3048 Desert Point TIA
ORDINANCE NO. 3048 AN ORDINANCE OF THE CITY OF MOSES LAKE, WASHINGTON, DESIGNATING THE DESERT POINT TAX INCREMENT AREA; SETTING A SUNSET DATE FOR THE INCREMENT AREA; IDENTIFYING THE PUBLIC IMPROVEMENTS TO BE FINANCED; INDICATING THE CITY’S INTENT TO ISSUE BONDS TO FINANCE PUBLIC IMPROVEMENT COSTS IN A MAXIMUM PRINCIPAL AMOUNT NOT TO EXCEED $14,000,000: PROVIDING THAT THE INCREMENT AREA WILL TAKE EFFECT ON JUNE 1, 2024; IMPOSING A DEADLINE FOR COMMENCEMENT OF CONSTRUCTION; AND PROVIDING FOR RELATED MATTERS. WHEREAS, the City has identified a proposed Tax Increment Area (TIA) of approximately 96 acres of property that is being planned for residential and commercial development and is in need of substantial infrastructure improvements to support the desired development; and
WHEREAS, the TIA has the opportunity, if developed, to provide a variety of multi-family housing, retail, restaurants, office space and amenities for the community providing for increased tax revenues to support City services and providing employment opportunities for the
residents of the City; and WHEREAS, the Washington State Legislature, during its 2021 legislative session,
enacted Engrossed Substitute House Bill 1189 as Chapter 207, Laws of 2021, titled "AN ACT Relating to tax increment financing" as amended by Chapter 354, Laws of 2023, and codified as Chapter 39.114 RCW (the “TIF Act”), which authorizes local governments, including cities, to carry out tax increment financing of public improvements needed to support vital private economic development projects; and WHEREAS, that the TIF ACT authorizes the allocation of property tax revenues generated from the increased assessed valuation of properties improved by private development that are within a TIA to pay for public improvements that are needed to support the private development; and WHEREAS, City management has identified the TIF public improvements (TIF Projects) to support the desired development based on market conditions necessary to accommodate housing demands and commercial tenants; and
WHEREAS, the TIF Projects are estimated to cost approximately $14 million to construct; and
WHEREAS, City management anticipates bringing forward for Council consideration an agreement between the City and the Desert Point Ownership Group (DP-OG) prior to the issuance of any debt that: (i) the OG-DP has agreed to be responsible for all of the debt issued
by the City up to $10 million not covered by TIF revenues; and, (ii) the parties plan to develop a process for when invoices are generated by the City to the OG-DP based on revenue gaps to pay the City’s debt service, along with a reconciliation process to proportionately payback OG-DP if additional TIF revenue are generated in later years from private development.
WHEREAS, The City plans to issue $9 million in debt in 2025 (funding for roads and utilities) and second debt issuance up to $5 million (for the State round-about) may occur no
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later than 2029, allowing the City time to purse State grants or funding to eliminate or reduce the second debt issuance.
WHEREAS, the City has prepared a Project Analysis for the Desert Point TIA and submitted such to the Office of the State Treasurer for review and comment as required by law; and
WHEREAS, there currently exists no TIA within the City and the TIA designated by this ordinance does not consist of the entire geographical area of the City and does not have an
assessed valuation of more than $200,000,000 or more than 20% of the City’s total assessed valuation; WHEREAS, the Office of the State Treasurer has completed its review of the Moses Lake Desert Point Project Analysis and has stated that the Project Analysis, generally addresses the topics listed in subsection (2) of RCW 39.114.020; and WHEREAS, the City has conducted public briefings on and provided notice of the proposed TIA to inform the community and other public agencies about the anticipated benefits and impacts associated with the development; and NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF MOSES LAKE, WASHINGTON, AS FOLLOWS:
Section 1. Definitions. Capitalized terms used in this ordinance shall have the meanings set forth in the recitals to this ordinance above and in this Section 1. The uncapitalized terms "public improvement costs," "regular property taxes," and "tax allocation revenues," used in this
ordinance shall have the meanings provided for those terms by RCW 39.114.010, as the context requires. "City" means the City of Moses Lake, Washington "Code" means the Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. "Council" means the Moses Lake City Council, acting in its legislative capacity. "County" means Grant County, Washington. "Finance Director" means the Director of Finance of the City or such other officer of the City who succeeds to substantially all of the responsibilities of that office.
"Increment Area" means the approximately 96 acres of land designated by Section 2 of this ordinance as the “Desert Point TIA.”
"Project Analysis" means the Desert Point Final Project Analysis submitted to the Washington State Treasurer on February 9, 2024, for its review and comment. "Treasurer's Review Letter'' means the letter to the City from the Office of State Treasurer dated May 6, 2024, summarizing its review of and providing comments, recommendations and acceptance with respect to the Project Analysis for consideration by the City.
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Section 2. Designation of Increment Area. Pursuant to the TIF Act, the City designates the approximately 96 acre parcel of land known as Desert Point and described in Exhibit A to this
ordinance. In making this designation, the Council finds that the Increment Area (i) is the only increment area designated by the City under the TIF Act, (ii) is located within the boundaries of the City, (iii) does not include the City's entire territory, and (iv) does not have an assessed value
on the date of this ordinance greater than the lesser of $200,000,000 or 20 percent of the total
assessed value of taxable property within the City of $ $2,967,270,315
Section 3. Sunset Date of the Increment Area. The sunset date of the Increment Area is
hereby set as (i) December 31, 2050, which is the date not later than 25 years after the first year (calendar year 2025) in which tax allocation revenues will be collected on taxable property within the Increment Area (the "outside sunset date"), or (ii) if earlier, the date ("an early sunset
date") on which the City certifies to the County Treasurer that all public improvement costs to be paid or reimbursed with tax allocation revenues derived from the Increment Area have been fully paid, including but not limited to reimbursements to the City for principal and interest
payments required to be made by the City from revenue sources other than tax allocation revenues on limited tax general obligation bonds issued to finance the portion of public improvement costs that are intended to be paid and retired, in whole, from tax allocation revenues, as authorized by RCW 39.114.060(1). Section 4. Identification of Public Improvements to Be Financed. The public improvements to be financed consist of the following infrastructure improvements to be owned by the City and the State of Washington located within or outside of and serving the Increment Area:
a. Roads and Utilities (includes curb-gutter-sidewalks, landscaping, storm, water, sewer mains, and gateway features)
b. State Round-about (at intersection of Highway 17 and Yonezawa Boulevard)
The exact timing, specifications, and features of the public improvements described above are to be determined by the City. As authorized by RCW 39.114.020(1)(h), the City may expand, alter, or add to the public improvements identified above only if the City Council determines that
such changes are necessary to assure that the public improvements identified above can be constructed or operated as intended. If the City Council determines that it has become impractical to acquire, construct, or equip any, or any portion of, the public improvements by
reason of changed conditions, or costs substantially in excess of the amount of bond proceeds or tax allocation revenues, the City shall not be required to acquire, construct or equip such public improvements or portions.
Section 5. Expected Issuance of Bonds to Finance a Portion of the Public Improvement Costs. Pursuant to RCW 39.114.060 and other law, including the applicable provisions of Chapters 39.36 and 39.46 RCW, the City intends to incur general indebtedness and issue limited tax general obligation bonds with a term of approximately 25 years to finance a portion (the "bond-financed portion") of the public improvement costs to be paid in whole or in part from tax allocation revenues. The City expects to pledge the tax allocation revenues received by the City from the Increment Area, the City’s other regular property tax revenues, other lawfully available revenues of the City, and the full faith and credit of the City. The bonds are expected to be issued as tax-exempt bonds under the applicable provisions of the Code; however, if and to the extent that bond counsel determines that any of the public improvements (or portions thereof)
do not qualify to be financed with tax-exempt bonds, the City expects to allocate funding
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sources other than proceeds of tax-exempt bonds, including but not limited to proceeds of taxable bonds, to the financing of those public improvements (or portions thereof).
As of the date of adoption of this ordinance, the estimated maximum principal amount of bonds expected to be issued by the City to finance the bond-financed portion of the public
improvement costs is $14 million. This estimated maximum principal amount of bonds is subject to change based upon the final timing, specifications, and features of the public improvements and the final public improvement costs of the public improvements identified in Section 4 of this ordinance. The amount of proceeds of such bonds also may vary (be lower or higher than the maximum principal amount of $14 million) to the extent that the bonds are sold with original issue premium or original issue discount (respectively). While the City will pledge its full faith and credit as well as its regular property tax revenues and other lawfully available revenues, in addition to tax allocation revenues received by the City from the Increment Area, to pay debt service on the bonds, the City intends that debt service on the bonds shall be payable, in whole, from tax allocation revenues as authorized by RCW
39.114.060(1). Accordingly, if and to the extent debt service payments on its general obligation bonds issued to finance the public improvements are required to be made from the City's other regular property tax revenues and/or from other lawfully available revenues because the
amount of tax allocation revenues received are insufficient for that purpose, those debt service payments to that extent may be reimbursed from later-received tax allocation revenues that become available to reimburse the City for those debt service payments.
The City intends that the provisions of Section 4 of this ordinance (identifying the public improvements to be financed) and this Section 5 (stating the estimated maximum amount of bonds expected to be issued) together shall constitute a declaration of official intent under Treasury Regulations §1.150-2 to reimburse with bond proceeds any original expenditures for the public improvements paid before the issue date of the bonds that are intended to finance the bond-financed portion of the public improvement costs. Section 6. Increment to Take Effect on June 1, 2024. The Increment Area designated in Section 2 of this ordinance shall take effect on June 1, 2024. Section 7. Deadline for Commencement of Construction of Public Improvements. The City expects that construction of the public improvements identified in Section 4 of this ordinance will commence after June 1, 2024. In no event will construction of those public improvements
commence later than June 1, 2029, the date five years from the date of adoption of this ordinance, unless that deadline is extended for good cause.
Section 8. Required Findings by the City Council. Based upon the Project Analysis, the Council finds that:
The public improvements proposed to be paid or financed with tax allocation revenues are expected to encourage private development within the Increment Area-i.e., the private development of the Desert Point site, and to increase the assessed value of real property within the Increment Area; The private development that is anticipated to occur within the Increment Area as a result of the
proposed public improvements will be permitted consistent with the applicable zoning and development standards of the City, which is expected to be the permitting jurisdiction for the Increment Area;
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The private development would not reasonably be expected to occur solely through private
investment within the reasonably foreseeable future without the proposed public improvements; and
The increased assessed value of taxable property within the Increment Area that could reasonably be expected to occur without the proposed public improvements would be less than the increase in the assessed value estimated to result from the proposed private development with the proposed public improvements. Section 9. Preparation and Consideration of Project Analysis. As required by RCW 39.114.020(2), the Council has caused the Project Analysis, attached hereto as Exhibit B, to describe and analyze, among other matters, the factors and considerations listed in that statute. The Council takes note of the conclusion expressed in the Treasurer's Review Letter that the City's Project Analysis generally addresses the topics listed in subsection (2) of RCW 39.114.020. In its consideration and adoption of this ordinance, the Council has reviewed and considered, among other things, the Project Analysis and the Treasurer's Review Letter, attached hereto as Exhibit C, including the "Key Risks” and "Recommendations" noted in the Treasurer's Review Letter.
Section 10. Reimbursement of Expenses Incurred by County Assessor and County Treasurer. Pursuant to RCW 39.114.020(6), the City may enter into arrangements to reimburse the County
Assessor and County Treasurer for the expenses incurred by those officials in connection with the implementation and ongoing administration of the Increment Area as described in RCW 39.114.0l0(6)(e). Such expenses shall be a portion of the public improvement costs to be paid or
reimbursed from tax allocation revenues derived from the Increment Area. Section 11. Public Briefings Held by the City. As required by RCW 39.114.020(7)(a), the City has held two public briefings for the community regarding the Desert Point development and the public improvements needed to serve the Increment Area. These public briefings were held on April 17, 2024, and May 7, 2024, and announced to the public at least two weeks prior to the date each briefing was held by publishing notice in the Columbia Basin Herald, a legal newspaper of general circulation in the City and the greater County area, and by posting information on the City’s website and on all of its social media sites. Each public briefing included a description of the Increment Area, the public improvements proposed to be financed with tax allocation revenues derived from the Increment Area, and a detailed estimate of tax revenues for the
participating local governments and taxing districts, including the amounts allocated to the public improvements serving the Increment Area. The City also offered additional briefings for elected and administrative officials of the County Assessor and Treasurer, Port District, Library
District, School District, and Hospital District, however no additional briefings were held. Section 12. Publication of Notice and Delivery of Ordinance Designating Increment Area. The
City published the Public Briefing Notice two weeks prior to the briefings with information on the public improvements. Following the adoption of this ordinance, the City will deliver a certified copy of this adopted ordinance to the County Treasurer, the County Assessor, and the governing body of each taxing district within which the Increment Area is located at the respective addresses specified pursuant to RCW 42.56.040 within 10 days of the date on which the ordinance was adopted.
Section 13. General Authorization and Ratification. The appropriate officers of the City are severally authorized to take such actions and to execute such documents as in their judgment
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may be necessary or desirable to carry out the tax increment financing of the public improvements serving the Increment Area contemplated in connection with this ordinance. All
actions taken prior to the effective date of this ordinance in furtherance of the purposes described in this ordinance and not inconsistent with the terms of this ordinance are ratified and confirmed in all respects.
Section 14. Severability. The provisions of this ordinance are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this ordinance to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this ordinance in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable. Section 15. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage on June 1, 2024. PASSED by the City Council of the City of Moses Lake, Washington this 14th day of May, 2024.
________________________________________ Dustin Swartz, Mayor ATTEST:
________________________________ Debbie Burke, City Clerk
APPROVED AS TO FORM:
__________________________________ Katherine L. Kenison, City Attorney
Martinez Swartz Myers Fancher Madewell Lombardi Skaug
Vote: Aye Aye Aye Aye Aye Nay Aye
Date Published: May 20, 2024
Date Effective: June 1, 2024
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I, the undersigned, City Clerk of the City of Moses Lake, Washington (the "City"), hereby certify as follows:
The attached copy of Ordinance No. _____ (the "Ordinance") is a full, true and correct copy of the Ordinance duly adopted at a regular meeting of the Moses Lake City Council held on
________, 2024 (the "Meeting"), as that Ordinance appears on the minute book of the City. The Ordinance is in full force and effect. The Meeting was duly convened and held in all respects in accordance with law, the public was notified of the access options for remote attendance via the City's website, a quorum of the members of the Council was present throughout the meeting and a sufficient number of members of the Council present voted in the proper manner for the adoption of the Ordinance. Dated: _______________________________ _____________________________________
City Clerk
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Exhibit A: Tax Increment Area (TIA)
Parcels in the Desert Point TIA, Grant County WA include: Parcel ID
110076001 110075002
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Exhibit B: Desert Point Project Analysis
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Exhibit C: Office of State Treasurer Project Analysis Review Letter
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MOSES LAKE
TAX INCREMENT FINANCING (TIF)
PROJECT ANALYSIS
February 9, 2024
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ACKNOWLEDGEMENTS
This Project Analysis was prepared for the City of Moses Lake by Stowe Development &
Strategies, LLC in association with ECONorthwest (SDS/ECO team).
The Project Analysis represents a thorough and comprehensive evaluation of a future Tax
Increment Financing program and establishment of a Tax Increment Area for a significant
development opportunity in Moses Lake located in Northeast area of the City adjacent to
Highway 17 and east of Yonezawa Boulevard.
The production of this report would not have been possible without the participation,
collaboration, and guidance of the following individuals and groups.
Moses Lake Mayor & City Council
• Mayor Dustin Swartz
• Deputy Mayor Judy Madewell
• Councilmember Victor Lombardi
• Councilmember David Skaug
• Councilmember Deanna Martinez
• Councilmember Don Myers
• Councilmember Mark Fancher
City of Moses Lake Staff
• Kevin Fuhr, City Manager
• Madeline Prentice, Finance Director
• Katherine Kenison, City Attorney
• Kirsten Peterson, Community Development Director
• Brian Baltzell, Public Works Director
Legal and Financial Consultants
• Cynthia Weed, Bond Counsel, K&L Gates – Partner
• Jim Nelson, Financial Advisor, D.A. Davidson Company
Increment Financing Consultants
• Bob Stowe, Stowe Development & Strategies (TIF Project Manager)
• Morgan Shook, ECONorthwest
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Table of Contents
Introduction/Summary .................................................................................................................. 5
Highlights ............................................................................................................................................................. 5
Other Revenues and Options ................................................................................................................................ 7
Development Opportunity and Vision ........................................................................................... 8
TIA Infrastructure Needs ............................................................................................................ 10
Tax Increment Area ..................................................................................................................... 11
Tax Increment Revenue Projections ........................................................................................... 12
Overview of TIF Allocation Revenues ............................................................................................................... 12
TIA Allocation Revenue Modeling .............................................................................................. 14
Private Development Assumptions .................................................................................................................... 14
TIA Allocation Revenues ................................................................................................................................... 16
Financing Plan/Duration of TIA ......................................................................................................................... 22
Debt Issuance and Debt Service Coverage ......................................................................................................... 23
Jobs Analysis ................................................................................................................................ 26
Construction Employment .................................................................................................................................. 26
Ongoing Employment ........................................................................................................................................ 26
Impact Assessment and Mitigation ............................................................................................. 28
Affordable Housing ............................................................................................................................................ 28
Local Business Community ................................................................................................................................ 28
Local School District .......................................................................................................................................... 28
Local Fire Service ............................................................................................................................................... 28
Outreach to Impacted Taxing Districts ....................................................................................... 29
TIF “But-For” Requirement ....................................................................................................... 30
Expected Development Without TIF Improvements ......................................................................................... 31
Summary of “But-For-Requirement” ................................................................................................................. 31
Additional Incremental Taxes ..................................................................................................... 32
City of Moses Lake ............................................................................................................................................ 32
Sales & Use Taxes .............................................................................................................................................. 32
Utility Taxes ....................................................................................................................................................... 33
State Shared Motor Vehicle Fuel Tax & Liquor Board/Taxes ........................................................................... 33
Real Estate Excise Tax (REET) ......................................................................................................................... 33
Hotel/Motel Taxes .............................................................................................................................................. 33
Transportation Benefit District ........................................................................................................................... 34
Tax Base Productivity Assumptions .................................................................................................................. 34
Summary of Additional Tax Results .................................................................................................................. 34
Risk Assessment and Mitigation Plan ......................................................................................... 36
Private Development Risk Mitigation ................................................................................................................ 36
City Financial Mitigation ................................................................................................................................... 38
Level 1: Debt Issuance Timing/Grants/Private Development Financial Backstop. ........................................... 38
Level 2: Additional Taxes from Moderate Development Scenario: .................................................................. 38
Level 3: General Fund Reserves & Re-Prioritization of Existing Capital Projects. .......................................... 39
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Additional Mitigation Measures ......................................................................................................................... 40
Public Improvement Cost Containment ............................................................................................................. 40
Financial Mitigation Summary ........................................................................................................................... 40
Moses Lake TIF Team ................................................................................................................. 41
Future TIF Actions ...................................................................................................................... 41
Remaining TIF Schedule ............................................................................................................ 42
Findings | Bottom Line ................................................................................................................ 43
APPENDICES ............................................................................................................................. 44
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Introduction/Summary
This Project Analysis explains in detail the proposed TIA designation of the City’s public
improvement projects, envisioned private development, and associated tax increment revenue
to fund the public improvement projects.
Highlights
• $14 Million Total TIF Public Improvements
o Roads and Utilities: $9 million
o State Round-about: $5 million
• Private Development at Build-Out:
o 510 multi-family units
o 60,000 square foot hotel
o 340,000 square feet of large format retail
o 81,000 square feet of office and related uses
o 39,900 square feet of general retail and food & beverage
• TIF Allocation Revenues
o Present Value (2023$): $12.1 million
o Nominal Value: $23.5 million
• $178 Million of Market Value of Private Development at Build-Out
• Additional Tax Revenue
o Present Value (2023$): $33.7 million
o Nominal Value: $68.4 million
• 630 Temporary Construction Jobs
• 480 Ongoing Jobs
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Tax Increment Financing (TIF) is a powerful economic development tool and was adopted into
law in Washington State in 2021. The Washington State Legislature created the TIF authority
through House Bill 1189 (codified as Chapter 39.114 RCW) for a city, county, or port to create a
tax increment area (TIA). TIFs are used throughout the United States to promote economic
development.
Figure 1: Basic TIF Model
Source: Stowe Development & Strategies, 2023
In general, our State’s TIF is a financing option that allows a public agency (city, county, or port)
to fund publicly-owned infrastructure determined necessary to encourage the envisioned
private development within a TIA designated by the public agency. As private development
occurs (as a result of the public agencies investment in the identified public improvements),
property values rise, and the public agency uses the property tax generated by that
development in the TIA to pay for the public improvement projects. After the project costs are
paid, the public agency retires the TIA.
There are several key limitations to TIF in this State which include the following:
• No more than two active increment areas per sponsoring jurisdiction and they may not
overlap.
• Increment areas may not total more than $200 million in assessed valuation, or more
than 20% of the total assessed valuation of the sponsoring jurisdiction, whichever is
less.
• Cannot add additional public improvements or change the boundary of the increment
area once adopted.
• Must include a deadline of 5 years following the TIF adoption ordinance by when
construction of public improvements will begin (ability to extend for good cause).
• The local government may only receive TIF revenues for the period of time necessary to
pay the costs of the public improvements.
• If the local government finances the public improvements, the increment area must be
retired no more than 25 years after the adoption of the ordinance designating the
increment area.
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Risks
Because increased tax revenue is generated after a local government begins construction on
public infrastructure and after private development occurs, using TIF is risky. Understanding
and accepting a certain level of risk is important as the City will be obligated for the repayment
of any bond debt that is issued for the infrastructure improvements, regardless whether the
projected private development and property tax materialize. Sponsoring jurisdictions must
evaluate risks associated with TIF. The two main risks are: 1) expected private development
does not occur; occurs slower than expected; and/or, the type of development and its
magnitude is less than expected, and 2) cost for infrastructure improvements is higher than
projected.
These risks impact the expected TIF revenues and/or the public infrastructure improvements
cost. If revenues are not sufficient to cover the cost, the sponsoring jurisdiction must then use
other sources of revenue to pay for the public infrastructure. A mitigation plan may alleviate
some risks. Other risks include over-investment of infrastructure, or building infrastructure
which isn’t necessary for development to occur, resulting in loss of tax dollars that could have
been used for other public purposes. Local governments can guard against and potentially
avoid over-investing and under-development by carefully evaluating the local market
conditions and analyzing the But-For requirement. Utilized correctly, growth and development
in a TIA will pay for the infrastructure investments that encouraged it.
Other Revenues and Options
This Project Analysis also examines other anticipated revenues from the projected private
development, including sales tax on construction and ongoing sales tax. Additionally, we
examine sequencing appropriate infrastructure improvements with multiple bond issues over
time (e.g., 5-year period) as well as structuring debt service to align with projected property tax
revenues generated to better manage risks. Following TIA adoption, the City has multiple levers
to direct a successful project utilizing TIA generated revenues and safeguarding its other
resources. These options include amount of debt issued and when to issue debt based upon
expected private development type and scale, as well as refinement of infrastructure cost
estimates.
Private development interest and anticipated interest rates will drive the City’s actions; the City
can proceed with the development plan identified here, or, because the City has up to five
years after passing the TIF ordinance, may modify it as conditions may change. The City could
choose not to issue any debt, especially if development interest substantially changes to a very
low level or the cost of debt it too high. The City could use a pay-as-you-go strategy for the
infrastructure; however, doing so will likely delay the timing and reduce the scale of the private
development. It is important to point out that the Ownership Group for the proposed private
development of Desert Point (OG-DP) has agreed to be responsible for all debt up to $10
million issued by the City not covered by TIF revenues. Finally, the City could also rescind or
retire the TIA by ordinance prior to incurring debt.
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Development Opportunity and Vision
The OG-DP has proposed a large mixed used development site referred to as Desert Point in the
northeast part of the City of Moses Lake. Desert Point will be anchored by local, regional, and
national retail tenants; as well as, provide additional medical and employment options. Desert
Point will also provide multi-family housing options and be an entertainment destination for
the local and regional trade area. The overall site covers approximately 96 acres in land
coverage with development parcels of 82 acres.
A site context map is shown in the figure below.
Figure 2: Desert Point Context Map
Source: Ownership Group – Desert Point, 2023
The Desert Point project plans for approximately 1.4 million square feet of building space across
commercial and residential uses, including:
• 510 multi-family units
• A 60,000 square foot hotel
• 340,000 square feet of large format retail
• 81,000 square feet of office and related uses
• 39,900 square feet of general retail and food & beverage
Preliminary plans for Desert Point are shown in the figure below.
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Figure 3: Preliminary Development Site Map by Phase
Source: Ownership Group – Desert Point, 2023
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TIA Infrastructure Needs
The City has identified that the below public improvements and costs are necessary to
incentivize private development within the TIA. Preliminary plans call for the development of
three roads (Roads A, B, C) and round-about on Highway 17 in the figure below.
Roads and Utilities: $9 million
(includes curb-gutter-sidewalks, landscaping, storm, water, sewer mains, and gateway
features)
Round-About $5 million
Total (TIF) $14 million
Figure 4: Public Improvement Plans
Source: Ownership Group – Desert Point, 2023
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Tax Increment Area
The TIA includes a small area of the City of approximately 96 acres. The assessed valuation of
the TIA in 2023 is approximately $6,782,120 (2023 certified values for 2024 taxes). It is well
below either the $200 million assessed valuation threshold or 20 percent of the City of Moses
Lake’s total regular assessed valuation of $2,967,270,315 since the TIA is 0.2% of the total
valuation. The TIA boundary was selected because it represents a planned development that
can be built over time as the result of the infrastructure improvements funded by TIF.
Figure 5: Recommended Tax Increment Area
Source: ECONorthwest, 2023
The below table in Figure 6 summarizes the parcel identification numbers and assessed values
of properties in the TIF area which total $6,782,120 (2023 certified values for 2024 tax year).
Figure 6: List of Parcels in TIA
Source: ECONorthwest, 2023
Parcel ID Area
(acres)
Appraised
Land Value
Appraised
Improvement
Value
Total Appraised
Value
110076001 4 $468,270 $0 $468,270
110075002 92.2 $6,313,850 $0 $6,313,850
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Tax Increment Revenue Projections
Overview of TIF Allocation Revenues
Following guidance issued by the Washington State Department of Revenue (June 29, 2022),
the analysis estimates the apportionment of taxes to the TIA. These revenues are available to
the sponsoring local jurisdiction for funding the identified public infrastructure projects (that
are named in the ordinance). Under the TIF legislation, only certain regular levies are available
to the TIA. Using latest tax rates available (tax year 2023), levy rates in the proposed TIA use
$5.19 of the $10.87 total levy, approximately 47.8% of the total 2023 levy rate.
Since these are regular levies, the taxes must conform with the constitutional 1% limit as well
as the $5.90 aggregate limits. Both parts of the State School levy as well as local school district
excess levies are excluded. In addition, any taxes levied by port districts for the purpose of
making payment on bonds would be excluded.
Broadly, TIF in Washington allocates a portion of incremental property taxes to the TIA based
on the amount of assessed value added to the TIA. This means that each taxing district that
includes the TIA within its boundaries will receive that portion of its regular property taxes
produced by the rate of tax levied by the taxing district based on the assessed value of real
property located in the area for taxes imposed in the year that the TIA was created (the base
value). This amount will flow to those taxing districts for the period that the TIA is in place.
The local government that created the TIA will receive the additional portion of the regular
property taxes levied by each taxing district based on the increment value within the increment
area. For the local government that created the TIA, this includes its own portion of the regular
levy. Those affected levies will be able to include an increment add-on value (similar to the new
construction add-on value) as part of their levy for the years that TIF is in place. Property taxes
from the TIA begin on the calendar year following the passage of the ordinance. The County
Treasurer will distribute these funds to the agency that created the TIA. The table below shows
the Levy Rate Composition for 2023 Taxes.
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Figure 7: TIA Levy Rates in Use
Source: ECONorthwest analysis of Grant County Assessor District Levy Rates, 2023
Levy Code Area 71 2023 Taxes
Rates
Exempt: State
Property Tax
Exempt: Excess
and Other Levies
Available for TIF
allocation
Total $10.86847 $2.6852 $2.9897 $5.1935
State
Part 1 $1.74976 $1.7498 $0.0000
Part 2 $0.93544 $0.9354 $0.0000
County
Regular_Current Expense $1.21299 $1.2130
Regular_Veterans Aid $0.01125 $0.0113
Regular_Mental Health $0.02500 $0.0250
Port #10 (Moses Lake)
General Fund $0.41400 $0.4140
Bond Fund $0.0000 $0.0000
City of Moses Lake
Regular Levy $2.71886 $2.7189
City Bond $0.22500 $0.2250 $0.0000
School #161
Enrichment $1.31378 $1.3138 $0.0000
Bond $1.45094 $1.4509 $0.0000
Capital $0.0000 $0.0000
Hospital District #1
Regular Levy $0.52501 $0.5250
Library District
Regular Levy $0.28644 $0.2864
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TIA Allocation Revenue Modeling
New incremental development in the TIA will drive future growth in incremental assessed
value. These values will then be multiplied by the levy rate in the respective years to estimate
the amount of TIA allocation revenues. To accomplish this, there are four separate analyses
that must be completed.
Forecast incremental TIA assessed value. Based on the development program, the future
assessed value is estimated by assigning market-based improvement prices based on the land
use and size of the proposed development.
Forecast jurisdiction assessed value. Outside of growth in the incremental assessed value in
the TIA, it is necessary to forecast growth in the City’s overall assessed value (not counting the
incremental growth in the TIA.
Forecast highest lawful levy. For each taxing jurisdiction in the TIA, future levies must be
estimated. To do so, the amount of new construction, other add-on value, 101% limit factor,
total levy limit, and the maximum allowable levy must be taken into consideration. From that
interplay, it is possible to estimate what the given levy will be for any respective jurisdiction in
the future.
Forecast levy rates. Once the levy and assessed value are known in future years, it is possible to
calculate the levy rate (divide levy by thousands of assessed value). TIA allocations are made by
multiplying the levy rate by the incremental TIF assessed value.
To model TIA allocation property tax revenues, a 25-year cash flow model was created to
reflect development over time and applied the appropriate property tax base productivity and
property tax rates to estimate the stream of future property tax revenues.
Private Development Assumptions
Based on discussions with the City and OG-DP, the following Baseline development scenario
was created for purposes of this Project Analysis. The Baseline analysis is derived from the
project level assumptions provided by the OG-DP. Overall, it is estimated that a present value
of the market value exceeds $178 million. The overall development program is described
below. OG-DP’s preliminary understanding of the development program expects development
to occur over three phases as represented in the Figure 7 below.
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Figure 8: Development Program by Phase
Source: Ownership Group – Desert Point, 2023
Additionally, the analysis has provided three sensitivity tests of this program to test the
potential variance of TIA allocation revenues.
• Levy Rate Decline Scenario (Figure 10 below). The first is to test macro conditions that
might impact the calculation of the levy rate per the 1% limit factor that governs regular
levies. This scenario tests a lower bound of the levy rate where it falls faster over time
than the Baseline analysis. Due to the 1% limit factor, assessed value as generally grows
faster than levies leading to a condition where levy rates fall over time. This scenario
tests the idea that this falling levy rate may be more than what is assumed in the
Baseline analysis leading to 21% fewer tax allocation dollars per dollar increment of
growth.
• Lower Valuation Scenario (Figure 11 below). The second sensitivity tests a potential
lower valuation of the project stemming from economic conditions or the assessment
process. The Baseline analysis assumes the market (or taxable) value of the projects will
DEVELOPMENT REVENUE - PHASE I - 2025-2027
#Land Acreage Use Bldg SF Per $ / SF Total Market Value
1 15.00 ac North 40 Outfitters 115,000 135.00$ 15,525,000$
8 1.47 ac STCU & ICCU Credit Union 6,000 160.00$ 960,000$
9 7.19 ac Apartment Complex (Phase I - 150 units)267,000 112.00$ 29,904,000$
11 1.47 ac Sit Down Resturant - 10,000 160.00$ 1,600,000$
13 2.14 ac Gas/C-Store 5,200 150.00$ 780,000$
14 3.13 ac Car Wash & Bank Pads 10,000 170.00$ 1,700,000$
15, 16, 17 5.00 ac Ruby & Hilton Hotel & Event Center 60,000 150.00$ 9,000,000$
35.40 ac 473,200 59,469,000$
DEVELOPMENT REVENUE - PHASE II - 2027-2029
#Land Acreage Use Bldg SF Per $ / SF Total Market Value
7 2.01 ac Retail Strip Bldg 9,200 150.00$ 1,380,000$
9 7.19 ac Apartment Complex (Phase II - 180 units)315,000 115.00$ 36,225,000$
12 1.26 ac QSR Resturant 4,000 150.00$ 600,000$
18, 19 2.00 ac Office / Retail Building 20,000 140.00$ 2,800,000$
21 10.00 ac Big Box / Grocery Store (Fred Meyer)115,000 130.00$ 14,950,000$
22 1.00 ac Grocery Pad Bldg.3,500 160.00$ 560,000$
23.46 ac 466,700 56,515,000$
DEVELOPMENT REVENUE - PHASE III - 2029-2031
#Land Acreage Use Bldg SF Per $ / SF Total Market Value
6 4.84 ac Medical / Dental Office Bldg 45,000 180.00$ 8,100,000$
9 7.19 ac Apartment Complex (Phase III -180 units)315,000 120.00$ 37,800,000$
10 2.42 ac Junior Box Retail 28,000 140.00$ 3,920,000$
20 7.00 ac Junior Box Retail 82,000 135.00$ 11,070,000$
23 1.00 ac Grocery Pad Bldg.4,000 160.00$ 640,000$
14 1.00 ac Grocery Pad Bldg.4,000 160.00$ 640,000$
23.45 ac 478,000 62,170,000$
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be more than the construction cost. However, many properties are not assessed at the
full market value requiring some equalization process. This sensitivity tests a potential
bound where projects are assessed at 75% of their expected market value.
• Lower Absorption Scenario (Figure 12 below). The last scenario tests a smaller and
slower absorption of the Baseline scenario. Here. It is assumed that 75% of the project is
completed and construction is delayed 3 years.
Understanding and accepting a certain level of risk is important as the City will be obligated for
the repayment of any bond debt that is issued for the infrastructure improvements, regardless
of the projected private development and property tax materialize. To mitigate this risk, OG-
DP has agreed to be responsible for all debt issued by the City up to $10 million not covered by
TIF revenues (see the Private Development Risk Mitigation section below).
TIA Allocation Revenues
Using the assumptions identified in the Baseline development scenario by phase, future
assessed values of those improvements are estimated and serve as a foundation for the
expected TIA allocation revenues. For example, a vertical project is constructed in a certain
year, the assessor assesses it, and the incremental assessed value is determined by subtracting
that base value. This increment value is then multiplied by a forecast of the levy rate in the
respective year to determine the TIA allocation revenues from all the affected TIF regular levies.
The following tables summarizes the discounted value of 25 years of TIA allocation revenues
that would flow to the City of Moses Lake based on the Baseline development scenario sorted
by phase contribution. The analysis assumed the TIA is created in 2024 using 2023 certified
values. Due to the lagging nature of the property tax, the first year of calculated increment will
be in 2025 for 2026 taxes. Therefore, TIA allocation revenues will run through the end of tax
year 2050.
The revenues are shown in present value and nominal dollars. The present values are
discounted at a rate of 5% to approximate the City’s cost of capital (debt and issuance costs) to
give some approximate value of the TIA cash flows. The nominal dollars are shown since this is
ultimately the amount that the City can draw upon to service principal and interest on its debt
payments. These values are shown in the figure below.
Figure 9: TIF Allocation Revenues for Baseline Development Scenario
Source: ECONorthwest calculations, 2023.
Note: Total may not sum due to rounding.
Present Value Nominal Value
Moses Lake $6,320,000 $12,257,000
Grant County $2,950,000 $5,728,000
Port of Moses Lake $960,000 $1,870,000
Hospital $1,220,000 $2,370,000
Library $670,000 $1,292,000
Total $12,120,000 $23,513,000
TIA Allocation Revenue
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The TIF allocation revenues from the Baseline development scenario are estimated to have:
• Present Value (2023$): $12.1 million
• Nominal Value: $23.5 million
Figure 10: TIF Allocation Revenues for Levy Rate Decline Scenario
Source: ECONorthwest calculations, 2023.
Note: Total may not sum due to rounding.
The TIF allocation revenues from the levy rate decline scenario are estimated to have:
• Present Value (2023$): $10.1 million
• Nominal Value: $19.7 million
Figure 11: TIF Allocation Revenues for Lower Valuation Scenario
Source: ECONorthwest calculations, 2023.
Note: Total may not sum due to rounding.
The TIF allocation revenues from the lower valuation scenario are estimated to have:
• Present Value (2023$): $9.1 million
• Nominal Value: $17.6 million
Present Value Nominal Value
Moses Lake $5,240,000 $10,168,000
Grant County $2,530,000 $4,904,000
Port of Moses Lake $800,000 $1,551,000
Hospital $1,010,000 $1,970,000
Library $550,000 $1,073,000
Total $10,130,000 $19,659,000
TIA Allocation Revenue
Present Value Nominal Value
Moses Lake $4,740,000 $9,191,000
Grant County $2,210,000 $4,293,000
Port of Moses Lake $720,000 $1,401,000
Hospital $920,000 $1,776,000
Library $500,000 $969,000
Total $9,090,000 $17,636,000
TIA Allocation Revenue
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Figure 12: TIF Allocation Revenues for Lower Absorption Scenario
Source: ECONorthwest calculations, 2023.
Note: Total may not sum due to rounding.
The TIF allocation revenues from the lower valuation scenario are estimated to have:
• Present Value (2023$): $7.5 million
• Nominal Value: $15.7 million
Figures 13, 14, and 15 below summarizes the property taxes that will remain in the affected
taxing districts and, identifies the property tax allocation values that will flow to the TIA. They
are shown for:
• Moses Lake
• Grant County
• Port of Moses Lake
• Hospital District
• Regional Library District
Present Value Nominal Value
Moses Lake $3,890,000 $8,170,000
Grant County $1,820,000 $3,815,000
Port of Moses Lake $590,000 $1,245,000
Hospital $750,000 $1,577,000
Library $410,000 $863,000
Total $7,460,000 $15,670,000
TIA Allocation Revenue
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Figure 13: Summary of TIA Contributions by Tax Jurisdiction – Baseline Scenario
City of Moses Lake and Port of Moses Lake
Source: ECONorthwest calculations, 2023.
Assessment
Year Base Value Increment Value Levy Rate Total Property
Tax
Tax Allocated to
TIF
Tax Allocated to
City
2024 $6,782,120 $0 $2.591 $17,573 $0 $17,573
2025 $6,782,120 $0 $2.551 $17,299 $0 $17,299
2026 $6,782,120 $31,623,838 $2.511 $96,430 $37,106 $17,029
2027 $6,782,120 $65,034,422 $2.472 $177,503 $75,117 $16,763
2028 $6,782,120 $99,058,249 $2.433 $257,515 $112,631 $16,501
2029 $6,782,120 $134,952,720 $2.395 $339,466 $151,049 $16,244
2030 $6,782,120 $173,950,528 $2.358 $426,114 $191,660 $15,990
2031 $6,782,120 $215,044,425 $2.321 $514,839 $233,239 $15,741
2032 $6,782,120 $220,743,102 $2.285 $519,824 $235,684 $15,495
2033 $6,782,120 $226,592,795 $2.249 $524,868 $238,154 $15,253
2034 $6,782,120 $232,597,504 $2.214 $529,971 $240,650 $15,015
2035 $6,782,120 $238,761,338 $2.179 $535,134 $243,172 $14,781
2036 $6,782,120 $245,088,513 $2.145 $540,357 $245,721 $14,550
2037 $6,782,120 $251,583,359 $2.112 $545,640 $248,296 $14,323
2038 $6,782,120 $258,250,318 $2.079 $550,985 $250,898 $14,100
2039 $6,782,120 $265,093,951 $2.046 $556,392 $253,528 $13,880
2040 $6,782,120 $272,118,941 $2.015 $561,862 $256,185 $13,663
2041 $6,782,120 $279,330,093 $1.983 $567,394 $258,870 $13,450
2042 $6,782,120 $286,732,340 $1.952 $572,990 $261,583 $13,240
2043 $6,782,120 $294,330,747 $1.922 $578,649 $264,325 $13,033
2044 $6,782,120 $302,130,512 $1.892 $584,374 $267,095 $12,830
2045 $6,782,120 $310,136,970 $1.862 $590,164 $269,894 $12,630
2046 $6,782,120 $318,355,600 $1.833 $596,020 $272,723 $12,433
2047 $6,782,120 $326,792,024 $1.805 $601,942 $275,581 $12,238
2048 $6,782,120 $335,452,012 $1.776 $607,931 $278,469 $12,047
2049 $6,782,120 $344,341,491 $1.749 $613,989 $281,388 $11,859
2050 $6,782,120 $353,466,540 $1.721 $620,114 $284,337 $11,674
2051 $6,782,120 $362,833,403 $1.694 $626,309 $287,317 $11,492
2052 $6,782,120 $372,448,489 $1.668 $632,573 $290,328 $11,313
Assessment
Year Base Value Increment Value Levy Rate Total Property
Tax
Tax Allocated to
TIF
Tax Allocated to
Port
2024 $6,782,120 $0 $0.395 $2,679 $0 $2,679
2025 $6,782,120 $0 $0.389 $2,637 $0 $2,637
2026 $6,782,120 $31,623,838 $0.383 $14,701 $12,105 $2,596
2027 $6,782,120 $65,034,422 $0.377 $27,061 $24,505 $2,556
2028 $6,782,120 $99,058,249 $0.371 $39,259 $36,743 $2,516
2029 $6,782,120 $134,952,720 $0.365 $51,752 $49,276 $2,476
2030 $6,782,120 $173,950,528 $0.359 $64,962 $62,524 $2,438
2031 $6,782,120 $215,044,425 $0.354 $78,488 $76,089 $2,400
2032 $6,782,120 $220,743,102 $0.348 $79,248 $76,886 $2,362
2033 $6,782,120 $226,592,795 $0.343 $80,017 $77,692 $2,325
2034 $6,782,120 $232,597,504 $0.338 $80,795 $78,506 $2,289
2035 $6,782,120 $238,761,338 $0.332 $81,582 $79,329 $2,253
2036 $6,782,120 $245,088,513 $0.327 $82,379 $80,160 $2,218
2037 $6,782,120 $251,583,359 $0.322 $83,184 $81,001 $2,184
2038 $6,782,120 $258,250,318 $0.317 $83,999 $81,849 $2,150
2039 $6,782,120 $265,093,951 $0.312 $84,823 $82,707 $2,116
2040 $6,782,120 $272,118,941 $0.307 $85,657 $83,574 $2,083
2041 $6,782,120 $279,330,093 $0.302 $86,500 $84,450 $2,050
2042 $6,782,120 $286,732,340 $0.298 $87,354 $85,335 $2,018
2043 $6,782,120 $294,330,747 $0.293 $88,216 $86,229 $1,987
2044 $6,782,120 $302,130,512 $0.288 $89,089 $87,133 $1,956
2045 $6,782,120 $310,136,970 $0.284 $89,972 $88,046 $1,925
2046 $6,782,120 $318,355,600 $0.279 $90,865 $88,969 $1,895
2047 $6,782,120 $326,792,024 $0.275 $91,767 $89,902 $1,866
2048 $6,782,120 $335,452,012 $0.271 $92,681 $90,844 $1,837
2049 $6,782,120 $344,341,491 $0.267 $93,604 $91,796 $1,808
2050 $6,782,120 $353,466,540 $0.262 $94,538 $92,758 $1,780
2051 $6,782,120 $362,833,403 $0.258 $95,482 $93,730 $1,752
2052 $6,782,120 $372,448,489 $0.254 $96,437 $94,713 $1,725
Moses Lake
Port of Moses Lake
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Figure 14: Summary of TIA Contributions by Tax Jurisdiction – Baseline Scenario
Grant County and Regional Library
Source: ECONorthwest calculations, 2023.
Assessment
Year Base Value Increment Value Levy Rate Total Property
Tax
Tax Allocated to
TIF
Tax Allocated to
County
2024 $6,782,120 $0 $1.249 $8,472 $0 $8,472
2025 $6,782,120 $0 $1.192 $8,084 $0 $8,084
2026 $6,782,120 $31,623,838 $1.173 $45,064 $37,106 $7,958
2027 $6,782,120 $65,034,422 $1.155 $82,951 $75,117 $7,834
2028 $6,782,120 $99,058,249 $1.137 $120,342 $112,631 $7,711
2029 $6,782,120 $134,952,720 $1.119 $158,640 $151,049 $7,591
2030 $6,782,120 $173,950,528 $1.102 $199,132 $191,660 $7,473
2031 $6,782,120 $215,044,425 $1.085 $240,595 $233,239 $7,356
2032 $6,782,120 $220,743,102 $1.068 $242,925 $235,684 $7,241
2033 $6,782,120 $226,592,795 $1.051 $245,282 $238,154 $7,128
2034 $6,782,120 $232,597,504 $1.035 $247,667 $240,650 $7,017
2035 $6,782,120 $238,761,338 $1.018 $250,080 $243,172 $6,907
2036 $6,782,120 $245,088,513 $1.003 $252,520 $245,721 $6,800
2037 $6,782,120 $251,583,359 $0.987 $254,989 $248,296 $6,693
2038 $6,782,120 $258,250,318 $0.972 $257,487 $250,898 $6,589
2039 $6,782,120 $265,093,951 $0.956 $260,014 $253,528 $6,486
2040 $6,782,120 $272,118,941 $0.941 $262,570 $256,185 $6,385
2041 $6,782,120 $279,330,093 $0.927 $265,155 $258,870 $6,285
2042 $6,782,120 $286,732,340 $0.912 $267,770 $261,583 $6,187
2043 $6,782,120 $294,330,747 $0.898 $270,415 $264,325 $6,091
2044 $6,782,120 $302,130,512 $0.884 $273,090 $267,095 $5,996
2045 $6,782,120 $310,136,970 $0.870 $275,796 $269,894 $5,902
2046 $6,782,120 $318,355,600 $0.857 $278,533 $272,723 $5,810
2047 $6,782,120 $326,792,024 $0.843 $281,300 $275,581 $5,719
2048 $6,782,120 $335,452,012 $0.830 $284,099 $278,469 $5,630
2049 $6,782,120 $344,341,491 $0.817 $286,930 $281,388 $5,542
2050 $6,782,120 $353,466,540 $0.804 $289,793 $284,337 $5,456
2051 $6,782,120 $362,833,403 $0.792 $292,688 $287,317 $5,371
2052 $6,782,120 $372,448,489 $0.780 $295,615 $290,328 $5,287
Assessment
Year Base Value Increment Value Levy Rate Total Property
Tax
Tax Allocated to
TIF
Tax Allocated to
Library
2024 $6,782,120 $0 $0.273 $1,854 $0 $1,854
2025 $6,782,120 $0 $0.269 $1,825 $0 $1,825
2026 $6,782,120 $31,623,838 $0.265 $10,171 $8,375 $1,796
2027 $6,782,120 $65,034,422 $0.261 $18,723 $16,955 $1,768
2028 $6,782,120 $99,058,249 $0.257 $27,163 $25,422 $1,741
2029 $6,782,120 $134,952,720 $0.253 $35,807 $34,094 $1,713
2030 $6,782,120 $173,950,528 $0.249 $44,947 $43,260 $1,687
2031 $6,782,120 $215,044,425 $0.245 $54,306 $52,645 $1,660
2032 $6,782,120 $220,743,102 $0.241 $54,831 $53,197 $1,634
2033 $6,782,120 $226,592,795 $0.237 $55,363 $53,754 $1,609
2034 $6,782,120 $232,597,504 $0.234 $55,902 $54,318 $1,584
2035 $6,782,120 $238,761,338 $0.230 $56,446 $54,887 $1,559
2036 $6,782,120 $245,088,513 $0.226 $56,997 $55,462 $1,535
2037 $6,782,120 $251,583,359 $0.223 $57,554 $56,044 $1,511
2038 $6,782,120 $258,250,318 $0.219 $58,118 $56,631 $1,487
2039 $6,782,120 $265,093,951 $0.216 $58,689 $57,225 $1,464
2040 $6,782,120 $272,118,941 $0.212 $59,265 $57,824 $1,441
2041 $6,782,120 $279,330,093 $0.209 $59,849 $58,430 $1,419
2042 $6,782,120 $286,732,340 $0.206 $60,439 $59,043 $1,397
2043 $6,782,120 $294,330,747 $0.203 $61,036 $59,662 $1,375
2044 $6,782,120 $302,130,512 $0.200 $61,640 $60,287 $1,353
2045 $6,782,120 $310,136,970 $0.196 $62,251 $60,919 $1,332
2046 $6,782,120 $318,355,600 $0.193 $62,869 $61,557 $1,311
2047 $6,782,120 $326,792,024 $0.190 $63,493 $62,202 $1,291
2048 $6,782,120 $335,452,012 $0.187 $64,125 $62,854 $1,271
2049 $6,782,120 $344,341,491 $0.184 $64,764 $63,513 $1,251
2050 $6,782,120 $353,466,540 $0.182 $65,410 $64,179 $1,231
2051 $6,782,120 $362,833,403 $0.179 $66,063 $64,851 $1,212
2052 $6,782,120 $372,448,489 $0.176 $66,724 $65,531 $1,193
Grant County
Library
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Figure 15: Summary of TIA Contributions by Tax Jurisdiction – Baseline Scenario
Hospital District
Source: ECONorthwest calculations, 2023.
Assessment
Year Base Value Increment Value Levy Rate Total Property
Tax
Tax Allocated to
TIF
Tax Allocated to
Hospital
2024 $6,782,120 $0 $0.501 $3,397 $0 $3,397
2025 $6,782,120 $0 $0.493 $3,344 $0 $3,344
2026 $6,782,120 $31,623,838 $0.485 $18,643 $15,351 $3,292
2027 $6,782,120 $65,034,422 $0.478 $34,317 $31,076 $3,241
2028 $6,782,120 $99,058,249 $0.470 $49,786 $46,596 $3,190
2029 $6,782,120 $134,952,720 $0.463 $65,630 $62,490 $3,140
2030 $6,782,120 $173,950,528 $0.456 $82,382 $79,290 $3,091
2031 $6,782,120 $215,044,425 $0.449 $99,535 $96,492 $3,043
2032 $6,782,120 $220,743,102 $0.442 $100,499 $97,504 $2,996
2033 $6,782,120 $226,592,795 $0.435 $101,474 $98,525 $2,949
2034 $6,782,120 $232,597,504 $0.428 $102,461 $99,558 $2,903
2035 $6,782,120 $238,761,338 $0.421 $103,459 $100,602 $2,858
2036 $6,782,120 $245,088,513 $0.415 $104,469 $101,656 $2,813
2037 $6,782,120 $251,583,359 $0.408 $105,490 $102,721 $2,769
2038 $6,782,120 $258,250,318 $0.402 $106,524 $103,798 $2,726
2039 $6,782,120 $265,093,951 $0.396 $107,569 $104,886 $2,683
2040 $6,782,120 $272,118,941 $0.389 $108,626 $105,985 $2,642
2041 $6,782,120 $279,330,093 $0.383 $109,696 $107,096 $2,600
2042 $6,782,120 $286,732,340 $0.377 $110,778 $108,218 $2,560
2043 $6,782,120 $294,330,747 $0.372 $111,872 $109,352 $2,520
2044 $6,782,120 $302,130,512 $0.366 $112,979 $110,498 $2,480
2045 $6,782,120 $310,136,970 $0.360 $114,098 $111,657 $2,442
2046 $6,782,120 $318,355,600 $0.354 $115,230 $112,827 $2,404
2047 $6,782,120 $326,792,024 $0.349 $116,375 $114,009 $2,366
2048 $6,782,120 $335,452,012 $0.343 $117,533 $115,204 $2,329
2049 $6,782,120 $344,341,491 $0.338 $118,704 $116,412 $2,293
2050 $6,782,120 $353,466,540 $0.333 $119,889 $117,632 $2,257
2051 $6,782,120 $362,833,403 $0.328 $121,086 $118,864 $2,222
2052 $6,782,120 $372,448,489 $0.322 $122,297 $120,110 $2,187
Hospital
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Financing Plan/Duration of TIA
The City anticipates issuing Limited Tax General Obligation (LTGO no-voted debt) tax-exempt
bonds to pay for the TIF improvement projects in the amount not to exceed $14 million with a
split debt issuance of $9 million in 2025 and up to $5 million in later years (prior to 2029) to
allow the City to obtain any grant funds or specific legislative fund allocations to assist with the
State round-about, thereby reducing the City’s debt and risk exposure.
The City plans the LTGO bonds to be structured with a 20-year amortization and a 10-year par
call. Additionally, the City is not currently expecting to capitalize interest during the first three
years of the financing when TIF revenues alone are not expected to be sufficient to cover debt
service. Instead, the City plans to pay any difference between debt service and TIF revenues
from non-TIF revenues. The City will reimburse itself for any feasibility studies, including
engineering design work to accurately project costs that occurred prior to the expected
adoption of the Ordinance designating a TIA in May 2024. The City also plans to reimburse itself
for any non-TIF revenue sources that are needed to meet the City’s debt service payments
associated with the TIF Infrastructure.
Debt Capacity
The maximum limit for LTGO non-voted debt cannot exceed 1.5 percent of the value of taxable
property within the City. Based on an assessed value of $2,967,270,315 in 2023, the City has
$44,509,055 in total non-voted debt capacity and will have $43,056,903 after accounting for
outstanding non-voted debt. As shown below, the City has sufficient capacity for the issuance
of the proposed $14 million LTGO bonds related to the TIF public improvements and is
expected to have approximately $29,056,903 in debt capacity available after the proposed
issuance.
Figure 16: Debt Capacity Table
2023
Assessed Valuation for 2023 Collections $ 2,967,270,315
Non-Voted Debt Capacity (1.5% of AV) $ 44,509,055
Less: Outstanding Non-Voted Debt $1,452,152
New Non-Voted Debt $43,056,903
Less: Financing Proposed $14,000,000
Projected Remaining Non-Voted Capacity $29,056,903
Source: EcoNorthwest, 2023
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Debt Issuance and Debt Service Coverage
It is expected that the City will issue initial debt of $9 million in 2025 to pay for the roads and
utilities and will issue a second debt up to $5 million in later years to pay for the proposed State
round-about. The delay of the second debt issuance is to allow the City the opportunity to
obtain grants funds and/or a specific fund allocation from the State to pay for the State round-
about. To estimate debt payments, a simple analysis uses a 5.0% true cost of debt over a 20-
year term for the full $14 million with $9 million issued in 2025 and $5 million issued in 2029. It
is assumed debt payments will start the year after the bond issuance and the debt table is
shown below.
Figure 17: Estimated Debt Schedule
Source: ECONorthwest, 2023
Year Issue 1 Issue 2 Combined
Debt
2024
2025
2026 $722,183 $722,183
2027 $722,183 $722,183
2028 $722,183 $722,183
2029 $722,183 $722,183
2030 $722,183 $401,213 $1,123,396
2031 $722,183 $401,213 $1,123,396
2032 $722,183 $401,213 $1,123,396
2033 $722,183 $401,213 $1,123,396
2034 $722,183 $401,213 $1,123,396
2035 $722,183 $401,213 $1,123,396
2036 $722,183 $401,213 $1,123,396
2037 $722,183 $401,213 $1,123,396
2038 $722,183 $401,213 $1,123,396
2039 $722,183 $401,213 $1,123,396
2040 $722,183 $401,213 $1,123,396
2041 $722,183 $401,213 $1,123,396
2042 $722,183 $401,213 $1,123,396
2043 $722,183 $401,213 $1,123,396
2044 $722,183 $401,213 $1,123,396
2045 $722,183 $401,213 $1,123,396
2046 $401,213 $401,213
2047 $401,213 $401,213
2048 $401,213 $401,213
2049 $401,213 $401,213
2050
Total P&I $14,443,666 $8,024,260 $22,467,926
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The table below shows the nominal value of those TIF tax allocation dollars applicable to the
Baseline development scenario (OG-DP’s development program) relative to the nominal
payments of debt in the corresponding years (20-year term at 5% interest). The table gives a
more accurate picture of how revenues might compare to debt payments, relative to only
considering the present value. The Baseline development scenario will require some interim
debt service support from the City until private development stabilizes and TIF revenue is able
to support the full amount of the debt service. The City will also be able to pay itself back for
any initial debt support from future TIF revenues that are generated in excess of its debt
payments.
Figure 18: TIF Debt Service Coverage
Source: ECONorthwest calculations, 2023.
Tax
Year
TIF
Allocation
Revenues
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF Debt
Service
Coverage
2025 $0 $0 $0 $0 0.00
2026 $152,000 $722,183 -$570,183 -$570,183 0.21
2027 $308,000 $722,183 -$414,183 -$984,367 0.43
2028 $462,000 $722,183 -$260,183 -$1,244,550 0.64
2029 $620,000 $722,183 -$102,183 -$1,346,733 0.86
2030 $787,000 $1,123,396 -$336,396 -$1,683,129 0.70
2031 $958,000 $1,123,396 -$165,396 -$1,848,526 0.85
2032 $968,000 $1,123,396 -$155,396 -$2,003,922 0.86
2033 $978,000 $1,123,396 -$145,396 -$2,149,318 0.87
2034 $988,000 $1,123,396 -$135,396 -$2,284,715 0.88
2035 $998,000 $1,123,396 -$125,396 -$2,410,111 0.89
2036 $1,009,000 $1,123,396 -$114,396 -$2,524,507 0.90
2037 $1,019,000 $1,123,396 -$104,396 -$2,628,903 0.91
2038 $1,030,000 $1,123,396 -$93,396 -$2,722,300 0.92
2039 $1,041,000 $1,123,396 -$82,396 -$2,804,696 0.93
2040 $1,052,000 $1,123,396 -$71,396 -$2,876,092 0.94
2041 $1,063,000 $1,123,396 -$60,396 -$2,936,489 0.95
2042 $1,074,000 $1,123,396 -$49,396 -$2,985,885 0.96
2043 $1,085,000 $1,123,396 -$38,396 -$3,024,281 0.97
2044 $1,097,000 $1,123,396 -$26,396 -$3,050,677 0.98
2045 $1,108,000 $1,123,396 -$15,396 -$3,066,074 0.99
2046 $1,120,000 $401,213 $718,787 -$2,347,287 2.79
2047 $1,131,000 $401,213 $729,787 -$1,617,500 0.99
2048 $1,143,000 $401,213 $741,787 -$875,713 2.85
2049 $1,155,000 $401,213 $753,787 -$121,926 2.88
2050 $1,167,000 $0 $1,167,000 $1,045,074 0.00
Baseline
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Using the Baseline development assumptions, the TIA will generate $23.5 million in TIF
allocation revenues. This must be balanced against P&I payments of $22.5 million during the
same time. The TIF cash flows do not provide ample coverage in many years and will run annual
deficits for 20 years leading to cumulative deficit that peaks at $3.1 in 2045. If the City were to
have to “borrow” from other funds to make up these deficits and pay it back from subsequent
years when allocations are larger, it would not be able to payback those borrowed funds until
2036. As indicated above, the OG-DP will financial backstop any gaps up to $10 million between
TIF revenues and the City’s debt service. Ultimately, the TIF balance sheet is $1.0 million cash
positive in 2050 when the debt is retired. Additionally, the City also has other revenues or
options as identified in the Risk Assessment Mitigation Plan sections below.
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Jobs Analysis
The job analysis considers two sources of employment tied to the TIA. First, the construction of
private development will create jobs in the construction industry. These jobs will occur during
the construction and are therefore “one-time” events. Once the buildings are constructed,
commercial-oriented buildings will be used to for commercial purposes. These jobs are
“ongoing”, meaning they are permanent on the condition of occupation within the TIA. The
following sections summarize these job estimates, and the methods used to derive them.
Construction Employment
Construction of the development over the anticipated build-out period would create temporary
construction jobs within the region and state. The jobs estimated in the figure below are
derived by using the 2023 value of construction investment for the Baseline development
scenario and interpolating them into the Washington State Office of Financial Management’s
Input/Output model.
The model relates spending in an industry sector to the number of jobs directly supported by
that same investment. While the model estimates the number of jobs generated in the state of
Washington, it is likely that most of these workers would come from the immediate region. The
region is rapidly growing in population, such that many of the jobs created would be additive to
existing jobs within the region. Ultimately, the income earned by workers would bring
additional spending to the City that would not have otherwise occurred.
ECONorthwest estimated the total number of construction jobs based on the spending by the
Baseline development scenario. The number of jobs at any given time would vary depending on
the timing and scale of development. As expected, the scale of the investment in the Baseline
development scenario produces the largest amount of construction jobs, in this case, 630
construction jobs.
Figure 19: Construction Jobs
Source: ECONorthwest calculations and Office of Financial Management Input/Output Model, 2022.
Ongoing Employment
Based on the types of uses and square feet of building area, ECONorthwest estimated the
potential number of jobs the development would support when built. These numbers are
derived from ratio estimate building area to number of employees. The U.S. Energy Information
Administration releases data from the 2018 Commercial Buildings Energy Consumption Survey
(CBECS) that provides building characteristics information for commercial buildings in 2018 in
the U.S. (the latest year of data). The data contain the average building square foot per worker
by building use. Using the amount of planned development square footage by building use at
full buildout of the scenarios, these ratios can be applied (less a vacancy rate of 5%) to estimate
Baseline Lower Absorption
Construction Jobs 630 480
Investment (millions)$176 $132
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the number of ongoing jobs. The Baseline development scenario, by measure of having more
commercial space than either of the other scenarios has the largest number of ongoing jobs at
480.
Figure 20: Ongoing Jobs
Source: 2018 CBECS, Table B1. Summary table: total and means of floorspace, number of workers, and hours of
operation, 2018 (Release date: September 2021)
Employment Uses Baseline Lower Absorption
Office 150 110
Retail and Food & Beverage 290 220
Services 40 30
Total Jobs 480 360
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25
Impact Assessment and Mitigation
Affordable Housing
No residential housing will be displaced from the envisioned development. It is expected that as
additional housing is built, demand is lowered, and housing costs are reduced over the long-
term and become more affordable. The increased number of housing units from this
development will help house the growing population base, meeting the demand with supply.
Without additional housing in Moses Lake and Grant County, affordability will only become
increasingly challenging. Additionally, the City’s Multifamily Tax Exemption program allows for
8-year property tax exemption at market rate or 12-year if the project includes a minimum of
20% of the multifamily housing units are income restricted to household who adjusted income
is at or below 115 percent of the Area Median Income (AMI).
Local Business Community
In addition to the new residents, 480 ongoing jobs will be introduced with the Baseline
development scenario. Likewise, 630 construction jobs will be introduced based on private
investment $176 million for the Baseline development scenario. These new jobs supported by
significant private investment will benefit other businesses in the City as well as the
surrounding jurisdictions.
Local School District
The Moses Lake School District’s property tax levies (enrichment, capital, and bond) are
excluded from the TIF under the law. The increased assessed values generated in the TIA will
operate to lower the rate per thousand of assessed value of levies imposed by the district.
School district Enrichment and Capital Levies are excess levies, and the districts periodically ask
voters to maintain existing levels of purchasing power via voted ballots. Bond levies ask voters
to approve bonds to expand or improve their facilities and to approve excess property tax levies
as necessary to pay debt service on the bonds.
The effect of growth in the tax base coming from TIF will have two implications. First, it
increases the tax base of the district, meaning that lower overall tax rates (per thousand of AV)
are needed to fund a similar level of service. Second, it increases the proportion of the tax base
that is commercial which leverages the relative voting power of residential households to
support school expenditures backed by these excess levies (voter approved or otherwise). As
part of the City’s regulatory review process, it will evaluate and apply mitigation measures to
the Desert Point Development based on identified impacts to surrounding schools.
Local Fire Service
State law requires a mitigation plan if the TIA will impact at least 20 percent of the assessed
value of an impacted fire district. Local fire service is provided by the City of Moses Lake and
therefore there is no impact to another taxing district.
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Outreach to Impacted Taxing Districts
While Washington State law requires formal notice to be provided to each impacted taxing
districts upon approval of the Tax Increment Area (TIA), the City plans to engage the Grant
County Commissioners, Treasurer and Assessor prior to any TIA adoption. This early outreach
will allow the City to collect feedback focused on the logistics of implementing TIF.
The taxing districts whose property tax levy would be directly impacted by TIF include:
• The City of Moses Lake
• Grant County
• Port of Moses Lake
• Regional Library District
• Hospital District
The levy rate from each of these jurisdictions will be applied to the increased assessed
valuation within the TIA and remitted to the City to pay the bonds associated with constructing
the public infrastructure to support the anticipated private development. Alternatively, if TIF
revenues exceed the amount necessary to pay the bonds then excess revenues will be
distributed to these taxing districts.
The City will provide the formal notice regarding the proposed TIA to the various taxing districts
in accordance with State law.
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9
TIF “But-For” Requirement
Washington State’s TIF law requires its local government sponsor to make the following
findings:
I) The public improvements proposed to be paid or financed with tax allocation revenues are
expected to encourage private development within the increment area and to increase the
assessed value of real property within the increment area;
II) Private development that is anticipated to occur within the increment area as a result of the
proposed public improvements will be permitted consistent with the permitting
jurisdiction's applicable zoning and development standards;
III) The private development would not reasonably be expected to occur solely through private
investment within the reasonably foreseeable future without the proposed public
improvements; and;
IV) The increased assessed value within the increment area that could reasonably be expected
to occur without the proposed public improvements would be less than the increase in the
assessed value estimated to result from the proposed development with the proposed
public improvements.
These findings (specifically sections i, ii, and iv) are commonly referred to as the “But-For-
Requirement”. The name comes from the assertion that private development would not occur
but-for provision of the public improvements through the use of TIF. This requirement is a
foundational element of TIF which directs public tax dollars generated by the development to
only those public improvement projects necessary to support the proposed development.
Although TIF is new to Washington State governments, the But-For-Requirement and
associated analysis is not.
Many local governments that have invested in infrastructure as part of economic development
projects have examined the public agency’s return on its infrastructure investment from the
generation of on-going tax revenues associated with new development. Additionally, for most
local governments, infrastructure demand exceeds revenue capacity, forcing local governments
to make priority decisions regarding infrastructure projects that get funded with tax dollars and
determining which projects can be paid for by developers. The But-For-Requirement for TIF
formalizes the analysis and requires the local government sponsoring TIF to provide convincing
evidence showing that tax dollars from the TIA are reasonably necessary to make the
development possible.
If proposed development would occur without TIF, public tax dollars should not be used
because it will cost taxpayers more than it should for the resulting development or growth.
However, if TIF is used to encourage a development that would not otherwise be reasonably
expected to happen, the tax base can be increased. A larger tax base helps pay for needed
services and can control the growth of new taxes. The But- For-Requirement is critical as a
means to determining the proper use for public tax dollars.
If the cost of the proposed TIF infrastructure below (estimated at $14 million) were required to
be funded by private developers it would likely mean that only the most profitable
developments could be built, reducing the size and scale of the proposed private development.
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Additionally, City staff discussions with current and formers owners of the TIA property reveal
that it would be unlikely for any development to occur without financial assistance for the
proposed infrastructure.
Expected Development Without TIF Improvements
The City studied the expected development within the TIA and believes it would be unlikely that
any development would be viable without TIF. For purposes of this analysis, we have taken a
far more conservative approach by estimating that without TIF, only 50% of the proposed
development would occur significantly impacting most of the commercial activities on the site
and take a five years longer time to develop. The figure below compares the amount of
assessed valuation growth anticipated in the area with TIF and without TIF.
The figure below compares the amount of assessed valuation growth in both conditions.
Figure 21: Comparison of Assessed Value Growth Between TIF Baseline Scenario and No TIF
Source: ECONorthwest calculations, 2023
Summary of “But-For-Requirement”
Based on the above analysis the proposed private development could not be reasonably
expected to occur without the identified TIF infrastructure improvements. Additionally, the
assessed values from projected private development within the TIA would be less than the
increase in assessed values from private development with the TIF improvements.
Assessment Year 2025 2030 2035 2040 2045 2050
Baseline $31,623,838 $215,044,425 $245,088,513 $279,330,093 $318,355,600 $353,466,540
No TiF $0 $18,330,000 $124,648,000 $142,062,000 $161,910,000 $179,767,000
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Additional Incremental Taxes
The City’s LTGO bonds will be backed the City’s full faith and credit, meaning bondholders can
make a legal claim against the general revenue of the City if a default occurs. However, the City
can use any unrestricted revenue sources it has available to satisfy its debt obligations.
Washington state tax policy has conditions that allow governments that grow their tax bases to
collect additional revenues. This relationship creates a mutually reinforcing benefit of housing
and commercial development with additional tax revenues.
New land development represents a direct financial investment in land preparation and
building structures. Those structures, occupied by residential neighborhoods and businesses,
increase the lands' productive economic capacity. That economic value generates taxable bases
at the land, business operation, and transaction levels, represented in land value, retail sales,
business income, etc. State tax policy allows government jurisdictions to tax these bases
(subject to rate, annual increase and other limitations) to fund needed public services and
infrastructure.
Outside of the TIF property tax, the development and occupation of buildings in the TIA will also
generate other incremental taxes which are differentiated into the three categories below:
• One-time Revenues. These revenues are tied to construction. Specifically, they include
the retail sales tax on construction (materials and labor), which is taxable under
Washington state law.
• Recurring Revenues. These revenues are derived from the occupation of structures by
residents and businesses. Specific revenues include retail sales tax, and utility taxes.
• Capital Restricted Revenues. These revenues are restricted to capital and include real
estate excise taxes and hotel/motel taxes.
City of Moses Lake
The City of Moses Lake is the local service provider for police, fire, public works, community
development, parks, and other local services. To support these services, the City collects a
range of general and restricted taxes, these include the following.
Sales & Use Taxes
Sales Tax. Of the 8.4% sales tax currently collected in the City on general retail purchases, a 1%
"local" share of the tax accrues to local jurisdictions. The City receives 85% of the 1% local tax
and Grant County gets 15%. This tax is levied on businesses in the area, and on construction
activity and some transactions related to housing and business, such as certain online
purchases and the delivery of personal and commercial goods. The current rate accruing to the
City for the local option is 0.85%. The incremental growth of this revenue is based on pro-rata
population growth in the TIF development. The City also receives a population pro rata share of
90% of the city allocation of Grant County’s 0.1% criminal justice sales tax. The increase in the
criminal justice tax is modeled on net increases in population due to development.
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The sales tax relies on estimates of new construction value and consumer taxable retail sales
spending. These assumptions are driven by valuation and use assumptions in the development
program detailed below.
Utility Taxes
The City imposes utility taxes on gross purchases of electricity, water, wastewater, solid waste,
telephones, cable, and natural gas. Current tax rates are used for this analysis. A generalized
utility expenditure productivity factor (on a per person and employee basis) was used to
generate estimates of utility purchases with the follow utility tax rates.
• Water: 10%
• Wastewater: 10%
• Electric: 6%
• Natural Gas: 6%
• Solid Waste: 10%
• Surface Water: 10%
• Cable/Internet: 3%
• Telephone/Mobile: 8%
State Shared Motor Vehicle Fuel Tax & Liquor Board/Taxes
Local governments receive a gas tax distribution unrestricted for street purposes from the
State. The distribution is determined using a formula that is heavily weighted towards
population. ECONorthwest used a proxy of this formula to derive these revenues to the City.
Cities also receive pro rata payments from Liquor Excise Tax & Liquor Board Profits.
Real Estate Excise Tax (REET)
Real estate transactions are subject to a 0.5% on the value of the transaction. REET revenues
are placed in the capital restricted funds to finance capital projects. REET revenues are
uncertain given volatility in the real estate market. Since REET is based on the total value of
real estate transactions each year, the amount of REET revenues the City receives can vary
substantially from year to year based on the normal fluctuations in the real estate market.
During years when the real estate market is active, revenues are higher, and during softer real
estate markets, revenues are lower. For the purposes of this analysis, it is assumed that all new
completed projects would be sold and then 7.4 percent of all property value would turn over
(re-sold) in any given year (this ratio in the historical average of REET sales to total assessed
value in the City in 2022).
Hotel/Motel Taxes
The City imposes a 2% tax on all charges for furnishing lodging at hotels, motels, and similar
establishments. This tax is taken as a credit against the 6.5% state sales tax. The City
also levies a local option 2% tax in accordance with RCW 67.28.181, which brings the total
effective rate to 4% of the lodging charges.
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Transportation Benefit District
The City created a Transportation Benefit District that uses a sales and use tax up to 0.2%
requires voter approval. The sales and use tax may not be imposed for longer than 10 years at a
time, except to repay debt, and must be approved by a simple majority of voters. This analysis
assumes the TBD sales tax is reauthorized.
Tax Base Productivity Assumptions
It is assumed that each housing unit will house on average 1.8 persons and that the
development will be 90% occupied (to account for times when homes sit vacant). Construction
costs represent the average per square foot cost for different building types based on recent
construction comparable projects (note: these costs are different from what a project is
assessed at for property tax purposes).
The below costs are subject to retail sales taxes on construction activity:
• Retail: $130 per square foot
• Multi-family Unit: $160,000 per unit
• Hotel: $100,000 per unit
• Office: $130 per square foot
On-ongoing taxable retail sales are based on assumed comparable businesses:
• Retail: $350 per square foot
• Multi-family Unit: $2,500 per unit
• Hotel: $130 per square foot
• Office: $5 per square foot
Summary of Additional Tax Results
Based on the approximate timing of the new development the Baseline development scenario
is estimated to generate approximately $33.7 million in additional tax revenues generated from
the private development for the City (Figure 22). The Lower Absorption Scenario generates
respectively less at $21.4 million (Figure 23). These figures represent a 25-year cash flow of
incremental tax revenues to the City in 2023 dollars (e.g., all future tax revenues have been
discounted at 5% back to 2023 values). Nominal values are also shown since this is ultimately
the amount that the City can draw upon to service principal and interest (5%) on its debt
payments.
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Figure 22: Summary of additional tax benefits Baseline Scenario
Source: ECONorthwest calculation, 2023.
Figure 23: Summary of additional tax benefits Lower Absorption Scenario
Source: ECONorthwest calculation, 2023.
Present Value Nominal Value
Property Taxes
Sales Tax on Construction $1,150,000 $1,370,000
Ongoing Sales Tax $19,690,000 $41,710,000
Utility Taxes $680,000 $1,350,000
REET $850,000 $1,180,000
Hotel/Motel $6,360,000 $12,610,000
Transportation Benefit District $4,920,000 $10,157,000
Total Incremental Revenues $33,650,000 $68,377,000
TIA Allocation Revenue
Present Value Nominal Value
Property Taxes
Sales Tax on Construction $820,000 $1,130,000
Ongoing Sales Tax $12,430,000 $28,240,000
Utility Taxes $450,000 $970,000
REET $540,000 $840,000
Hotel/Motel $4,090,000 $8,700,000
Transportation Benefit District $3,120,000 $6,915,000
Total Incremental Revenues $21,450,000 $46,795,000
TIA Allocation Revenue
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Risk Assessment and Mitigation Plan
As stated in the summary and introduction above, TIF is a powerful tool available to local
governments for encouraging development. Using local property tax revenues to finance
certain public improvements can encourage and generate the desired or envisioned private
development; however, using TIF has risks. The largest risks are that: 1) the expected private
development does not occur; occurs slower than expected; and/or, the type of private vertical
(office, retail, housing) development and its magnitude is less than expected; and 2) the cost
projected for the public improvements is higher than projected.
These risks impact the expected revenues to be generated within the TIA or the costs for the
public infrastructure improvements. If revenue is not as expected, a local government must
then use other sources of revenue to pay for the public improvements. The City will be
obligated to pay for the TIF infrastructure even if little or no private development materializes.
As stated previously in this report, the City anticipates issuing LTGO bonds which will be backed
by the City’s full faith and credit, meaning bondholders can make a legal claim against the
general revenue of the City if a default occurs. The City should have a mitigation plan to address
a shortfall in revenue or overrun of infrastructure improvement costs.
Other related risks include over-investment of infrastructure funding by TIF, which can waste
limited tax dollars for other uses. Local governments can guard against and potentially avoid
the over-investing and under-investing by carefully evaluating the local market conditions and
performing the analysis associated with the But-For-Requirement identified in this report.
When TIF is used correctly, the growth and development pay for the infrastructure investments
that encouraged it.
For purposes of this Project Analysis, the City has identified the Baseline development scenario
as the most likely development scenario. Based on this scenario, the TIA is projected to
generate approximately $23.5 million in tax allocation revenues over a 25-year TIF period
(2024-2049). This value exceeds the projected public improvement cost of $14 million ($22.5
million in principal and interest).
Private Development Risk Mitigation
As referenced above, the OG-DP has agreed to be responsible for all of the debt issued by the
City up to $10 million not covered by TIF revenues. The parties plan to develop a process for
when invoices are generated by the City to the OG-DP based on revenue gaps to pay the City’s
debt service, along with a reconciliation process to proportionately payback OG-DP if additional
TIF revenue are generated in later years from private development.
Additionally, both the City and the OG-DP have agreed in concept that the OG-DP will be
responsible for constructing the public improvements on the site (excluding the State round-
about, subject to the City’s design standards and applicable State law. Upon conveyance and
acceptance of the public improvements by the City, the City will pay OG-DP the amount for said
work up to $10 million. The City anticipates managing the construction process for the State
round-about. By having the OG-DP responsible for the construction of the public
improvements, further reduces the City’s financial risk caused by construction change orders.
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The City and the OG-DP plan to memorialize the above concepts as part of a future binding
agreement between the parties.
The City will need to fill the financial gap (e.g., the difference between TIF allocation revenues
and debt payments) projected to occur for 20 years for a total gap of $3.1 million in the
Baseline development scenario with other sources of revenue that are identified below. This
amount can then be repaid from increased TIF revenues after the proposed private
development stabilizes in later years or from additional local taxes coming from the
development. Notwithstanding these projections, the City has prepared the mitigation plan
below to respond to possible development and financial risks.
Figure 24: Summary of Baseline TIF Allocations & Debt Service
Source: ECONorthwest, 2023
Tax
Year
TIF
Allocation
Revenues
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF Debt
Service
Coverage
2025 $0 $0 $0 $0 0.00
2026 $152,000 $722,183 -$570,183 -$570,183 0.21
2027 $308,000 $722,183 -$414,183 -$984,367 0.43
2028 $462,000 $722,183 -$260,183 -$1,244,550 0.64
2029 $620,000 $722,183 -$102,183 -$1,346,733 0.86
2030 $787,000 $1,123,396 -$336,396 -$1,683,129 0.70
2031 $958,000 $1,123,396 -$165,396 -$1,848,526 0.85
2032 $968,000 $1,123,396 -$155,396 -$2,003,922 0.86
2033 $978,000 $1,123,396 -$145,396 -$2,149,318 0.87
2034 $988,000 $1,123,396 -$135,396 -$2,284,715 0.88
2035 $998,000 $1,123,396 -$125,396 -$2,410,111 0.89
2036 $1,009,000 $1,123,396 -$114,396 -$2,524,507 0.90
2037 $1,019,000 $1,123,396 -$104,396 -$2,628,903 0.91
2038 $1,030,000 $1,123,396 -$93,396 -$2,722,300 0.92
2039 $1,041,000 $1,123,396 -$82,396 -$2,804,696 0.93
2040 $1,052,000 $1,123,396 -$71,396 -$2,876,092 0.94
2041 $1,063,000 $1,123,396 -$60,396 -$2,936,489 0.95
2042 $1,074,000 $1,123,396 -$49,396 -$2,985,885 0.96
2043 $1,085,000 $1,123,396 -$38,396 -$3,024,281 0.97
2044 $1,097,000 $1,123,396 -$26,396 -$3,050,677 0.98
2045 $1,108,000 $1,123,396 -$15,396 -$3,066,074 0.99
2046 $1,120,000 $401,213 $718,787 -$2,347,287 2.79
2047 $1,131,000 $401,213 $729,787 -$1,617,500 0.99
2048 $1,143,000 $401,213 $741,787 -$875,713 2.85
2049 $1,155,000 $401,213 $753,787 -$121,926 2.88
2050 $1,167,000 $0 $1,167,000 $1,045,074 0.00
Baseline
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City Financial Mitigation
The following mitigation plan is proposed to provide multiple levels of financial protection to fill
any financial gaps that occur in the early years of the TIA until private development and TIF
revenues stabilize or should the expected private development occur slower than planned.
Level 1: Debt Issuance Timing/Grants/Private Development Financial Backstop.
As identified above, the City plans to reduce its financial exposure related to the timing and
scope of private development by:
1) Entering into an agreement with OG-DP in which they will be responsible for any
debt not covered by TIF revenues up to $10 million;
2) Pursuing State grants or funding to eliminate or reduce the second debt issuance up
to $5 million for the State round-about.
The City plans to issue $9 million in debt in 2025 (funding for roads and utilities) and second
debt issuance up to $5 million (for the State round-about) may occur no later than 2029,
providing for greater development and TIA revenue certainty.
The City may also make additional adjustments in the timing of the initial debt issuance based
on development activity, the nexus between the identified infrastructure improvements and
the proposed private development providing for greater development and tax revenue
certainty to help pay the debt service associated with TIF infrastructure improvements.
Alternatively, debt could be structured to proportionally match the expected tax allocation
revenues with a longer interest only payment or more back-loaded payments by capitalizing the
interest. The tradeoff with both of these measures is that more interest will be paid on the
bonds.
Level 2: Additional Taxes from Moderate Development Scenario:
Based on the Baseline development scenario, it is projected the City will receive a nominal
value of $68.5 million in additional tax revenues generated by the proposed development. A
portion of these incremental additional taxes can be used to support any infrastructure debt
service gap in TIF revenues.
Netting out tax revenues restricted to specific uses (and not available to service debt such as
criminal justice sales taxes) and holding 50% to cover potential increases in public service
operating costs, additional revenues that may service debt is shown below. Applying these
additional tax revenues (assumed to be 50% of the total) to this Baseline development scenario,
the number of years of deficit drops from 20 to one year and the amount of deficit decreases
from $3.1 million to only one year with shortfall of $54,000. The remaining years are positive
surpluses.
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Figure 25: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes
Source: ECONorthwest Calculations, 2023
Level 3: General Fund Reserves & Re-Prioritization of Existing Capital Projects.
Over the last 6 years (2018 to 2023), the City has averaged approximately $3.5 million in
available General Fund reserves not allocated to any specific operating or capital expense.
These unallocated funds can pay the debt service for infrastructure improvements if property
tax revenue from the TIA is insufficient. Additionally, the City may reprioritize some capital
project expenditures to respond to any gaps between TIF revenues and debt payments.
Year
TIF
Allocation
Revenues
Incremental
Taxes
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF Debt
Service
Coverage
2025 $0 $215,500 $0 $215,500 $215,500 0.00
2026 $152,000 $516,000 $722,183 -$54,183 $161,317 0.71
2027 $308,000 $662,000 $722,183 $247,817 $409,133 0.92
2028 $462,000 $825,500 $722,183 $565,317 $974,450 1.14
2029 $620,000 $997,000 $722,183 $894,817 $1,869,267 1.38
2030 $787,000 $1,172,000 $1,123,396 $835,604 $2,704,871 1.04
2031 $958,000 $1,193,000 $1,123,396 $1,027,604 $3,732,474 1.06
2032 $968,000 $1,148,000 $1,123,396 $992,604 $4,725,078 1.02
2033 $978,000 $1,178,500 $1,123,396 $1,033,104 $5,758,182 1.05
2034 $988,000 $1,213,500 $1,123,396 $1,078,104 $6,836,285 1.08
2035 $998,000 $1,249,000 $1,123,396 $1,123,604 $7,959,889 1.11
2036 $1,009,000 $1,285,000 $1,123,396 $1,170,604 $9,130,493 1.14
2037 $1,019,000 $1,320,500 $1,123,396 $1,216,104 $10,346,597 1.18
2038 $1,030,000 $1,361,500 $1,123,396 $1,268,104 $11,614,700 1.21
2039 $1,041,000 $1,403,000 $1,123,396 $1,320,604 $12,935,304 1.25
2040 $1,052,000 $1,444,500 $1,123,396 $1,373,104 $14,308,408 1.29
2041 $1,063,000 $1,486,000 $1,123,396 $1,425,604 $15,734,011 1.32
2042 $1,074,000 $1,527,500 $1,123,396 $1,478,104 $17,212,115 1.36
2043 $1,085,000 $1,569,500 $1,123,396 $1,531,104 $18,743,219 1.40
2044 $1,097,000 $1,622,000 $1,123,396 $1,595,604 $20,338,823 1.44
2045 $1,108,000 $1,674,000 $1,123,396 $1,658,604 $21,997,426 1.49
2046 $1,120,000 $1,722,000 $401,213 $2,440,787 $24,438,213 4.29
2047 $1,131,000 $1,774,500 $401,213 $2,504,287 $26,942,500 0.99
2048 $1,143,000 $1,823,000 $401,213 $2,564,787 $29,507,287 4.54
2049 $1,155,000 $1,876,000 $401,213 $2,629,787 $32,137,074 4.68
2050 $1,167,000 $1,929,500 $0 $3,096,500 $35,233,574 0.00
Baseline with Taxes
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1
Additional Mitigation Measures
Public Improvement Cost Containment
Additionally, both the City and the OG-DP have agreed in concept that the OG-DP will be
responsible for constructing the public improvements (excluding the State round-about),
subject to the City’s design standards and applicable State law. Upon conveyance and
acceptance of the public improvements by the City, the City will pay OG-DP the amount for said
work up to $10 million. By having the OG-DP responsible for the construction of the public
improvements, further reduces the City’s financial risk caused by construction change orders.
There are other risks that a municipal government faces regularly such as: construction delays,
which increase costs for public infrastructure improvements; economic slowdown or recession;
higher borrowing costs then even accounted for in the Project Analysis; and lower levy rates
within the TIA than anticipated. The City has been successful in addressing these secondary
type risks by using conservative estimates and adherence to prudent fiscal and construction
management policies. The City will continue these same practices as it implements the
proposed TIA and the associated infrastructure improvements.
Financial Mitigation Summary
The City has multiple levels of mitigation identified above to satisfy its debt obligations if
development does not occur as expected in accordance with the Baseline development
scenario. Key to mitigating its risks include: 1) the future agreement between the City and the
OG-DP to financial backstop up to $10 million for any annual gaps in revenue between the City
debt service and TIF revenues; and 2) Seeking “outside” funding for the State round-about prior
to the issuance of any debt.
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Moses Lake TIF Team
City of Moses Lake Staff
• Kevin Fuhr, City Manager
• Madeline Prentice, Finance Director
• Katherine Kenison, City Attorney
• Kirsten Peterson, Community Development Director
• Brian Baltzell, Public Works Director
Legal and Financial Consultants
• Cynthia Weed, Bond Counsel, K&L Gates – Partner
• Jim Nelson, Financial Advisor, D.A. Davidson
Tax Increment Financing Consultants
• Bob Stowe, Stowe Development & Strategies (TIF Project Manager)
• Morgan Shook, ECONorthwest
Future TIF Actions
There are a number of actions that will occur before the Moses Lake City Council formally
considers the formation of a TIA within the City. First, is to receive and review feedback offered
by the Office of the State Treasurer related to this Project Analysis. Second, based on any
feedback, the TIF team will evaluate and make appropriate adjustments to its proposed TIF
program. Third, is to conduct two separate public briefings on the proposed TIA and provide
formal notice in the local newspaper. The City will also engage its local partners and taxing
districts as the TIA advances. There are also a number of planning, engineering, finance, and
legal activities that will occur to advance the proposed public improvements and private
development for the Desert Point Project. Below is an expected schedule for the future TIF
actions.
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Remaining TIF Schedule
Figure 26: Remaining Schedule
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Findings | Bottom Line
The envisioned Desert Point Development within the TIA would not be viable without the City’s
intervention to provide the identified public improvements. The City has demonstrated a strong
nexus between the proposed development and the proposed public improvements. The City is
conservatively estimating the potential revenues generated by the formation of a TIA and has
available resources to pay for infrastructure debt service should the expected TIA revenues not
materialize.
There are no negative impacts to affordable housing, the local business community, the local
school district, and the local fire districts. The Desert Point Development will provide for jobs
and investment into the local and regional economy.
Based on all of the above findings and information contained in this Project Analysis, the Desert
Point Development and its proposed TIA meets both the spirit and the letter of Washington’s
State’s TIF law.
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APPENDICES
• State Audit Report Summary
• Consultant Team Bios
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State Audit Report Summary
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Consultant Team Bios
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Bob Stowe - Principal
Bob Stowe is the principal and founder of Stowe Development & Strategies —
a company he formed in 2016 to help public sector clients succeed with their
economic and community development interests. With 34 years of experience
in progressive community transformations, Bob is one of the Northwest’s
most innovative and entrepreneurial real estate and community developers.
He uses sound long- range fiscal planning skills and has achieved enviable
results in leading redevelopment efforts from the dream stage to construction.
This is true for projects large and small, straightforward and complex.
Bob’s understanding and experience with tax increment financing, master plan development, transit
oriented development, placemaking, negotiation of purchase and sale agreements, development
agreements, public benefit agreements, and his ability to create public private partnerships make him an
ideal public sector development partner.
Bob has been responsible for leading, managing, coordinating, and implementing a wide variety of complex
and multi-faceted projects including, downtown revitalization plans, civic center plans and development,
master plans, public-private partnerships, and transit-oriented developments to name a few.
Bob was the City Manager for the City of Bothell, Washington from 2005 to 2016 where he was the architect
and leader of Washington’s largest and most successful publicly-led downtown revitalization. Under Bob’s
leadership, this project utilized a Local Infrastructure Financing Tool award (AKA TIF light) as part of the
funding package that stimulated private investment of over $300 million; a very big step in achieving the
City’s 25-year goal of $650 million. The fact that nearly half that goal was reached in just a few years, during
the Great Recession, and with leverage from public/private collaboration, made it all the more remarkable.
Bob guided the development of approximately $150 million in public sector improvements (relocation of
a state highway, creation of new streets, storm water system, parks, environmental clean-up, etc.)
identified as necessary to achieve the revitalization vision. The massive public development plan and
schedule also needed to align with private sector purchase of surplus land from the City, environmental
remediation, public streets to be developed by the private sector, and on-site mixed-use development.
Precise scheduling, communication and the ability to respond to changing conditions were skills that Bob
successfully delivered on this project.
Before arriving in Bothell, Bob was the City Manager for the City of Mill Creek for nine years and helped
lead development of the award-winning Mill Creek Town Center in the early 2000s. His first downtown
transformation project began with the revitalization of Downtown Dayton, Washington in the late 1980s.
The hallmark of Bob’s effort is his commitment to create well designed and environmentally sustainable
places where people want to live, work, and come together to celebrate. Bob has tackled the most difficult
and complex projects, achieving the redevelopment and economic dreams of several communities with his
failure is not an option approach.
EDUCATION
• MBA, Albers School of Business & Economics, Seattle University (with honors).
• BA, Urban and Regional Planning, Eastern Washington University.
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Morgan Shook - Director/Partner
Morgan Shook is a Senior Policy and Economic Analyst working in
real estate, land use, and transportation economics, and finance. He
has deep expertise in economic, market and financial analytics that
he brought to bear in business, enterprise, and policy settings.
Morgan has worked for a range of government, business, and non-
profit clients to advance their missions that in diverse set areas
and topics.
Morgan has worked on every form of tax increment financing in Washington including
Community Revitalization Financing, Local Infrastructure Financing Tool, Local
Revitalization Financing LRF, Landscape Conservation and Local Infrastructure Program, as
well as the recently passed Tax Increment Financing bill in the 2021 legislative session.
Before joining ECONorthwest, Morgan worked in biotechnology development at the Institute
for Systems Biology, and health disparities research at the University of Chicago. Morgan
recently served on the Seattle Planning Commission.
EDUCATION
• M.U.R.P., Portland State University
• B.S. Molecular Biology, University of Puget Sound
• Certificate in Commercial Real Estate Development, University of Washington
Extension
Areas of Expertise
• Economic Development
• Affordable Housing
• Land Use Planning
• Market & Feasibility Analysis
• Infrastructure & Finance Funding
• Transit-Oriented Development
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Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200
(360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov
Tax Increment Financing
Project Analysis Review
— City of Moses Lake —
May 6, 2024
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Page 1 of 12
Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov
May 6, 2024
Kevin Fuhr, City Manager
City of Moses Lake
401 S. Balsam St, PO Box 1579
Moses Lake, WA 98837
Dear Mr. Fuhr:
This letter confirms the Office of the State Treasurer’s (“OST”) receipt and review of the City of Moses
Lake’s (the “City”) tax increment financing (“TIF”) project analysis, consisting of the project analysis report
dated February 9, 2024. OST and Montague DeRose and Associates, the state’s municipal advisor, have
reviewed the provided materials. Based on our review, which is detailed in the sections to follow, we
believe that the City’s project analysis generally addresses the topics listed in section 020(2) of RCW
39.114 (the “TIF Statute”). However, please see our recommendations provided at the end of this letter.
Please note that this review is based on the information, projections, and assumptions provided by the
City and its consultants in the project analysis. OST has not independently verified the data or its accuracy
or performed any feasibility analyses or projections of its own.
Executive Summary
The City’s proposed tax increment area (“TIA”), consisting of 96 acres with a total assessed value of $6.8
million, was selected because it represents a planned development (“Desert Point”) that can be built over
time, as the result of the infrastructure improvements funded by TIF. The public improvements described
in the project analysis total $14.0 million and include roads and utilities (estimated to cost $9.0 million)
and a round-about (estimated to cost $5.0 million) connecting the TIA to Highway 17. The project analysis
did not provide a detailed expenditure plan for the public improvements; however, the City expects to
issue the first series of bonds in 2025 to finance the $9.0 million needed for the roads and utilities,
followed by a second bond series of $5.0 million by 2029 for the round-about. The City may not proceed
with the second bond issuance in the event that a state grant or legislative allocation is received for the
round-about.
The baseline development scenario’s projections show that for the two series of bonds, annual deficits
between tax increment revenues and debt service will average $153,000 over the first 20 years of
repayment, resulting in an accumulated deficit of $3.1 million by 2045. Tax increment revenues are
forecast to exceed debt service annually from 2046-2050 which will allow the City’s $3.1 million deficit to
be repaid, while also generating a $1.0 million surplus.
If the City receives a state grant for the round-about project and only issues the first $9.0 million series of
bonds , annual deficits between tax increment revenues and debt service are projected to average
$337,000 over the first four years of repayment, resulting in an accumulated deficit of $1.3 million by
2029. Tax increment revenues are forecast to exceed debt service annually from 2030-2050 such that the
City’s $1.3 million deficit is projected to be repaid by 2036, with a cumulative surplus of $9.1 million being
generated by 2050.
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Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov
The City expects to cover these projected annual shortfalls through a combination of general fund
resources and a limited financial guarantee arrangement with the ownership group of Desert Point (“OG-
DP”). The project analysis notes that the City has averaged approximately $3.5 million in available general
fund reserves not allocated to any specific operating or capital expense over the six years from 2018 to
2023, and these unallocated funds can be used to cover deficits between tax increment revenues and
debt service. The City plans to enter into an agreement with OG-DP in which the ownership group will
reimburse the City for deficits between tax increment revenues and debt service up to a maximum of
$10.0 million. The City’s project analysis did not include any information regarding the adequacy of the
financial resources of the OG-DP to provide this guarantee to the City.
Our review of the project analysis found potential risks worth consideration. A discussion of these risks,
as well as other factors that could impact tax increment revenue projections, are included later in this
review.
Statutory Role and Purpose of Review
As enacted by the 2021 Washington State Legislature, section RCW 39.114.020(7)(b) of the TIF Statute
requires that prior to the adoption of an ordinance authorizing the creation of a TIA, the local government
proposing the TIA must provide a project analysis to OST for review. Upon completing the review, OST
must provide to the local government any comments regarding suggested revisions or enhancements to
the project analysis that OST deems appropriate. OST received the City’s project analysis report dated
February 9, 2024.
OST’s primary goal in our statutorily mandated review is to ensure that the project analysis addresses the
topics listed in the TIF statute and that risks to the City that might result from the implementation of the
project are adequately disclosed.
Project Team
Jurisdiction:
City of Moses Lake
County:
Grant County
Redevelopment Area:
City of Moses Lake TIA
Consultants:
Stowe Development & Strategies
ECONorthwest
D.A. Davidson Company (municipal advisor)
K&L Gates (bond counsel)
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Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov
Proposed Tax Increment Area
The City’s proposed TIA of approximately 96 acres is comprised of two undeveloped parcels with total
assessed value (unimproved land) of $6,782,120 for the 2024 tax year. Located in the southeast portion
of the City roughly one mile from Interstate 90, the TIA is shaped like a right-triangle with its longest side
following Highway 17. The TIA was selected because it represents a planned development to be built over
time following the infrastructure improvements to be funded by TIF revenues. (The TIA proposed for the
Port of Moses Lake, with 5,100 acres to be developed for industrial projects, would be located to the
northeast of the City’s TIA.)
Figure 1 – Map of Proposed Tax Increment Area
Source: City of Moses Lake
Impacted Taxing Districts
Four taxing districts with regular property tax levies would be directly impacted by the TIA. These districts
are:
(1) Grant County;
(2) Port of Moses Lake;
(3) Library District; and
(4) Hospital District #1.
After the TIA effective date, the levy rate for each of these jurisdictions will be applied to the increased
AV within the TIA, with the tax increment revenues remitted to reimburse the City for debt service on the
bonds and, potentially, to pay for the remaining unfunded public improvements.
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Legislative Building, P.O. Box 40200 Olympia, Washington 98504-0200 (360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037 www.tre.wa.gov
Not all taxing districts would be impacted by the TIA. The property tax levies for State Schools (Part 1 and
2) and School District 161 would be excluded from the calculation of tax increment revenues.
Project Description
Public Improvements within the TIA
To facilitate private development in the TIA, the project analysis identifies three categories of public
improvements totaling $14.0 million (2024 dollars): 1) three roads; 2) utilities such as curbs, gutters, and
sidewalks, storm, water, and sewer mains, landscaping, and gateway features; and 3) a round-about
connecting the TIA to Highway 17. The costs are estimated at $9.0 million for the roads and utilities and
$5.0 million for the round-about. The project analysis did not provide a detailed expenditure plan for the
public improvements; however, the City expects to issue the first series of bonds in 2025 to finance $9.0
million the roads and utilities, and a second series of bonds by 2029 to finance $5.0 million for the round-
about project in the event a state grant or other funding is not realized.
Figure 2 – Map of Public Improvements within the TIA
Source: City of Moses Lake
The project analysis indicates that if the public improvements were required to be funded by private
developers, only the most profitable developments could be built, reducing the size and scale of the
proposed private development within the TIA. Without TIF revenues funding the public improvements,
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the City estimates that only 50% of the proposed private development would occur and take an additional
five years to materialize.
Private Development within the TIA
The proposed private development within the TIA would be a large mixed-use project referred to as Desert
Point. This project would develop 82 of the 96 TIA acres over three phases from 2025-2027, 2027-2029,
and 2029-2031. At build-out, Desert Point is projected to include 510 multi-family rental units, a 60,000
sq. ft. hotel, large format retail space (340,000 sq. ft.), office and related space (81,000 sq. ft.), and general
retail, food, and beverage locations (39,900 sq. ft.). Each development phase includes an average of 170
multi-family rental units and a mix of retail and office space. The details of this baseline scenario are
summarized in Table 1. The projected market value of each phase is approximately $60.0 million with a
total market value of $178.2 million for all phases (2023 dollars).
Table 1 – Projected Private Development of the TIA in Three Phases
Source: City of Moses Lake
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Assessed Value of the TIA
As cited in the project analysis, the estimated AV of the two parcels within the TIA for the 2024 tax year
is $6.8 million, or 0.2% of the City’s total AV of $2.97 billion, which is below the statutory limit of the lesser
of $200 million in AV and 20% of the City’s total AV.
The magnitude and timing of real property development in the TIA will drive growth in incremental
assessed value and, therefore, will drive growth in tax increment revenues. For the baseline scenario
provided by the City, the incremental taxable assessed value of the TIA was estimated by assigning market-
based improvement prices reflecting the land use and size of the proposed private development. (Detailed
year-over-year projections of assessed values within the TIA resulting from the $178.2 million baseline
scenario were not provided by the City.) The assessed values used to calculate tax increment revenues
assumes the market value of new development is added to the tax roll one year after construction is
completed. The City assumes the TIA base value and the assessed values of newly developed properties
will increase by 2.65% annually, which is described as slightly below the region’s 3.7% real rate of assessed
valuation growth and reflective of modest growth assumed for the regional economy.
Tax Increment Revenue Projections
The TIA is expected to be created in 2024, with 2026 being the first year in which the City expects to
receive tax increment revenues based on the tax increment produced in 2025. The term of the TIA is
assumed to be 25 years (the maximum allowed) with 2050 being the final year in which tax increment
revenues will be received. The City assumes a tax increment base AV of $6.8 million. In the baseline
scenario, a projected $353.5 million in incremental AV would be added between 2026 and 2050, with
$178.2 million from private development and $175.3 million from TIA assessed value growth. Under the
baseline scenario, the City projects $23.5 million of tax increment revenues would be collected over the
25-year term of the TIA. See Table 2 – Tax Increment Revenues (Baseline Scenario).
Under the TIF Statute, only certain regular levies are applied to the TIA. Both parts of the state school levy,
local school district excess levies, voted bond levies, and levies of districts for bond payments are excluded
from the TIA levy rate. The TIA’s annual levy rate may change year-to-year based on factors including the
growth rate of the AV of overlapping taxing districts and relevant levy limits. The project analysis calculates
the levy rate for each of these jurisdictions and applies the levy rates to the projected incremental AV
within the TIA to calculate the projected tax allocation revenues provided in Table 2.
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Table 2 – Tax Increment Revenues ($ nominal)
Baseline Scenario
Source: City of Moses Lake
In addition to the baseline scenario, the City’s project analysis included three alternative scenarios with
lower estimates of total tax increment revenues. These scenarios are referred to as the levy rate decline
scenario, the lower valuation scenario, and the lower absorption scenario. Table 3 provides a summary
description of each scenario with projected total tax increment revenue relative to the $23.5 million
projected for the baseline scenario. (Detailed annual projections of tax increment revenues for the
alternate scenarios were not provided by the City.)
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Table 3 – Alternative Tax Increment Revenue Scenarios
TI
Revenue
Scenario Description Relative to Baseline Scenario
Total TI Revenue
($ nominal)
Levy Rate
Decline
The tax levy rates decline faster due to higher
than assumed growth of assessed valuations in
the taxing districts
$19.7 million
Lower
Valuation
The private development is assessed at 75%
rather than 100% of the $178.2 million market
value
$17.6 million
Lower
Absorption
The value of private development is 25% lower
and requires three additional years to complete
$15.7 million
Source: City of Moses Lake
Financing Plan for Public Improvements
To fund $9.0 million of the proposed roads and utilities public improvements, the City plans to issue $9.0
million of tax-exempt LTGO Bonds in 2025. The City will issue a second series of bonds by 2029 to finance
$5.0 million for the round-about project in the event that a state grant or other funding is not awarded to
the City. As stated in the project analysis, because of their general obligation pledge, the City will be
required to pay the full debt service due on these bonds from the City’s general fund resources, regardless
of the amount of tax increment revenues generated within the TIA.
The City’s structure for the Bonds assumes a 5.0% true interest cost with 20 equal annual payments for
each series. The total principal and interest is estimated at $22.5 million for both series combined. The
maximum annual debt service is projected to be $1.1 million from 2030 through 2045.
For the baseline scenario, which includes both series of bonds being issued, annual deficits between tax
increment revenues and debt service are projected to average $153,000 over the first 20 years of
repayment, resulting in an accumulated deficit of $3.1 million by 2045. Tax increment revenues are
forecast to exceed debt service annually from 2046-2050 such that by 2050 the City’s $3.1 million deficit
is repaid, while also generating a surplus of $1.0 million. Alternatively, if the City receives a state grant for
the round-about project and only issues the first series of bonds for $9.0 million, annual deficits between
tax increment revenues and debt service are projected to average $337,000 over the first four years of
repayment, resulting in an accumulated deficit of $1.3 million by 2029. Tax increment revenues are
forecast to exceed debt service annually from 2030-2050 such that the $1.3 million deficit is repaid to the
City by 2036, while generating a cumulative surplus of $9.1 million by 2050.
The City expects to cover these projected annual shortfalls through a combination of general fund
resources and a limited financial guarantee arrangement with OG-DP. The project analysis notes that the
City has averaged approximately $3.5 million in available general fund reserves not allocated to any
specific operating or capital expense over the six years from 2018 to 2023, and these unallocated funds
can be used to cover deficits between tax increment revenues and debt service. Also, the City may
reprioritize some capital spending to cover such deficits.
The City plans to enter into an agreement with OG-DP in which the ownership group will reimburse the
City for deficits between tax increment revenues and debt service up to a maximum of $10 million. The
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ownership group would be repaid by the City for any reimbursements if or when tax increment revenues
exceed debt service in later years. The City’s project analysis did not include information regarding the
adequacy of the financial resources of OG-DP to provide this guarantee to the City.
Debt Capacity
Based on the City’s 2024 total assessed value, the City has $44,509,055 in total non-voted debt capacity
(1.5% of 2024 AV). The City currently has $1,452,152 in outstanding non-voted general obligation debt,
leaving sufficient net non-voted debt capacity of $43,056,903 before the $14,000,000 in TIA bonds are
anticipated to be issued in two series (2025 and by 2029). After these debt issuances, the City’s remaining
non-voted debt capacity would be $29,056,903.
Table 4 – Debt Capacity (2025 and 2029 Issuances)
Assessed Valuation for 2024 Tax Year $ 2,967,270,315
Non-Voted Debt Capacity (1.5% of AV) 44,509,055
Less: Outstanding Non-Voted Debt 1,452,152
Remaining Non-Voted Debt Capacity 43,056,903
Less: Bonds Proposed 14,000,000
Projected Remaining Non-Voted Capacity $ 29,056,903
Projected Remaining Non-Voted Capacity (%) 65.3%
Projected Debt Service Coverage
Tables 5 and 6 below summarize the total tax increment revenues, revenue shortfalls, and debt service
coverage for the two financing structures using the baseline tax increment projections. For the financing
structures, cumulative shortfalls of $3.1 million and $1.4 million, respectively, would need to be covered
using the City’s general fund resources.
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Table 5 – Tax Increment Revenues and Debt Service Coverage
Development
Scenario
First Year Tax Increment
Revenues Exceed Debt Service
Year That Tax
Increment
Revenues Fully
Reimburse Debt
Service Shortfalls
Total Projected TIF
Revenue ($MMs)
Total Projected
Debt Service
($MMs)
Projected Maximum
Cumulative Shortfall ($MMs)
Total Surplus/
(Shortfall) Through
End of TIA ($MMs)
Aggregate Debt
Service Coverage
Ratio
Baseline with
$14.0MM of Bonds 2026 2050 $23.51 $22.47 $3.07 $1.05 1.16x
Baseline with
$9.0MM of Bonds 2026 2036 $23.51 $14.44 $1.35 $9.07 1.23x
Source: City of Moses Lake
Table 6 – TIF Debt Service Coverage
Source: City of Moses Lake
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Key Risks
From OST’s review of the project analysis, it appears that the anticipated public improvements and
corresponding economic development will provide benefits to the City and its community. Nonetheless,
the proposed project comes with certain risks and costs to the City, which we attempt to summarize
below:
General Obligation Pledge: The LTGO Bonds expected to be issued in connection with the project’s
plan of finance will obligate the City to pay the full amount of debt service due from City revenues
and resources, regardless of the amount of tax increment revenues generated from the TIA. Because
of the potential cost to the City’s general fund, it is essential that decision makers understand and
accept the project’s risks and potential long-term costs in comparison to its benefits.
Escalation of Project Costs: With an unclear timeline for the construction of the public improvements,
inflation could have a significant impact on the cost of these projects.
Construction Delays: Any delay in private development construction timelines could reduce the
amount of tax increment revenues generated by the TIA.
Permits: It is unclear where the projects are in the permitting process. Delays in permits could
negatively impact the construction of the private developments within the TIA, potentially reducing
the amount of tax increment revenues generated by the TIA.
Economic Conditions: Growth in the TIA’s assessed value could be negatively impacted by depressed
economic conditions. A variety of economic factors could negatively impact the demand for
development, jeopardizing the timeline, scale, and market value of private development, potentially
reducing the amount of tax increment revenues generated by the TIA.
Assessed Valuations: As private developments are completed, the actual assessed values will depend
on factors considered by the County Assessor’s office. Tax increment revenues could potentially be
lower than projected if the assessed values of the projects are lower than expected or take longer
than anticipated to be reflected on the County’s tax rolls, potentially reducing the amount of tax
increment revenues generated by the TIA.
Interest Rate Risk: The City will be exposed to interest rate risk until the anticipated bonds are sold.
The project analysis assumed a relatively generic 5.0% financing rate for 20-year bonds which is
relatively conservative based on current market data.
Risk Summary: The general impact to the City from any of the risk factors outlined above could potentially
be higher costs and/or lower than projected tax increment revenues and a greater than expected reliance
on the City’s general revenues and reserves to pay the debt service due on the bonds issued to fund the
public improvements, reducing the City’s ability to allocate those funds to other projects or operations.
Recommendations
To help ensure the financial success of the project, and to minimize unanticipated costs and risks, we
recommend the City consider the following measures:
1. Prior to approving the TIA, we recommend the City coordinate closely with the taxing districts
impacted by the project, and the County Assessor’s Office, to ensure that all parties have an
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accurate understanding of how the TIA will impact them and provide sufficient time to work
through any concerns.
2. Prior to approving the TIA, we recommend that the City discuss and establish a policy regarding
how much project related debt service it is able and willing to pay from general fund revenues
and reserves on an annual basis, to offset projected as well as unanticipated tax increment
revenue shortfalls.
3. We recommend that the City conservatively budget for and proactively set funds aside to cover
its projected tax increment revenue shortfalls.
4. As the project moves forward, we recommend the City coordinate with the County Assessor’s
Office to help ensure that the tax increment revenue projections match the County’s assessment
process and are as accurate as possible.
5. Given the timeline for its bond issuances, we recommend the City periodically revisit its interest
rate assumptions.
6. Given the timeline for public improvements, we recommend the City revisit public improvement
cost projections frequently and utilize a publicly recognized inflation index to inform inflation
projections.
Thank you for the opportunity to review the City’s project analysis. Based upon the information provided
to date in connection with this project, this concludes our review. If there are material changes in the
scope, timing, or cost of the project, please let us know. We wish the City all the best with its project.
Respectfully,
Mike Pellicciotti
Washington State Treasurer
Jason Richter
Deputy Treasurer
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