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Local Revitalization Funds for Tacoma
An ordinance adopted by the City Council this week would allow the City of Tacoma to access a pot of up to $12.5 million in funds for public infrastructure improvements associated with private development.
The money comes with some strings attached, but give Tacoma a way to keep a bit more of its tax dollars local. The funds come through the Local Revitalization Financing Program, a State program that allows the city to essentially retain a portion of the state sales tax paid in Tacoma for local use.
Following an unsuccessful bid to retain Russell investments back in 2008, the City of Tacoma was included as a demonstration project for the State’s new Local Revitalization Financing program. This program returns a portion of state sales tax dollars raised to the municipality where they were generated.
Through this program, Tacoma is allowed to keep a portion of the 6.5% sales tax paid locally that ordinarily goes to the state, up to $500,000 annually for 25 years, or $12.5 million total. The funds must be used for public infrastructure associated with an increase in private investment and employment.
That's one of the strings attached: funds received through this program must be used in association with a project that includes private investment and job creation. There are other strings too: funds obtained through this program must be invested in public infrastructure, they must be used in a designated revitalization area, and there must be a one-to-one local/federal match for the state contribution.
The City created a 660-acre “revitalization area” downtown to be the receiving area for the funds. The area is bounded by Tacoma Avenue and the Foss Waterway on the west and east, and the Stadium District, and essentially I-5 on the north and south (see map).
The City has also met and exceeded the match requirement, investing $54.6 million in the area since 2010.
Unfortunately, another original requirement was that the City had to bond for the public improvements to be funded, and Tacoma’s financial situation coming out of the recession wasn’t great. So the City has had insufficient debt capacity to take advantage of the program. That is, until the State legislature amended the rules in 2015, adding flexibility that gives Tacoma a way to access the funds on either an annual basis.
Then in March the State passed new legislation putting Tacoma in a use-it-or-lose-it situation in which if we don’t use the funds, they will be forfeited and passed on to those who will. The adoption of this week's ordinance allows the City to access those funds.
Now that Tacoma has access to the funds, the question is how they will be used. They have to be used for infrastructure improvements associated with an increase in private investment and employment within the Revitalization Area. Eligible uses include:
- Street, road, bridge and rail construction and maintenance;
- Water and sewer system construction and improvements;
- Sidewalks, streetlights, landscaping and streetscaping;
- Parking, terminal and dock facilities;
- Park and ride facilities of a transit authority;
- Park facilities, recreational areas and environmental remediation;
- Storm water and drainage management systems; and
- Electric, gas, fiber and other utility infrastructure.
An example given of how this could work was the construction of a public, City-owned parking garage using the State funds, with a privately-funded office building above the parking garage. In terms of where the funds are actually invested, the City will be looking for the biggest bang for the citizens’ buck in terms of economic development and job creation.
So, those are the rules - what would you like to see Tacoma build with these funds?
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