Misc TIA FAQFederal Way Tax Increment Area FAQ
What is a Tax Increment Area?
The Washington State Legislature authorized tax increment financing in 2021. It is a new
financing tool in Washington, allowing cities, counties and ports to establish Tax Increment
Areas (TIAs) to fund public improvements that help enable new private development.
All TIAs must have a specified boundary, a set duration (maximum of 25 years), and a
specific list of public projects to be funded. In Federal Way, the proposed TIA includes the
property bounded generally to the west of 1-5 and east of Highway 99, and on the north and
south sides of S 312t" Street/330t" Street. The estimated timeframe for the proposed TIA is
25 years.
Proposed TIA Boundary
2. How does a TIA work? How does this impact the taxing districts that currently
receive revenue from the properties within the TIA?
TIAs receive funding from the property tax revenue generated by the growth in assessed
value for properties located in a TIA. The property tax levies imposed in the proposed
Federal Way TIA include the list below. They are separated by those impacted and
those NOT impacted by the TIA. Voter approved bonds and general obligation bonds are
NOT impacted by a TIA. State and local school levies are excluded and would not be
impacted by the proposed TIA (see question 8 below).
TAXING DISTRICTS IMPACTED
• County Regular Levy
• County Lid Lifts
• County Transportation Levy
• County Conservation Futures
• County Flood Zone
• County Ferry District
• Port General Fund
• Emergency Medical Services
• Sound Transit
• City General Fund
• Library General Fund
• Fire District 39 General Fund
TAXING DISTRICTS NOT IMPACTED
• State Schools Part 1
• State Schools Part 2 (McCleary)
• County voter -approved bonds
• Port Bond Fund
• Federal Way School District 210
• Library General Obligation Bond
• Fire District 39 Maintenance &
Operations
• Fire District 39 General Obligation
Bond
The property taxes being levied on the current assessed value within the TIA boundary
will continue to go to the overlapping taxing districts. In the proposed Federal Way TIA,
property tax revenue from increases in assessed value after the TIA is established will
go to the City to pay for improvements within the TIA boundary (called tax allocation
revenues). This tax allocation revenue is from new development in the TIA and
increases in assessed value from appreciation of existing properties (shown in orange in
the figure below). A TIA will not increase the taxes that a property owner pays.
Taxing districts temporarily forego some taxes raised from the increase in assessed
value in the TIA, and the dollars are directed toward public infrastructure improvements
in the TIA.
This allocation of some property tax revenues from the increased assessed value in the
TIA each year will occur until the increment area expires, no more than 25 years after
receiving its first increment. Once the TIA has expired, the overlapping taxing districts
will receive the full amount of property taxes from the increased assessed value in the
increment area. This concept is shown in the chart below.
$35
$30
$25
$20
x
$10
$5
TIA Sunset
2025 2030 2035 2040 2045 2050
3. Does a TIA increase our property taxes?
No. Property taxes will not increase because of a TIA. The source of the revenue is from
the taxing districts (listed above), not the property taxpayers. The diverted property tax
revenues can then be used only on specific projects within a TIA.
For this TIA, the property taxes collected on the new development in the Federal Way
TIA boundary will be allocated to the City. The use of these revenues is limited to help
fund the construction of the needed infrastructure in the TIA, and these projects will be
identified as part of this adoption process.
4. What are the Goals & Objectives of the TIA?
Goal: Transform a suburban, auto -centric and non -remarkable area of Federal
Way into a distinct, vibrant and walkable downtown.
Objectives:
■ Utilize creative funding tools to help achieve the Goal.
■ Leverage the regional investment in high -capacity transit; the sale of city -
owned property; and, local investment to attract high -quality, private
development that will catalyze redevelopment.
■ Prioritize walkability and enhanced non -motorized connections. Construct
pedestrian -oriented infrastructure improvements that that improve mobility.
■ Invest in community gathering areas and placemaking to define the area and
create a destination for the community.
5. Why is Federal Way considering use of a TIA?
A TIA adds an additional funding source to complete needed infrastructure projects.
These projects will provide the infrastructure needed to enable new development that
will provide services and jobs for our community.
6. What are the projects being considered for this TIA?
The projects listed in the Ordinance to create the TIA will be determined by the City
Council. Those conversations are currently on going. The projects are intended to help
stimulate private development in the TIA.
7. Who manages the revenues from the TIA?
The governing body (the City of Federal Way) adopting the TIA manages the revenues.
The City will form a separate fund dedicated to the tax allocation revenues the increment
area generates. The City is only allowed to spend the tax allocation revenues on specific
projects within the increment area that were identified during the adoption process.
8. Does this take dollars away from the local schools?
No, a TIA will not negatively impact schools, as both the state and local school levies are
exempt by law from being included in this new financing tool. The property taxes from
state and local school levies generated from increased assessed value from new
development in the TIA will not go to the TIA, but will immediately be allocated to the
state school fund and local school district, respectively.
9. What are the overall benefits of this TIA?
The TIA is expected to generate substantial positive economic impacts for the regional
economy, because the funded improvements will enable new development. As part of
the preparation of the TIA's project analysis report, a full economic analysis will be
conducted. The benefits are expected to include creation of a vibrant city center for
Federal Way that includes new housing opportunities, job and income creation, added
recreational spaces and community amenities like public art.
10. What is the schedule for the TIA and how can I get more information on the
proposed increment area and adoption process?
The City of Federal Way is currently evaluating the feasibility of a TIA. It is anticipated
that the City will be prepared to decide on whether or not to proceed with establishing
the TIA at some point in 2023. The City will be participating in outreach throughout the
spring and summer to educate the community about and seek input on the TIA. The City
will also be holding two official public briefings in the spring/summer of 2023 as part of
the adoption process.
For more information or to submit a question, please contact Chaney Skadsen at
chaney.skadsen(a�-cityoffederalway.com