Item 6a Memo

PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA           Item No.      6a 
Date of Meeting:    August 24, 2009 
DATE:    August 20, 2009 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    Clare Gallagher, State Government Relations Manager 
Elizabeth Morrison, Senior Manager, Corporate Finance 

SUBJECT:  Resolution No. 3627, First Reading. Opting Out of Tax Redistribution for Local
Revitalization Areas 

BACKGROUND 
This past legislative session, the Washington Legislature adopted SB 5045, Community
Revitalization Financing, which permits Washington local governments, including port districts, 
to form "local revitalization areas" (RA) to finance public infrastructure designed to attract
private investment and economic development. This new tool is based on tax increment
financing (TIF). Traditional TIF financing taps increased tax revenue generated by private
development, and applies those taxes to pay bonds issued to finance the public infrastructure
supporting the development. 
Under SB 5045, the state will provide grants in the form of a state sales credit to local
jurisdictions for infrastructure improvements. The city would be allowed to keep up to $500,000
per year in sales tax money that otherwise would go to the state. That money must be matched,
dollar for dollar, by local tax revenue. That local tax revenue can include pledged new tax
revenue resulting from the new development from the city applying for the grant, other grant
monies or private contributions, as well as new tax revenue collected by overlapping tax
jurisdictions such as port districts or transit districts for up to the 25 years of the project . 
SB 5045 allows local taxing districts that do not wish to redistribute the increased property and
sales taxes within the RA to take official action to opt out. By opting out, the Port would collect
its full portion of property tax generated on the improved property. Per the law, the proposing
jurisdiction is required to provide notice, hold a public hearing and allow taxing districts to opt
out of the revitalization area financing within a 30-day time frame before adoption of the RA. 
While the legislation offers only one opportunity to either participate in the proposed new RA or
to opt out, nothing in the legislation prohibits the Port from participating in development through

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer 
August 20, 2009 
Page 2 of 2 

more traditional means such as interlocal agreements, which would allow the Port more time and
involvement to determine that the development is an appropriate use of the Port's tax levy funds. 
The Port of Seattle has received notice from the City of Newcastle that it is evaluating whether to
create a Revitalization Area under the new legislation.
Newcastle: 
Public hearing August 18, 2009 
Project proposal: Newcastle Downtown Project 
Opt out deadline: August 25 
Due to the long life of this authority (25 yrs) and the lack of information regarding future growth
in any RAs, there is no way to calculate or to estimate the amount of the Port's tax receipts that
would be diverted to other jurisdictions. However, the Port's levy collection would be impacted.
Each year, the Commission establishes a dollar amount of tax levy which is then translated into a
levy rate applied to all assessed value in King County. By participating in an RA, the Port's levy
rate applied to 75% of the new assessed value created in the RA would remain in the RA and
only 25% would be sent to the Port. The result is that the Port would collect less than its full
levy amount. That could mean that the Port would need to set a higher tax levy in order to fund
Port projects. 

RECOMMENDED ACTION 
Because the legislation is very new and the future impact to the Port is unclear, the
recommendation is to opt-out from participation in 2009 local revitalization areas. Should the
Port choose to support a project in a city or town, the use of an interlocal agreement is available,
and is a method used historically to define financial participation. The Port's role in any
interlocal agreement must be consistent with the Port's mission, as defined by statute, and
provides greater certainty regarding support of another local government's project, use of Port
monies and consistency with our fiduciary responsibility under the statute. 
In order to transmit an official action from the Port Commission by the opt-out deadline for the
City of Newcastle, the Commission must take final passage on a resolution by August 25. A
proposed resolution is attached.

Limitations of Translatable Documents

PDF files are created with text and images are placed at an exact position on a page of a fixed size.
Web pages are fluid in nature, and the exact positioning of PDF text creates presentation problems.
PDFs that are full page graphics, or scanned pages are generally unable to be made accessible, In these cases, viewing whatever plain text could be extracted is the only alternative.