Chelan City Council votes to established a Tax Increment Financing (TIF) district

CHELAN - In an emotionally charged event of the standing room only variety, the Chelan City Council held a special meeting May 24 to discuss Ordinance 2023-1607, which proposes establishing a Tax Increment Financing (TIF) district in East Chelan. Used by local governments, TIF is a financing mechanism to fund public infrastructure within a designated zone referred to as a Tax Increment Area (TIA). After Councilwoman Erin McCardle made a motion to approve the TIA, the Council passed the motion in a 6-1 vote allowing the City to possibly implement the financial initiative. Councilman Chris Baker added the lone nay vote stating that if the TIF fails, Chelan may be susceptible to lawsuits.
City Administer Wade Farris, and others, reminded the Council Chamber that the day’s vote was restricted to establishing an area. This would give the Council many options going forward.
Washington State authorized TIF in 2021 via the Engrossed Substitute House Bill 1189 in an attempt to avoid harming existing taxing districts.
Rather than imposing a new tax, TIF utilizes existing tax levies. The primary purpose of the proposed TIF is to improve water availability in the Chelan area. This includes a plan to issue bonds which will fund a new water reservoir and booster pump station. Other projects under the TIF umbrella include extending the water main to Bradley St. and then extending the main from Bradley to No See Um Rd. Taxes generated by new construction will pay back the bonds over a 25-year period or whenever the bonds are paid off.
On Sept. 27 of last year, the Chelan City Council approved a proposal to prepare a Professional Services Agreement with Stowe Development and Strategies, a real estate development consulting firm out of Bothell. The following Oct. 11, the Council approved the agreement with Bob Stowe. Before the Council began discussion, several area citizens spoke on the matter, most encouraging the Council not to establish the TIF. They included attorney Stan Morse, Mary Signorelli, Lake Chelan Health Hospital District Commissioner (LCHH); Jordana LaPorte, LCHH commissioner; Russ Jones, Chelan Fire & Rescue Commissioner No. 7 and Brian Kenck, Manson resident. Comments were also made by hospital employees Byron Schmidt, Kim Brown, Jane Jedwabny and Marlene Morningstar.
“Politicians are nickel and diming us one small cut at a time,” LaPorte said.
“As a Junior Taxing District, it is very difficult to get good answers,” Jones said. “There are too many questions, bad data and legal premises.” Signorelli distinguished herself by publicly supporting the City Council. She encouraged Junior Council Districts and Chelan to collaborate saying that the June 1 deadline of setting the TIF in motion was not a point of no return.
“Let’s deliberate and continue to work together,” Signorelli said. McCardle asked Stowe, who joined the meeting via Zoom, if there would be an impact if the ordinance was repealed. He said there would not and that discussions could continue on the matter. McCardle added that there would be no impact on Junior Tax Districts and did not view the TIF as the only funding choice, but as one option among many. Councilman Peter Jamtgaard supported the TIA and urged people to avoid faulty facts. He said there is not enough water in the area and that the TIF was the best way forward for the community. “There’s a lot of misinformation floating around. This Tax Increment Area is fundamentally a funding mechanism that will fund a water system. Chelan’s not having trouble growing. We’re having trouble supporting the growth with our infrastructure,” Jamtgaard said. “What we’re trying to do is get ahead of the game a little bit and that will only be able to benefit the developments. We have the ability to make sure or mitigate any impact on Junior Tax Districts to make sure that they’re not losing money and we’re not raising taxes on anyone. This is merely a mechanism to allow us to do this water system improvement.” Councilman Mark Ericks detailed the negativity the Council has recently received regarding this hot button issue. He mentioned that an unknown person paid to have anonymous calls made to the Council office accusing “us all of being thieves and trying to line our pockets with your tax dollars.” “I was offended by that greatly. I am committed to this community, and I am committed to doing the right thing,” Ericks said. “It’s common knowledge that the water system has been cobbled together for 100 years. The decision to fix it has definitely been punted down the road…We have only two options: borrow and secure a bond or raise utility rates. Councilman Tim Hollingsworth emphasized the communities water needs. He said the water was crucial to help the hospital and fire district, though he remained unsure of the TIF. The Council’s approval of the TIA gives Junior Taxing Districts and Chelan the ability to work together on a TIF agreement. It also provides the City with time to explore other funding options. “We’re in this together. This is a door that opens. Anybody that can find a way through any kind of funding sources, we need your help so that we don’t have to build this all the way out,” Goedde said. “Please stay with us. We need all of you working with us. If you can find the money down in some rat hole, please point it out. We’re going to be looking everywhere.”