By Roy Koegen
2021 DSP Board Chair
Partner, Kutak Rock LLP
Recent developments in Tax Increment Financing in the state of Washington present an important economic development financing tool in downtown Spokane.
In Washington, this tool is called Community Revitalization Financing (CRF) and is authorized to be used by cities, towns, counties and port districts to finance public improvements and public improvement costs. What makes CRF unique is that it does not increase regular property taxes, but instead redirects those regular property taxes levied after the creation of an increment area.
Before adopting an ordinance creating the increment area, a local government must obtain a written agreement for the use of CRF to finance all or a portion of the costs of public improvements from taxing districts that levy at least 75% of the regular property tax on property within the specified increment area.
The local government must then hold a public hearing in which proponents describe the boundaries of the proposed increment area and estimate the period during which CRF is contemplated to be used, as well as provide an overview of the public improvements, their costs, portion of costs to be paid from CRF revenues, and any other sources of revenue.
Once an increment area is created, in the following year, the county treasurer will distribute income from regular property taxes, dividing out the portion attributable to the CRF to the costs of public improvements.
Because CRF does not increase regular property taxes, it simply redirects 75% of taxes collected in the increment area. That 75% provides a long-term, dedicated source of money to finance public improvements, such as downtown affordable housing, a downtown parking garage, and maintenance and security for downtown public areas, to name a few.
The Downtown Spokane Partnership is actively engaging in the formation of a CRF to benefit current and future stakeholders, workers, residents and visitors.
As the Spokane workforce reenters the workplace, the ability to use CRF to provide money to revitalize downtown and provide the necessary public improvements is essential to maintaining an inviting, clean and safe downtown. As with urban areas across the country, downtown Spokane office-vacancy rates are high, and we may be losing new tenants due, in part, to a lack of adequate covered parking in the downtown core. CRF provides the ability to solve such an issue through a dedicated source of revenue.
Read more from the 2021 Downtown Spokane Economic Report by clicking here.