This Washington

Coalition to Push For Controversial Tax Mechanism Next Session

By Erica C. Barnett December 10, 2010

David Fisher, spokesman for the Washington State chapter of the National Association of Industrial and Office Properties, says the group is forming a coalition including environmentalists, labor representatives, business advocates, and local governments to support legislation next year that would pave the way for tax increment financing (TIF) in Washington State.

Some background: Tax increment financing is a scheme that allows local governments to sell bonds to make large infrastructure investments.  The idea is that the city of Seattle, for example, would finance bonds for infrastructure improvements around light-rail stations, which would spur dense new development, creating higher property values; the city would pay back that debt by skimming off the higher property taxes that would result from that new development, which would have ordinarily been distributed among all the taxing districts that collect property taxes (such as King County).

TIFs are controversial because they siphon off tax dollars that would, in theory, go to local taxing districts. Nonetheless, they've gotten support from some progressive groups, including the environmentalists at Sightline, because of their potential to promote transit-oriented development.

Fisher says his group has been talking to state Sen. Derek Kilmer (D-26) about sponsoring legislation to allow TIFs. (Kilmer has not yet returned a call for comment). Currently, the state constitution prohibits TIFs because it requires that all property taxes go to education. (Amending the constitution requires a two-thirds vote by the state House and Senate and a simple-majority statewide vote.) Fisher says that "in the long run, all taxing districts benefit from increased development," including counties, several of which have---somewhat surprisingly, given that most TIFs nationally are established by cities---signed on to NAIOP's pro-TIF efforts.
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