PORT OF SEATTLE
MEMORANDUM

COMMISSION AGENDA            Item No.         6e

Date of Meeting       Jul 28, 2009
DATE:   July 27, 2009

TO:     Tay Yoshitani, Chief Executive Ofcer

FROM:   Clare Gallagher, State Government Relations
Manager 5%
Elizabeth Morrison, Senior Manager, Corporate Finance     "14" Z41

SUBJECT: Resolution No. 323 6- 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 nance public infrastructure
designed to attract
private investment and economic development. This new tool is based on tax increment
nancing (TIF). Traditional TIF nancing taps increased tax
revenue generated by private
development, and applies those taxes to pay bonds issued to nance 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 ofcial 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 nancing 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 Ofcer
July 27, 2009
Page 2 of 3

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 cities of Auburn, Bellevue, Federal Way and
Renton that they intend to form a revitalization area under the new legislation.

Auburn:
Public hearing July 20, 2009
Project proposal: Downtown Transit Center improvements
Estimated project cost: $8 million
Opt out deadline: August 3

Bellevue:
Public hearing July 27, 2009
Project proposal: NE 4th Extension project
Estimated project cost: $29.4 million
Opt out deadline: August 3

Federal Way:
Public Hearing August 4, 2009
Project proposal: Federal Way Village development, 44 acres at S 336th Street/Pac Highway S.
Estimated project cost: $2.97 million
Opt out deadline: August 4

Renton:
Public hearing August 10
Project proposal: Council evaluating development at S. Lake Washington and/or Port Quendall
Estimated project cost: undetermined at this time
Opt out deadline: August 10

Due to the long life of this authority (25 years) and the lack of information regarding future
growth in each of the RAs, there is no way to calculate or to estimate the amount of the Port's
tax receipts that would be diverted to these 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.

COMMISSION AGENDA
T. Yoshitani, Chief Executive Ofcer
July 27, 2009
Page 3 of 3

RECOMMENDED ACTION

Because the legislation is very new and the future impact to the Port is unclear, the
recommendation is to optout from participation in 2009 local revitalization area participation.
Should the Port choose to support a project in a city or town, the use of an interlocal agreement
(ILA) is available, and is a method used historically by the Port to dene nancial participation.
The Port's role in any ILA must be consistent with the Port's mission, as dened by statute, and
provides greater certainty regarding support of another local government's project, use of Port
monies and consistency with our duciary responsibility under the statute.

In order to transmit an ofcial action from the Port Commission by the rst opt-out deadline for
the City of Auburn, the Commission must take nal passage on a resolution by August 3. The
proposed resolution is attached and the Commission should consider taking rst and second
reading on its meeting of July 28 to meet that deadline.