Chelan Port Vote Advances Malaga Tax Financing District

The Chelan Port of Commissioners voted Tuesday to approve the proposed Malaga Tax Increment Financing (TIF) district, a move that could divert up to $154 million in local tax revenue over the next 25 years.

What the Malaga TIF Would Do

The 3,326-acre Malaga TIF would redirect future property tax revenue from Chelan County and several junior taxing districts, including Wenatchee Valley Fire Department, NCW Libraries, the county road district, and the Chelan County Flood Control Zone.

How Commissioners Voted

The vote passed 2-1, with District 1 Commissioner Don Etherington and District 2 Commissioner JC Baldwin voting yes, while District 3 Commissioner Richard DeRock voted against the proposal.

Mitigation Talks With Taxing Districts

Port officials said the approval includes a commitment to pursue a mitigation agreement with impacted taxing districts. Under the proposed framework, those districts would receive assessed property value revenue from new construction during the first year, while the Port would collect the revenue in subsequent years for the remainder of the TIF's duration. Commissioners could vote on the mitigation plan as early as Jan. 13, 2026.

Chelan Douglas Regional Port Authority CEO Jim Kuntz said the county approached the Port with a mitigation proposal on Dec. 16, and Port leadership agreed to work toward an agreement.

"We're committed to working on that over the next 30 days," Kuntz said. "There appears to be a path forward for not only having a Malaga [TIF], but having a mitigation agreement put into place that is not as negatively impactful to local taxing districts."

County Officials Push Back

Chelan County Commissioner and Commission Chair Shon Smith criticized the Port's decision, saying county officials were disappointed by the outcome.

"It sure seems to me like they went through the processes disingenuously to say that they jumped through all the hoops in front of them to get to this point," Smith said. "It feels like they had a predetermined decision made, even though 99% of the comments were not in favor of a TIF in Malaga."

Kuntz said public comments played a key role in delaying the vote earlier this month and in prompting discussions around mitigation.

"I think public input was critical for the commissioners, as well as local taxing districts reaching out," Kuntz said. "Early in December, the board made it very clear to staff at the Port there had to be a mitigation plan put together, and if there wasn't a mitigation plan laid out, then there probably wasn't going to be support for a [TIF]."

Impact to the Fire Department

Wenatchee Valley Fire Department Fire Chief Brian Brett said Microsoft agreed to provide funding to staff the Malaga Fire Station through 2027. He said the fire district planned on staffing based on current construction revenue, but remains hopeful that future project tax revenue will help offset funding gaps.

One drawback, Brett said, is that receiving construction tax revenue now could have lowered rates for taxpayers - an option that is no longer available.

"We can work through this by receiving the future construction revenue on those buildings, plus future development," Brett said. "What that would have done is it would have thrown $1 million into our pool, which would have lowered everyone's rate."

What Happens Next

Smith said the County will pay close attention to the Port's actions in the coming months as mitigation discussions continue.

"The next steps on our end is to see how genuine their offer is to look at interlocal agreements between the county and junior taxing districts," Smith said. "Had the Port not voted this in today, it would have been much easier to negotiate and stay in the same room and keep cooler heads, but now that the Port has taken this direction, all bets are off."

County officials urged the Port to delay the vote into the new year. Kuntz said the Port chose not to delay because it supports the TIF law as currently written.

The Washington Legislature starts Jan. 12, 2026, and Kuntz said lawmakers may consider changes to TIF statutes. He acknowledged that advancing a TIF proposal while legislation is pending could be perceived negatively.