Bill > HB2451

This bill modifies existing laws concerning local tax increment financing (TIF), a tool used by local governments to fund public improvements by capturing the increase in property taxes generated by new development within a designated area. Key changes include defining the "consumer price index" for annual adjustments to the maximum assessed value of increment areas, which are now capped at $200 million (adjusted annually) or 20% of a jurisdiction's total assessed value, whichever is less, with a temporary exception allowing up to $500 million for specific cities under certain conditions. The bill also mandates that increment areas have a sunset date, which must be the earlier of 25 years after tax revenues are collected or when all related debt is repaid, and clarifies that active increment areas cannot physically overlap. It introduces new requirements for project analyses, including a detailed list of public improvements with estimated completion dates and funding sources, and strengthens provisions for consulting with and mitigating impacts on other taxing districts (like fire departments or school districts) through negotiation, mediation, and binding arbitration if agreements cannot be reached, with specific conditions triggering these processes. Additionally, the bill allows private developers to construct public improvements and be reimbursed through TIF revenues via a reimbursement agreement, and it requires annual reporting on the status of increment areas, including progress, economic benefits, and impacts on taxing districts. Finally, it clarifies how voter-approved increases in property tax levies affect the tax allocation base value and specifies that these changes do not apply to increment areas already in effect before June 2, 2026.

Budget and Finance, Government Affairs

https://app.leg.wa.gov/billsummary?BillNumber=2451&Year=2025&Initiative=false