FAQs

The Washington State Legislature authorized tax increment financing in 2021. It is a new financing tool in Washington, allowing cities, counties and ports to establish Tax Increment Areas (TIAs) to fund public improvements that help enable new private development.

All TIAs must have a specified boundary, a set duration (maximum of 25 years), and a specific list of public projects to be funded. In Federal Way, the proposed TIA includes the property bounded generally to the west of I-5 and east of Highway 99, and on the north and south sides of S 312^th Street/330^th Street. The estimated timeframe for the proposed TIA is 25 years. 

TIAs receive funding from the property tax revenue generated by the growth in assessed value for properties located in a TIA. The property tax levies imposed in the proposed Federal Way TIA include the list below. They are separated by those impacted and those NOT impacted by the TIA. Voter approved bonds and general obligation bonds are NOT impacted by a TIA. State and local school levies are excluded and would not be impacted by the proposed TIA (see question 8 below).

The property taxes being levied on the current assessed value within the TIA boundary will continue to go to the overlapping taxing districts. In the proposed Federal Way TIA, property tax revenue from increases in assessed value after the TIA is established will go to the City to pay for improvements within the TIA boundary (called tax allocation revenues). This tax allocation revenue is from new development in the TIA and increases in assessed value from appreciation of existing properties (shown in orange in the figure below).

Taxing districts temporarily forego some taxes raised from the increase in assessed value in the TIA, and the dollars are directed toward public infrastructure improvements in the TIA.

This allocation of some property tax revenues from the increased assessed value in the TIA each year will occur until the increment area expires, no more than 25 years after receiving its first increment. Once the TIA has expired, the overlapping taxing districts will receive the full amount of property taxes from the increased assessed value in the increment area. This concept is shown in the chart below. 

Goal: Transform a suburban, auto-centric and non-remarkable area of Federal Way into a distinct, vibrant and walkable downtown.

Objectives:

• Utilize creative funding tools to help achieve the Goal.
• Leverage the regional investment in high-capacity transit; the sale of city-owned property; and, local investment to attract high-quality, private development that will catalyze redevelopment.
• Prioritize walkability and enhanced non-motorized connections. Construct pedestrian-oriented infrastructure improvements that that improve mobility.
• Invest in community gathering areas and placemaking 

A TIA adds an additional funding source to complete needed infrastructure projects. These projects will provide the infrastructure needed to enable new development that will provide services and jobs for our community.  

No, a TIA will not negatively impact schools, as both the state and local school levies are exempt by law from being included in this new financing tool. The property taxes from state and local school levies generated from increased assessed value from new development in the TIA will not go to the TIA, but will immediately be allocated to the state school fund and local school district, respectively.  

The estimates of impacts on a property tax bill were made for a property value of $100,000 as it is easily multiplied to show any property value. For $100,000 of property value, the TIA impact is projected to be a TOTAL of $8.78 over the 25 years of the TIA.  The impacts start out at 8 cents the first year and grow to 83 cents in 2049 with an average annual impact of 35 cents.  

 According to Redfin statistics, the median sale price of a home in Federal Way in May of 2023 was $575,0000. This would make the initial year of impact forty-eight cents and the TOTAL 25-year impact $50 with an average annual impact of $2.