8 - Downtown Federal Way Tax IncrementEstablishing a Tax Increment Area
Federal Way, City Council Retreat
January 21, 2023
CtTIBERIUS
SOLUTIONS
• Tax Increment Financing (TIF) 101
• Proposed Federal Way TIA Overview
• Increment Forecast
• Proposed Project List
• Adoption Process
• Finance Considerations
• Questions& Answers
• Washington Legal Framework
• How it works
• Required analysis
• Adoption process
• Examples from other communities
• RCW 39.114: HB 1189 enacted in 2021
• Cities, counties, and Ports can establish Tax
Increment Areas (TIAs) to fund public
improvements that enable private development
• Some property taxes paid in TIA are collected by
the TIA to pay for public projects
TIAs do not raise taxes on any property, but
redirects some taxes paid
• Current taxable assessed value in TIA is "frozen;'
and property taxes from the frozen tax
allocation base value are paid to taxing districts
• Increase in assessed value is increment value,
and property taxes from the increment value are
paid to the TIA (tax allocation revenues)
• TIAs can collect tax allocation revenues for a
maximum of 25 years
• TIA Boundary
• List of Public Improvements
• Anticipated Private Development
• Finance Plan
• Economic and Community Impacts
• No more than two per municipality
• Assessed value: less than 20% or $200M
• Identify property to be acquired by
municipality
• Legal description*
• Description and cost estimate for each
• Cannot add projects to the list in the future
• Capital, Admin, Financing, Maintenance,
Security, Feasibility Studies
• Projects can be outside of TIA boundary, if
they benefit property inside the TIA
• Deadline for commencement
• Description of private development
with and without public improvements
• Public improvements result in higher value
development, sooner than without the
improvements
• Private development consistent with
applicable zoning
• Effective date
• Duration (no more than 25 years)
• Estimate tax allocation base value
• Estimate of future increment value and tax
allocation revenues
• Maximum amount of debt obligations to be
financed with tax increment
• Job creation
• Affordable and low-income housing
• Local business community
• Local school districts
• Local fire service
Examples, Port of Vancouver
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Proposed TIA Boundary
• Forecast growth in taxable assessed value
• Identify impacted levy rates, and forecast
future changes
• Forecast future tax allocation revenue
• Estimate future financing terms
• Estimate financial capacity (adjusting for
inflation and cost of interest)
• Inherently uncertain
• RFP to select developer(s) for City -owned
property downtown will provide some clarity
Calendar Year
2023-2027
2028-2047
New Taxable
Assessed Value
$116M Per Year
Completed by Johnson Economics
$97M Per Year
• County Regular Levy
• County Lid Lifts
• County Transportation Levy
• County Conservation Futures
• County Flood Zone
• County Ferry District
• Port General Fund
• EMS
• Sound Transit
• City General Fund
• Library General Fund
• Fire District 39 General Fund
• State Schools Part 1
• State Schools Part 2 (McCleary)
• County Bonds (voted)
• Port Bond Fund
• Federal Way School District 210
• Library GO Bond
• Fire District 39 Maintenance & Operations
• Fire District 39 GO Bond
$35
$30
$5
TIA Sunset
2025 2030 2035 2040 2045 2050
$14
$12
$10
a�
_ $8
a�
a�
_ $6
0
V
Q $4
x
$2
2025 2030
2035
2040
F
F
F
2045
• Tax allocation revenues: $149M
• Funding for projects: $121M
(accounts for cost of interest on debt)
• Funding for projects (2023 $): $81M
(accounts for inflation over time)
• Key variables: timing/value of new
construction, appreciation of property values,
inflation rates, interest rates, borrowing
assumptions.
Levy 1
Countywide Regular Levy
Countywide Lid Lifts
Countywide Transport levy
County Conservation Futures
County Flood Zone
County Ferry District
Port General Fund
EMS
Sound Transit
City of Federal Way General Fund
Library General Fund
Fire District 39 General Fund
Total
Total Impact (25 Years)
$22,500,000
$300,000
$1,700,000
$1,200,000
$4,400,000
$400,000
$2,300,000
$9,800,000
$7,200,000
$32,000,000
$11,500,000
$551500,000
$148,800,000
Priority Project
1 Public Parking &
Plaza
2
911
4
Total
Not
Included
Recreation
Pedestrianization
& Placemaking
Public Art
Description
• 400 stalls @ $65,000/stall
• $10M plaza (based on cost for
Yakima Central Plaza)
• 4 acres @ $21VI/ac
• $3M park (based on 2022 Rose
Village Neighborhood Park,
Vancouver)
• S 320th Dip
• 21st Avenue S reimagination
• S 316th St reimagination
• 2% of each project (part of budget)
Community • 15,000 sf
Building • Located on TC-3 plaza
• Could be built later under separate
funding solution
Total
Other Projected TIA
Funding? Cost Portion
No $36M $36M
Yes $12M $8M
Yes $52M $1m
No
$2M
$0
r$100M
$45
$4M
$0
• City has unilateral authority to establish TIA
• State reviews and comments, but has no
formal approval
• Impacts other taxing districts, but does not
require their approval
• Timing considerations impact frozen base
year, first year of tax revenues, long-term
financial capacity
• Required by RCW
— Review (90 days) and input from State
Treasurer
—Two public briefings
— Resolution adopted at public hearing
• Recommended
— Outreach to impacted tax districts
— Outreach to key stakeholders
— Coordination with County Assessor
TIA Adoption Deadlines
Jan
2025 First TIF
Feb Mar Apr May Jun July Aug
State Treasurer Review
Submit Draft Report 1 Finalize
to State Treasurer I Report
1
Public
Briefing #1
I
1
I
1
I
1
Public
Briefing #2/
Adoption
TIA Adoption Deadlines
2024 First TIF
Jan Feb Mar Apr May Jun July Aug
State Treasurer Review
Submit Draft Report
to State Treasurer
Finalize
Report
Public Public
Briefing #1
Briefing #2/
Adoption