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News / Politics / Clark County Politics

Ridgefield mulls tax increment financing to pay for infrastructure

Proposal seeks to fund infrastructure, boost development

By Shari Phiel, Columbian staff writer
Published: June 22, 2023, 7:16pm

A tax increment financing proposal from the city of Ridgefield could give the city millions of dollars to build needed infrastructure and spur development as the city’s rapid growth continues. But it could also affect other agencies serving Ridgefield, such as Clark-Cowlitz Fire Rescue.

Tax increment financing, or TIF, is a relatively new concept in Washington but has been used in other states for decades. The program lets local government invest in infrastructure and other improvements, then pay later for those improvements through bonds or other methods. A key benefit is that jurisdictions get to capture future anticipated tax revenues now.

“The legislation for TIF, or tax increment financing, is pretty new in Washington,” said Ridgefield Finance Director Kirk Johnson. “It was just approved in 2021 and it is complex and confusing.”

If the city council decides to move forward, Johnson said the city first would need to create a map of the TIF program area.

Within that area, property owners continue to pay taxes at the same rate as their neighbors outside the zone. The presumption is that their property taxes will increase over time, due to the new TIF-financed infrastructure that raises the assessed value of their property.

That extra tax revenue would repay the loan the city took to pay for the improvements.

Johnson noted the city is still very early in the analysis phase but has drafted a report for the state treasurer’s office to review. He said while the city council has discussed the basics of the program, further review and discussion will be needed before a TIF program is approved. He also said the city has a list of projects it wants to fund, but that list is not final.

“What we’re looking at now is all infrastructure projects, mainly street projects, on the east and the west side of Interstate 5 — at the junction — straddling Pioneer Street. Those transportation projects are needed to get the economic development that the analysis shows could bring up to 1,900 jobs,” Johnson said.

Johnson said it’s important to note that development won’t occur without the infrastructure being in place. The TIF program is a way to make sure that infrastructure is ready, he added.

Since its passage in 2021, nine jurisdictions have created TIFs including the ports of Vancouver, Pasco and Grays Harbor and the cities of Blaine, College Place, Chelan, Kirkland and Wenatchee. All but two of those were adopted in the last nine months.

Fire district concerns

The way tax increment financing works affects other taxing districts, such as fire districts. These districts would continue to receive property taxes at their current rate, but wouldn’t share in the gains due to increased property values.

“Any tax revenue that current jurisdictions, including Ridgefield, receive right now, they’re going to continue to receive that. There’s no loss of current revenue,” Johnson said.

Chief John Nohr of Clark-Cowlitz Fire Rescue said while TIFs can be a useful tool for cities, counties and others, there are downsides that should be considered.

“The thing that concerns us is it’s a 25-year process. The tax increases on the valuation of properties that are in the TIF will go to the city. The city will use that money to bond projects, specifically road projects,” Nohr said.

Nohr said Ridgefield officials estimated those projects will bring not just new jobs and development to the area, but also more residents.

“People are what drives incident volume for fire districts and fire departments. The more people we have, the more calls we’re going to have, the more fires we’re going to have, the more EMS incidents we’re going to have,” Nohr said.

While demand for fire and emergency medical services will be increasing, Nohr said Ridgefield’s TIF would mean the fire district won’t be receiving the additional tax revenue from the new development and residents coming to the region.

“Our demand for service is going to increase but we’re not going to get the taxes from those properties that come with the increased values,” he said.

Nohr said the fire district’s concern is those new developments could include businesses that make a lot of 911 calls, such as an assisted living center.

Because the fire district would only be collecting taxes on the assessed value when the TIF went into effect, there would not be enough tax revenue to cover costs for fuel, fire trucks, equipment or other expenses.

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Unlike fire districts, school districts were exempted from TIF impacts by the Legislature. If the TIF is passed by the city council, Ridgefield School District would collect taxes on the current assessed value rather than the frozen value.  However, Nohr said the Fort Vancouver Regional Library and Clark County’s general fund could also lose out on millions in tax revenue over the 25 years.

Despite his concerns, Nohr said he has faith the city will take the required steps to offset any impacts from creating a TIF area, even though that may not be required by state law.

While “the provision in the (Revised Code of Washington) says that the city has to mitigate the impacts with the fire district,” he said the value of the proposed TIF falls well below the threshold that requires the city to act.

If the city does not mitigate the impacts, Nohr said the district may have go back to taxpayers and ask them to raise the levy lid amount, which would affect everyone’s taxes. In the meantime, the fire district is continuing its talks with the city.

“I’m confident that we can come to an agreement that will allow the city to utilize some of their additional income that comes from development in the TIF to help offset the impacts on the fire district,” Nohr said.

The Ridgefield City Council is expected to again review the proposed TIF program this fall. A public briefing on the program will be held at 5 p.m. July 13 in the Columbia Assembly Room at the Ridgefield Administrative and Civic Center, 510 Pioneer St. For more information about the Ridgefield proposal, go to https://ridgefieldroundtable.org/tax-increment-area.