Port: New state guidance changes projections for Malaga TIF

WENATCHEE — The Chelan Douglas Regional Port Authority says new state guidance has shifted the math in the long-running debate over Tax Increment Financing in Malaga — but not ended it.

On Oct. 9, the Washington Department of Revenue (DOR) published updated policy guidance on how Tax Increment Areas (TIAs) interact with property taxes and other local revenues. Port officials said they’re reviewing the revisions with outside finance consultants; their initial read is that the fiscal hit to other taxing districts would be lower than earlier projections suggested. At the same time, the DOR materials acknowledge that creating a TIA can contribute to higher property taxes over time. Chelan County circulated a preliminary chart showing potential increases across the 25-year life of the Malaga TIA. The Port said it will return within 45 days with a plain-English breakdown of what the new guidance means locally.

The Malaga TIA covers 3,326 acres. Under Washington’s 2021 TIF law (RCW 39.114), a TIA allows a portion of the future growth in property-tax revenue inside its boundaries — the “increment” — to be set aside to pay for public projects that serve that area. The core idea is simple cause and effect: Public improvements unlock private development, and a portion of the new tax revenue generated by that development helps retire the cost of those improvements. The Regional Port has framed TIF as a tool to bring long-deferred infrastructure to a historically underserved part of Chelan County; its current plan anticipates up to $220 million in roads, utilities, and public amenities over 25 years.

Project priorities were drawn from existing community plans — the Chelan County Comprehensive Plan (2017–2037), the 2017 Malaga Vision Plan, and the Our Valley Our Future Action Plan (2022–2026) — and grouped into four buckets:

• Safety & capacity: Fixes along Malaga-Alcoa Highway (safety, overlays, capacity), Stemilt Creek Bridge work, West Malaga Road safety upgrades, intersection improvements, and targeted pedestrian upgrades (e.g., Saturday Avenue).
  
  
• Access: A study of a potential third Columbia River crossing at Malaga (followed by right-of-way work if warranted), plus a Malaga-to-Wenatchee bike/ped pathway.
  
  
• Economic development & utilities: Sewer and water transmission lines; electrical improvements sized for large loads such as data centers; natural-gas upgrades; rail line rehabilitation and added capacity, including loading/off-loading infrastructure; an expanded industrial cooling-water system; and “industrial symbiosis” projects that link byproducts from one facility to inputs for another.
  
  
• Community facilities: A Malaga Columbia River park, renovation/expansion of the Wenatchee Valley Fire Department station in Malaga, a daycare facility, a law-enforcement training range, and the bike/ped pathway noted above.
  
  

A full list of the projects is available here.

Supporters argue TIF is one of the only realistic ways to fund big-ticket improvements without raising new taxes countywide. Skeptics have pressed two questions for months: How the increment set-aside affects revenues for schools, fire, libraries and other districts; and whether property owners inside and outside the TIA will see their tax bills rise as the area builds out. The DOR’s new guidance — simultaneously lowering some expected district impacts while confirming that taxes can still increase over time — ensures those questions will remain front and center as Malaga’s TIF moves from plan to practice.

The Regional Port said it will publish a fuller explanation of the DOR changes, along with revised fiscal examples, within the next month and a half.

Andrew Simpson: 509-433-7626 or andrew@ward.media