A couple healthcare providers working at Lake Chelan Health voiced their opposition against the City of Chelan's proposed taxing district around the hospital on May 24.

The proposed Tax Increment Financing (TIF) District would use revenue from increasing property taxes within a certain district and funnel it towards neighboring public infrastructure projects.

Chelan city council voted 6-1 to set boundaries for this Tax Increment Area (TIA) in East Chelan, in order to fund water utility infrastructure projects.

During the council meeting, Bob Stowe with Stowe Development & Strategies summarized how the TIA works. Stowe Development & Strategies, who are in association with ECONorthwest, conducted the TIF district analysis.

Later on, Public Works Director Jake Youngren showed a map of the TIA and the projects that are associated within the district.

The TIA would cover construction costs for the East Chelan Reservoir and Booster Pump Station, along with the Bradley Street to No See Um Road Water Main Extension, and the Isenhart Road Watermain Extension.

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The city would start receiving TIF funds in 2024, depending on whether property taxes do increase within that district over the past year.

Construction on these infrastructure projects are scheduled to begin in mid-to-late 2024 and estimated to cost $27,059,100, with $16 million of that coming from TIF revenues.

According to council packet materials, the value of land within the TIA is currently assessed at $115 million. 

The city would issue two series of bonds, one in 2024 for $9 million, and another in 2028 for $7 million and would be repaid over a span of 25 years or whenever they get fully paid off.

Lake Chelan Health workers like Kim Brown and Marlana Morning Star, along with former Lake Chelan Health Board Commissioner Jordana LaPorte, were among those who spoke out against the TIF district, claiming that this district would place another financial burden on the hospital.

“You are literally threatening our ability to provide efficient and financially effective medical services that your own citizens need and voted for,” LaPorte said.

“This is a nonprofit organization, we're trying to just be in the black to pay our employees, to be here to have enough employees for each of these departments to care for this community,” Brown said. “I feel like we're being asked to cover costs that developers should be covering, at least in part.”

“The TIF should not be your first line and your first attempt at infrastructure funding,” Morning Star later added, “Please don't reach into the pockets of citizens of this community without protecting us. I want you to go in with your gloves on.”

Earlier on May 16, the city published a letter to concerned parties the process of establishing a TIF district and that they looked at other funding routes, such as raising utility rates or creating a Local Improvement District (LID) for North/East Chelan residents.

The city determined that both of those options were unfair to existing rate payers.

The city wrote that if construction costs exceed their ability to be repaid, then the city would cancel the TIF and return those TIF funds to junior taxing districts.

They also wrote that this TIF district proposal included negotiation provisions for the Fire District, Hospital, and EMS, which will be triggered after the first project within the district is constructed and it achieves a 95 percent occupancy rate.

The sunset date for this district is set for Dec. 31, 2049.

You can read more on the TIF district study here.

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