Chelan County sets new public hearing for Malaga TIF

Chelan County commissioners Monday set a public hearing for July 13 to receive public comment on a six-month moratorium on Tax Increment Financing Districts in the Malaga area - the latest chapter in a year-long disagreement between the county and Port of Chelan County.

The Chelan Douglas Port Authority proposed the creation of the 3,226-acre TIF district back in early 2025, which would divert future property tax revenue to fund public improvement projects in the Malaga area.

A tax increment financing district reallocates future property tax revenue generated by increases in property values within a defined area. The districts do not create new taxes.

Chelan County established a six-month moratorium back in July 2025 to prevent the formation and implementation of a TIF district in Malaga and then voted in February to renew the moratorium.

The Port of Chelan sued the county over this, seeking an injunction as it argued in Douglas County Superior Court that it has the authority to establish these districts, and the county's moratorium oversteps that authority.

But while that matter is being addressed in court, the commissioners set a July 13 hearing date for the public to comment on the issue before potentially passing a resolution for another six-month moratorium.

The Port of Chelan approved a resolution in December to create the Malaga TIF District despite protests from the county and several junior taxing districts, including the Wenatchee Valley Fire Department and NCW Libraries.

Reallocating property tax revenues would harm each of these entities, they've said in several public forums.

The county proposed an interlocal agreement before the December meeting that it said would not affect junior taxing districts and would result in $54 million more for the port. The interlocal agreement setting those conditions has not been signed, but some port commissioners said they were interested in signing it at the time.

The county said in a Facebook post in March that it was at a standstill with the port. Port of Chelan commissioners said they would not sign the interlocal agreement until the county retracts its lawsuits against the port and its ongoing TIF moratorium.

Chelan County Commissioner Shon Smith said at a March port meeting that the moratorium is for the county's protection until an interlocal agreement is signed.

Douglas County Court Commissioner Phil Safar granted the port a preliminary injunction to prevent the county from enforcing their moratorium. After Judge Brian Huber declined the county's motion to reconsider, the county appealed the case to the Washington Court of Appeals.

The hearing for oral arguments in the court of appeals was most recently continued Friday to November 5 "in furtherance of ongoing settlement discussions."

Jill FitzSimmons, Chelan County spokesperson, said in an email Monday that the county is "still hopeful to reach a resolution with the Port."

Jim Kuntz, Chelan Douglas Port Authority executive director, said in an email that the port made a "mitigation proposal" on June 24 and expects to hear a response within a few weeks.

Kuntz said that effective July 1, "refurbished and replacement server equipment from data centers are now subject to state and local sales taxes," as well as the labor costs, as part of a new state law. He said he expects this to offset some of the TIF reallocations.

"We believe when one data center building replaces all its servers, the local sales tax collection will be approximately $3.5 million," Kuntz said.

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