The bill amends several sections of the Revised Code of Washington (RCW) concerning local tax increment financing, specifically addressing definitions, assessed valuations, and the establishment of increment areas. A new definition for "consumer price index" is introduced, referring to the index for all urban consumers in the western region as published by the U.S. Bureau of Labor Statistics. The maximum assessed valuation for increment areas is set at $200,000,000, adjusted annually by the consumer price index. Local governments are permitted to create two non-overlapping increment areas, and each ordinance must include a sunset date not exceeding 25 years from the start of tax revenue collection.

Further provisions require local governments to conduct a project analysis before designating an increment area, assessing impacts on affordable housing and local taxing districts. If an increment area significantly affects a public hospital or fire protection district, a mitigation plan must be negotiated, with arbitration required if negotiations fail. For increment areas established after June 1, 2026, negotiations with affected taxing districts must commence within 30 days of the project analysis under certain conditions. The bill also mandates public hearings, annual reporting on the increment area's status, and reimbursement for assessors and treasurers' costs, ensuring that tax allocation revenues do not interfere with the highest allowable levy for taxing districts. The act is set to take effect on June 2, 2026.

Statutes affected:
Original bill: 39.114.010, 39.114.020, 39.114.030, 39.114.040, 39.114.050