Port lays out Malaga TIF proposal focused on Alcoa site, infrastructure and tax base

WENATCHEE — Port leaders spent more than an hour at Mission View Elementary on the night of November 17 explaining the mechanics of tax-increment financing and outlining their proposal for a Malaga tax increment area, describing it as a long-term tool to rebuild the Alcoa site, address infrastructure gaps and grow the tax base for Chelan County.

Port of Chelan County Commissioner Donn Etherington opened the meeting by emphasizing that the Chelan-Douglas Regional Port Authority is a policy-setting body, not a general-purpose government. The regional port, he said, measures its mission in terms of living-wage jobs, private capital investment and transportation connectivity, noting more than $76 million in public infrastructure work they’ve completed in 2025 alone.

Etherington pointed to the Alcoa property’s loss of $42 million in assessed value as a significant blow to Malaga’s long-term tax base. The port’s goal, he said, is to use the TIF as a tool to position the site — one of the largest remaining industrial tracts in Chelan County — for redevelopment by putting basic infrastructure in place.

He also underscored that the port ultimately answers to residents. On an organizational chart he displayed during the meeting, “citizens of Chelan County” appeared at the top, above the combined port board and staff.

New tool, old examples

Consultant Elaine Howard, who has worked on more than 100 TIF and urban-renewal projects in Oregon and Washington, walked residents through the basics of Washington’s tax-increment law. The Legislature authorized TIF in 2021 and updated it in 2023. Cities, counties and ports may each create up to two tax increment areas, and each must start with no more than $200 million in assessed value. The maximum life of a TIF is 25 years.

Howard noted that Washington’s law does not require a TIF area to be officially designated as distressed, and that revenues may be spent on projects outside the boundary if they directly benefit the designated area. All eligible projects must be listed up front in the resolution that creates the TIF.

Because Washington’s program is so new, Howard relied on examples from Oregon and the Port of Vancouver’s 2022 TIF, where the port used increment from early development to finance infrastructure on long-planned mixed-use waterfront land. She also pointed to the Hood River waterfront district, where a TIF helped pay for odor control at a wastewater plant, new roads and a waterfront park that turned vacant industrial land into a busy recreation and commercial area.

Why Malaga

Port CEO Jim Kuntz said Malaga’s infrastructure deficits — lack of municipal sewer, aging private water systems, and the condition of the Malaga–Alcoa Highway — are limiting redevelopment options. He pointed to zoning, land availability and regional economic momentum from Microsoft and Helion as reasons Malaga is positioned to benefit from a dedicated infrastructure tool.

Kuntz said the port chose a larger boundary rather than a tight line around the Alcoa site to generate enough increment to finance community projects that fall outside the industrial footprint, such as park access and trail connections. “The broader the district, the more community benefit there can be,” he said.

Project list and bonding

The port and county have prepared a preliminary list of eligible projects, including a sewer treatment plant, transmission lines, safety and capacity improvements along the Malaga–Alcoa corridor, Columbia River park improvements, pedestrian access to the Apple Capital Loop Trail, and early study work for a potential third bridge.

Kuntz stressed that TIF revenues cannot fund salaries or general operations, only eligible public projects. He said the port’s bonding authority allows it to issue bonds backed by future increment and then leverage those local dollars to compete for state and federal grants — an approach he described as necessary in an era of shrinking state and federal infrastructure funding.

While the project list totals roughly $200 million, Kuntz said the TIF is forecasted to generate about $210 million over 25 years, meaning outside grants and phased work will be required.

Revenue forecasts and DOR guidance

The port’s economic forecast anticipates no TIF revenues in 2026, about $35,000 in 2027, and gradual increases thereafter. Kuntz told residents that the Department of Revenue issued new guidance this year allowing junior taxing districts to “add back” the revenue they would otherwise forego under a TIF, on top of their usual 1% annual increase and new construction outside the district.

He described the DOR interpretation as “mind-boggling,” but said it applies to all 23 TIFs already formed in Washington. Using a model for a $500,000 home with 4.6% annual appreciation, he acknowledged residents could see modest increases in levy rates in later years as districts adjust.

Kuntz said Chelan County commissioners would be responsible for reviewing TIF-related tax impacts annually as part of their broader levy decisions, and that the statute allows the amount of increment collected each year to be dialed up or down.

School districts are exempt from contributing to TIF. Kuntz also pointed to projected sales-tax growth driven by Microsoft-related construction as a benefit to the county’s general fund, which TIF does not touch.

Jobs and tax base

Kuntz said a consultant’s long-range modeling showed the district could support approximately 6,600 new jobs over 25 years if redevelopment advances. He described TIF as a way to reinvest part of the new “seed corn” back into Malaga instead of dispersing all new revenue countywide.

He said the board believes long-term revenue from redevelopment should be reinvested locally rather than dispersed countywide. “If you don’t form a TIF, that’s fine,” he said. “None of the money’s coming in now. [New revenue] will go to Chelan, it’ll go to Leavenworth, it’ll go to Entiat… it’s not coming to Malaga.”

Port commissioners said they will continue taking public comment at additional meetings later this month before deciding whether to adopt a resolution forming the Malaga tax increment area.

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