Port, county signal thaw as Malaga TIF talks turn collaborative

CHELAN COUNTY — After months of tension over the Port of Chelan County’s proposed tax increment financing district in Malaga, a joint working session this week suggested a meaningful shift in tone.

Port commissioners and all three Chelan County commissioners met to walk through a draft interlocal agreement that would govern how TIF-related revenues are calculated, shared, reported, and adjusted over a 25-year lifespan. The agreement is not yet finished or signed, but the discussion was notably collaborative, with both sides repeatedly signaling that they are trying to build a durable framework they can live with long term.

County Commissioner Kevin Overbay, whose District 1 includes Malaga and who has taken the lead for the county on the issue, framed the goal simply: get the details right now, so the agreement works years from now.

Port CEO Jim Kuntz opened the discussion by thanking the county commissioners for attending and noting that the agreement flows from a commitment made when the port approved the Malaga TIF in December — that the port would work in good faith on a revenue-sharing agreement with the county and other taxing districts. He said staff met their deadline to deliver a draft, and now the work is to refine it together. Overbay, in turn, thanked county staff for turning around a heavily marked-up response in about 48 hours.

Much of the county’s technical explanation and legal framing came from Deanna Walter, Chelan County’s Director of Community Development, who emphasized that the agreement must be precise enough to be implemented correctly long after current staff are gone.

“This agreement is going to be in place for 25 years,” Walter told the group, explaining why the county is insisting on careful definitions and consistent language tied as closely as possible to state law.

That focus showed up early in the discussion in a debate over terminology. Walter explained that “tax allocation revenue,” which appears in levy calculations, is not the same thing as the actual payout that ultimately gets distributed. The county’s edits aim to make sure the agreement tracks the apportionment — the real-world distribution — rather than relying on terms that could be misread in future implementation. Port commissioners largely agreed, and the boards flagged a number of smaller consistency issues as cleanup items for the next draft.

The conversation then turned to one of the most sensitive political questions surrounding the Malaga TIF: whether it could ever translate into direct pressure on local property taxpayers.

Port Commissioner Richard DeRock raised the concern directly, focusing on scenarios where personal property values — such as servers and equipment associated with data center development — might not grow as projected, or where broader market conditions could depress assessed values.

DeRock said the port’s intention from the beginning has been to pursue a financing model that generates revenue for infrastructure and development without increasing local property taxes. He described a worst-case scenario where the numbers break the wrong way in a given year and said the port wants to preserve the ability to adjust course.

“That was not our intention when we started this,” DeRock said of any outcome that would push costs onto taxpayers. He said the board wants the flexibility, in a bad year, to reduce what it takes, or even elect not to take it at all, rather than contribute to a noticeable tax increase. He added that this is why the port wants early, reliable data from the county each year, so commissioners can see what the assessed value picture looks like before making levy-related decisions in the fall.

Walter responded by explaining how the levy and collection processes already give taxing districts a range of options. Districts can choose whether to take certain amounts through the levy process, and preliminary letters from the assessor’s office already include information about increment values. The group also discussed whether those notices should highlight overall year-to-year assessed value changes to better flag broader market shifts.

The takeaway was not a final policy decision, but a shared understanding that timing and transparency of information matter if the port is serious about its taxpayer-protection goal.

The most technical — and quietly consequential — part of the meeting came during a discussion of administrative costs and the county’s software systems. Walter explained that while existing TIF calculations for Wenatchee or Chelan can be handled within current software, Malaga’s multi-jurisdictional boundaries make it more complicated. Some parts of the process can be automated, but others may require manual work, especially when revenue-sharing agreements change how payouts are distributed on the back end.

She said the county is already in conversations with its software vendor about what is covered under existing contracts, what qualifies as a legislatively mandated change, and what might be considered a paid “enhancement.” Over a 25-year agreement, she said, relying on hand calculations is not realistic. Port commissioners said they want to avoid surprise administrative bills and are interested in setting clearer boundaries around reimbursable costs, while also acknowledging that the system has to be workable for future staff, not just current ones.

A related long-term risk also came up: appeals of assessed value. Walter explained that large property owners sometimes appeal valuations, and if an appeal is resolved years later, refunds can be owed after taxes have already been collected and spent. The draft agreement includes language meant to protect both taxpayers and taxing districts from bearing disproportionate impacts in those situations. The group agreed the protection makes sense, while also noting that the broader system may need legislative fixes to avoid sudden, destabilizing repayment scenarios.

That legislative uncertainty surfaced again near the end of the meeting, when Kuntz noted that new TIF-related legislation has been introduced in Olympia. He warned that shifting rules could create chaos if they collide with agreements already in progress, and argued that any major statutory changes should apply going forward, not retroactively.

Overbay responded with what became one of the meeting’s clearest signals of the new tone.

Even if new laws create new options, he said, an agreement reached in good faith should be honored.

“If we can reach an agreement,” Overbay said, “you would have my word” that he would not change course midstream simply because the Legislature offers a different path.

The meeting ended with a tight timeline. Kuntz said port staff will quickly incorporate agreed-upon changes and return a revised draft to the county by the end of the week, with the goal of bringing the agreement back for further public discussion soon.

The document is not finished. But after months of strained exchanges, the session offered something new: a sense that the port and county are now working from the same horizon — trying to build a framework that lasts, protects taxpayers, and gives both sides confidence they can live with the results for decades to come.

Andrew Simpson: 509-433-7626 or andrew@ward.media