Washington Senate Bill Report ESHB 1189 (March 8, 2021)
- Issuer
- Congressional materials
- Document type
- Report
- Date
- 2021-03-11
- Case
- 2021 03 11 A28695 D230879 Bill Report 1189 S E Sba Bfst 21
Summary
A Senate Bill Report on ESHB 1189, an act relating to tax increment financing, prepared for the Senate Committee on Business, Financial Services & Trade and dated as of March 8, 2021. It records that the bill passed the House on 3/3/21 by a vote of 64-33 and lists committee activity on 3/11/21. The background section describes property tax levies, the 1 percent revenue growth limit and the constitutional $10 limit. The summary of the proposed striking amendment describes how a local government may designate up to three increment areas, retired after no more than 25 years, after a project analysis reviewed by the Office of the State Treasurer, and how the county treasurer apportions the resulting property taxes. The report lists no appropriation and states that a fiscal note is available.
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Full text
SENATE BILL REPORT
ESHB 1189
As of March 8, 2021
Title: An act relating to tax increment financing.
Brief Description: Concerning tax increment financing.
Sponsors: House Committee on Finance (originally sponsored by Representatives Duerr,
Boehnke, Bateman, Sullivan, Fitzgibbon, Walen, Ramel, Springer, Wicks, Slatter, Pollet,
Callan and Harris-Talley).
Brief History: Passed House: 3/3/21, 64-33.
Committee Activity: Business, Financial Services & Trade: 3/11/21.
Brief Summary of Bill
• Authorizes local governments to designate tax increment financing areas
and to use increased local property tax collections to fund public
improvements.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE
Staff: Clinton McCarthy (786-7319)
Background: Property Tax. All real and personal property in the state is subject to
property tax each year based on its value, unless specific exemption is provided by law.
Property taxes are levied by the state and many local jurisdictions, including counties, cities,
and local school, fire, park, and library districts. Property taxes are collected by the county
and distributed to the levying jurisdiction. The county assessor determines the value of real
and personal property for tax purposes, and calculates and certifies levy rates for most
taxing districts. The Washington Constitution requires taxes be uniform within a class of
property. The annual growth of all regular property tax levy revenue is limited as follows:
• jurisdictions with a population of less than 10,000, revenue growth is limited to 1
percent; and
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- ESHB 1189
• jurisdictions with a population of 10,000 or more, revenue growth is limited to the
lesser of inflation or 1 percent plus the value of new construction.
The constitution also provides for a levy rate limit of $10 per $1,000 of assessed value,
referred to as the constitutional $10 limit.
Tax Increment Financing. Tax increment financing (TIF) is a method of allocating a
portion of property taxes to finance public improvements in designated areas. Typically,
under a TIF program, a local government issues bonds to finance public improvements. To
repay its bondholders, the local government is permitted to draw upon regular property tax
revenue from increases in assessed value inside a special district surrounding the site of the
public improvements.
Summary of Bill: The bill as referred to committee not considered.
Summary of Bill (Proposed Striking Amendment): Creation of a Tax Increment
Financing Area. A local government may designate TIF areas and use resulting tax
allocation revenues to pay for public improvement costs. To do so, the local government
must adopt an ordinance designating a specific increment area within its boundaries. Public
improvements to be financed with the use of TIF must be specified. The increment area
cannot include the area of the entire jurisdiction of the local government. A local
government can create no more than three active increment areas at any given time and they
may not physically overlap. An increment area must be retired after no more than 25 years.
Prior to establishing an increment area, the local government must consider a project
analysis that includes objectives for the increment area, identification of properties within
the financing area, assessments of likely job creation and private development expected
from the project, potential impacts and mitigation measures needed, and so on. If a project
analysis indicates an increment area will impact at least 20 percent of assessed value in a
fire district, mitigation strategies must be negotiated. Prior to adoption of an ordinance
authorizing an increment area, the project analysis must be submitted to the Office of the
State Treasurer for review. The local government must hold at least two public briefings for
the community regarding the tax increment project.
A local government designating a TIF area may issue general obligation bonds to finance
the public improvements within an increment area. Any increase in assessed value within
an area is included in the add-ons for purposes of the 1 percent revenue growth limit
calculation.
Apportionment of Taxes. Beginning in the calendar year following the passage of the
ordinance, the county treasurer must distribute receipts from regular taxes on real property
located in the increment area. Property taxes to be apportioned under TIF include property
tax levies subject to the $10 and $5.90 limits. Taxes levied by port districts or public utility
districts specifically for making payment on bonds, and taxes levied by the state for
Senate Bill Report -2- ESHB 1189
supporting common schools are excluded from TIF apportionment.
Each taxing district shall receive that portion of its regular property taxes produced by the
rate of tax levied by the taxing district on the tax allocation base value for that TIF project
in the taxing district.
The local government that created the increment area shall receive an additional portion of
the regular property taxes levied by each taxing district upon the increment value within the
increment area. The local government that created the increment area may agree to receive
less than the full amount of this portion as long as bond debt service, reserve, and other
bond covenant requirements are satisfied. The portion of the tax receipts distributed to the
local government may only be expended to finance public improvement costs financed by
TIF.
The apportionment of increases in assessed valuation in an increment area cease when the
taxing district certifies to the county assessor that allocation revenues are no longer needed
to pay the public improvement costs. Any excess tax allocation revenues must be returned
to the county treasurer and distributed to the taxing districts that imposed regular property
taxes.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Senate Bill Report -3- ESHB 1189
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- app.leg.wa.gov