Port says state memo on Malaga TIF was routine guidance, not a warning

Attachments

Response to the Treasurer’s memo

MALAGA — A memo from Washington State Treasurer Mike Pellicciotti that Chelan County officials cited to oppose the proposed Malaga Tax Increment Area (TIA) was mostly standard guidance given to local governments across the state, according to a newly released response from the Port of Chelan County.

Earlier this month, Chelan County issued a press release urging the Port to halt the TIA process, pointing to a list of recommendations in the Treasurer’s memo. The County characterized those recommendations as concerns specific to the Malaga proposal.

After reviewing the same memo, the Port says the majority of the State’s comments were not unique to Malaga, but part of a routine checklist meant to strengthen any TIA proposal. In a written response released November 24, the Port said it has already met many of those recommendations and is currently addressing others.

What is routine — and what isn’t

Tax increment financing (TIF), and its Washington variant known as a TIA, allows public agencies to fund infrastructure that supports economic development by capturing future growth in property tax revenues inside a defined boundary.

The State Treasurer provides general guidance to ensure TIAs are fiscally defensible and backed by public documentation. The Port’s response says this guidance typically includes:

• Clear assumptions for revenue forecasting
  
  
• Documentation of infrastructure needs
  
  
• Financial stress-testing to account for market shifts
  
  
• A public record showing local government collaboration
  
  

Most of those elements, the Port argues, appear in TIA planning statewide.

The memo did, however, include two recommendations tailored specifically to Malaga. The Port’s response acknowledges these are the only aspects of the State’s guidance that apply directly to the local proposal.

1) A stronger “But for” demonstration

Under Washington law, a TIA must show that a project would not reasonably occur “but for” the formation of the district. In other words, the public infrastructure must be something that the private sector would not pay for on its own, and which the existing tax base cannot support without a TIA.

The State asked the Port to provide more evidence on this point. The Port says its updated response now includes additional documentation showing that transportation, water, and utility improvements essential to regional growth will not be built without the use of a TIA.

2) Clearer phasing of infrastructure investments

The State also recommended refining the timeline for spending TIA funds to match the revenue growth they depend on. The Port says those clarifications are now being finalized in its revised project sequence.

How the recommendations were framed publicly

Chelan County’s press release described the Treasurer’s guidance as a signal that the Malaga TIA needed further scrutiny before moving forward. That perspective was reflected in public discussion, which viewed the County’s interpretation as a sign that the State had “raised concerns” about the proposal. That could be a reasonable interpretation when it comes to the two recommendations that applied to this specific proposal.

The Port’s response identifies a different reading: That the memo functions primarily as a set of improvement criteria, not a warning. Ward Media has reviewed other state TIA guidance in the form of publicly-available completed reports on other TIFs and confirmed that many of the same recommendations appear in general TIF advisories provided to Washington jurisdictions.

Communication pause remains an open question

The Port’s written response notes that County representatives recently told the Port they are not authorized to meet with Port staff while there is any ongoing litigation between the two entities.

What remains unclear is why the County views that discussion as being prohibited during litigation — whether that limitation is imposed by state regulations or code, or whether it represents a discretionary choice made to protect its legal position. The Port’s statement does not assert that the County is wrong to take this approach, only that the limitation was noted by the County.

The response emphasizes that the Treasurer’s recommendations “are best addressed collaboratively among local governments,” but does not characterize the County’s refusal to meet as improper.

Port stresses cooperative intent

In the written response, Port CEO Jim Kuntz states that the Port intends to continue revising the Malaga proposal, including the “But for” demonstration and phasing clarifications, regardless of the status of the ongoing appeal. He described the TIA as “an opportunity to support critical infrastructure that benefits both private development and regional water and utility systems.”

The Port’s response frames its revisions not as corrections but as refinements: “The memo provides detailed recommendations, which the Port appreciates and has been addressing through additional documentation and analysis.”

What happens next

The Port says it will complete revisions addressing the two Malaga-specific items within weeks, after which the proposal will enter the statutory public hearing process required for TIAs under state law. That process will allow both supporters and opponents to submit comments before any vote to establish the district.

A full copy of the Port’s response to the Treasurer’s memo can be accessed by clicking here.

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