Pasco becomes Washington’s first city to use TIF
Pasco, Washington’s population increased by nearly 20,000, or one-third, since 2010. People are drawn to the region’s natural beauty, mild winters, and relative affordability. The growth drives demand for new homes, schools, shopping districts, and industrial areas, which in turn requires city-financed infrastructure—roads, sidewalks, water and sewer systems, streetlights, parks, and transit stops. Paying for that infrastructure has been a long-time challenge and has strained the city’s budget.
Enter Tax Increment Financing (TIF), a productive tool for economic development that can help communities overcome infrastructure funding challenges and spur growth. TIF, adopted by Washington State in 2021, enables local governments to fund infrastructure projects by assessing taxes on the anticipated incremental growth in a property’s value after it is developed. With a well-designed TIF plan, the new development pays for the infrastructure it uses without increasing taxes or diverting funds from other areas of the local government’s budget. Because TIF can help to unlock the potential of vacant land without burdening residents or community resources, it holds the promise of equitable development.
ECONorthwest’s real estate development and municipal finance experts are advising an inaugural class of Washington cities, five in all, on how to apply the new financing tool. Of the five, Pasco was the first to approve a TIF-funded project—$40 million in road, water, sewer, and storm infrastructure improvements in the Broadmoor area situated in the geographic center of the Tri-Cities region. The improvements, which broke ground in March 2023, will facilitate the development of hundreds of multi-family and single-family housing units and commercial properties over the next two decades.