Ridgefield City Hall. (Alisha Jucevic/The Columbian)
Ridgefield city officials continued their discussions about a proposed tax increment financing plan with Clark-Cowlitz Fire Rescue during a special meeting Wednesday.
The two agencies last discussed the proposal in May. The tax plan would provide the city with millions of dollars in new revenue to build needed infrastructure in the taxing area.
“What we’re looking at now is all infrastructure projects, mainly street projects, on the east and the west side of Interstate 5 — at the junction — straddling Pioneer Street. Those transportation projects are needed to get the economic development that the analysis shows could bring up to 1,900 jobs,” Finance Director Kirk Johnson said in a June interview.
Frequently used in other states, tax increment financing is a relatively new concept in Washington. The program was approved by the state Legislature in 2021. It lets local governments invest in infrastructure and other improvements, then pay later for those improvements through bonds or other methods. The primary benefit is that jurisdictions get to capture future anticipated tax revenues now. Ten jurisdictions have submitted tax increment financing proposals to the state for review, including Ridgefield and the Port of Vancouver.
How does tax increment financing work? Properties within a designated tax increment financing area are assigned a fixed or “base” property value when the tax area is formed. Local taxing districts, such as the city, county and fire district, would continue to receive tax revenues based on that base value rather than the assessed value, which is updated each year. Taxes levied on future increases in the assessed value of the property — or the increment value — are paid to the city to pay for the public improvements.
While the tax plan would be a boon to the city, fire district officials say they will lose out on tax revenue needed to support the growing city. The city estimates the impact to the district over the 25-year lifespan of the tax plan at $18.2 million.
“The thing that concerns us is it’s a 25-year process. The tax increases on the valuation of properties that are in the (tax increment financing) will go to the city. The city will use that money to bond projects, specifically road projects,” Fire Chief John Nohr said in June.
The city contends the potential revenue loss to the fire district is a small portion of its total revenue. According to a statement from the city, properties within the proposed tax increment financing area represent less than 1 percent of the total assessed value of properties within the fire district’s taxing area. Initially, the amount of revenue lost also will be less than 1 percent of the district’s total revenues, the statement adds. By 2049, the amount of lost revenue would increase to 5.8 percent of total revenue.
New to the discussion was the idea of mitigating the fire district’s financial losses.
“We talked in theory about a few things, but nothing was agreed to during the meeting,” said Stanley Chunn, board chair for the fire district, in an interview Thursday.
“Ideas were kicked around without ever vetting them,” Nohr said Thursday.
Those ideas included purchasing land for a fire station, building a new fire station and sharing sales tax revenue.
Nohr said stores such as Costco or Home Depot would generate millions of dollars in tax revenue for the city and could make sharing sales tax revenue easier to accomplish.
“But that received a pretty cool reception,” Nohr added.
Chunn said the system is built on everybody paying their fair share.
“That’s not to say that the property owners or developers aren’t paying their fair share, but those taxes are being reallocated, without a vote of the people, to another taxing district,” Chunn said Thursday.
Ridgefield Mayor Jennifer Lindsay said a couple of mitigation options were outlined during the special meeting. One idea involves the project list that has to be created and approved before the tax plan is implemented.
“Before we get that project list created, one possible mitigation option is working with Clark-Cowlitz Fire Rescue in getting a project specific to the fire district on that project list,” Lindsay said in an interview Thursday.
Lindsay said the ordinance could also include language requiring the city to revisit the tax plan and its impact to the fire district at a later date.
“We don’t know how much of an impact it’s going to be, and we don’t know the timeline for the impacts so it’s challenging to say, ‘We’re going to do this on this date for this amount,’ because we don’t know what that is yet,” she said.
“The fire district is strongly pushing for mitigation; some type of financial offset to us that helps us to continue to provide service to those areas when the development occurs,” Nohr said.
Whichever mitigation option, if any, the city and fire district agree to will have to be resolved quickly. The proposal is scheduled to come back before the city council in October. A second reading would be required before the council can approve or deny the plan. A public briefing was held July 13 and a second public briefing will be held in the fall. Lindsay said the goal is to have something in place by the start of the new year.
