Chelan County’s $37.5M Offer Rejected by Port Authority

Chelan County’s offer to pay the Chelan-Douglas Regional Port Authority $1.5 million annually for 25 years in exchange for dropping its proposed tax increment area (TIA) in Malaga has been rejected.

The Port Authority responded with a letter declining the county’s proposal and suggesting that commissioners and other local taxing districts raise taxes instead to offset potential revenue losses caused by the TIA.

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Background: What Is the Malaga TIA?

“As you may be aware, the Washington State Department of Revenue recently issued a policy guidance on July 16, 2025, interpreting RCW 84.55.010 as allowing impacted taxing districts to adjust their levy rates to recoup increment revenue otherwise diverted into a TIA,” the letter stated. “This policy guidance could substantially reduce the projected impact to Chelan County’s General Fund and County Road Fund.”

County Commissioner Kevin Overbay, who represents the Malaga area, criticized the response, calling the suggestion to raise taxes “irresponsible.” “We don’t wish to create an additional tax burden on our residents, and I find it irresponsible for anyone to suggest in such a cavalier manner that this is a solution,” Overbay said. “A levy lid lift is passed only by a vote of the people. The community has spoken out against this TIF proposal. They want to see county, fire and library services protected - not be burdened with paying more taxes because of the port’s speculative plans.”

Chelan County’s $37.5M Counteroffer Explained

Commissioner Shon Smith shared similar frustrations.

“By extending a $37.5 million olive branch, we had hoped the regional port would put all residents first,” Smith added. “No one wants to see critical services jeopardized or taxes increased right now, especially in response to a port-sponsored TIA.”

The Regional Port’s proposed 3,326-acre TIA in Malaga would divert an estimated $195.7 million in property tax revenue over 25 years from local taxing districts - including Chelan County, the Wenatchee Valley Fire District, and NCW Regional Libraries - into the Port’s control.

“Their mission reads, ‘Working Together to Enhance the Economic Vitality of North Central Washington,’” Overbay added. “It appears these are only words on a webpage, as the reality is they have chosen to act alone in this endeavor and do not wish to be a partner with Chelan County or its residents.”

The county’s counteroffer would have drawn funding from its “.09 funds,” a portion of state sales tax revenue returned to counties for economic development. Commissioners said their proposal would have supported wastewater and road improvements in Malaga without affecting public services or requiring tax increases.

Commissioners Push Back Against Tax Hike Idea

“The county is willing to transfer $1.5 million annually to the Regional Port for 25 years from these funds to facilitate wastewater and road improvements in the Malaga area,” the county’s letter stated.

County leaders said the rejection leaves few options for compromise.

“We’ve reached out to the regional port multiple times over the past five months with potential resolutions that would allow for important economic development activities to take place while minimizing impacts to our taxing districts and the people who receive their services,” Overbay said. “At every turn, the regional port has resisted any opportunity for collaboration or cooperation.”

The commissioners said they consider the matter closed for now.