Pullman mulls incremental tax increases

The city of Pullman is considering setting aside revenue generated from property tax increases for economic development.

The City Council convened for its regular meeting Tuesday to discuss expanding its revenue sources in the coming years. Sean Miller, the city’s economic development manager, presented an option to take advantage of incremental increases in property tax and invest back into the community.

Tax increment financing, or TIF, is a financing tool that enables local governments to invest in the development and revitalization of specific areas within the community, Miller said. He said though the process is new, it’s shown to stimulate economic growth, attract private investors and promote community redevelopment.

The city would be able to create two districts no greater than 20% of Pullman’s assessed value, selecting areas that either need to be further developed or have potential economic development, Miller said.

Each year, the local government would use current tax assessed value to set a base assessed property value for buildings within the district, Miller said. Increases in property tax from the base assessed value would be set aside into a TIF fund, which can last from five to 25 years.

Miller said the process doesn’t increase property taxes, but rather puts increases property owners have already paid aside to accumulate in a fund.

Local government would be able to use funds to finance public infrastructure projects within the district, such as utility improvements, road construction and new infrastructure, Miller said.

The city would have an option to fund projects from general obligation bonds, or a “pay as you go basis,” he said. The fund would be used to pay bond redemption or project invoices. Once the project completes, the TIF fund sunsets. Miller said after this the city is required to return all extra money in the fund as appropriate.

Councilor Nathan Weller asked if there are any downsides to TIF. Miller said if the TIF fund isn’t able to generate enough to finance projects, the city is responsible to pay for developments. He added more economic development to an area could affect rent rates.

Megan Guido, councilor, asked if it would be possible to fund a bypass using TIF. Miller said absolutely. Wenatchee, Wash., is working on this.

Mayor Glenn Johnson said he’s heard a lot of positives about TIF. He said he’s on the Transportation Improvement Board for the state, and other towns are grateful for the funding. He added it seems other cities have been able to get projects done with TIF funds.

No action was taken on this issue. The presentation served as an opportunity for the council to learn about additional revenue sources like TIF.