HB 2842

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As of February 26, 2016

Title: An act relating to financing of improvements for state-owned lands to be transferred for private development.

Brief Description: Financing of improvements for state-owned lands to be transferred for private development.

Sponsors: Representatives Schmick, Wylie, Nealey, Reykdal, Dye and Walsh.

Brief History: Passed House: 2/17/16, 89-9.

Committee Activity: Ways & Means: 2/29/16.


Staff: Juliana Roe (786-7438)

Background: Traditional tax increment financing is a method of allocating a portion of property taxes to finance economic development in urban areas. A tax increment financing program typically includes designating an area for making public improvements, such as roads, sewer, utilities, or other public infrastructure, to encourage economic development. A local government issues bonds to finance the public improvements, and the improvements tend to increase the market value of nearby properties. The tax increment financing program allows the local government making the improvement to receive all or a portion of the resulting tax revenue increase to pay for the costs of improving the property.

Washington has five tax increment financing programs, two of which are closed to new applications. Tax increment programs include the Community Revitalization Financing Act, the Local Infrastructure Financing Tool, the Hospital Benefit Zone Financing Program, the Local Revitalization Financing Program, and the Local Infrastructure Project Area Financing Program.

Summary of Bill: A city may finance public improvements using a State Land Improvement Financing Area (SLIFA) under certain circumstances. To qualify, a city must be located east of the Cascade mountains, be adjacent to the Columbia River, and have a population greater than 60,000. The land that is being sold for private development must be owned by the State of Washington, or have recently been state-owned land that was sold for private development.

A qualifying city may designate a SLIFA by adopting an ordinance specifying the public improvements to be financed within its boundaries. The public improvements are expected to encourage private development and increase property values.

A city seeking to create a SLIFA must provide notice and hold public hearings. The notice must describe the boundaries of the financing area, proposed improvements, costs, and financing for the project. The city must also adopt an ordinance establishing the area and provide information about the apportionment of property taxes to finance the project, and notify county officials regarding the ordinance.

A city creating a SLIFA is authorized to incur debt and issue general obligation bonds to finance the improvements. After adoption of the ordinance, regular property taxes within the state land improvement financing area are distributed to the city. State property taxes for support of common schools and excess levies are excluded from the distribution to the city. Distributions stop when the revenues are no longer needed to pay for the public improvements.

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.