potential seven of such CCFR could be subjected to. The district covers area in two counties, two port districts and three cities, all of which could enact their own areas totalling up to $1.4 billion in base assessed value.
“It’s the first of what could be many” of TIF areas impacting the district, Nohr said.
Nohr noted there is part of state law that requires mitigation under certain circumstances, though what that mitigation looks like was unclear. The chief said outside of the state requirements, he has reached out to city administration to see what they could work out on their own to ease impacts the TIF area would have on CCFR.
Though those discussions are only a few weeks in, Nohr was encouraged by the dialogue.
“I’m confident that they understand the issue now, and will work with us to take some type of action that will help mitigate the long-term effects,” Nohr said.
Though the impacts a TIF area would have on CCFR’s funding wouldn’t be felt for the first few years, Nohr was concerned over what the lack of increasing funds would look like through the full lifetime of the area.
“I’m looking five, to 10, or 15 years out, and I want to make sure that an agreement or program that started today isn’t going to harm us 15 years from now,” Nohr said.
The city of Ridgefield’s public briefing on the area will be at 5 p.m. Thursday, July 13, in the Columbia Assembly Room of the Ridgefield Administrative and Civic Center at 510 Pioneer St. The briefing will also be shown via Zoom, with a link to the meeting available at ridgefieldwa.us/163/City-Council.
