HomeMy WebLinkAbout4618 Ordinance - Forming Broadmoor Tax Increment Area for Tax Increment Funding (TIF)City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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ACKNOWLEDGEMENTS
This Project Analysis was prepared for the City of Pasco by
Stowe Development & Strategies, LLC in association with
ECONorthwest and Gordon Thomas Honeywell
Governmental Affairs.
The Project Analysis represents a thorough and
comprehensive evaluation of a future Tax Increment
Financing program and establishment of a Tax Increment
Area for a significant and large development opportunity in
the west side of Pasco, called the Broadmoor Development.
The production of this report would not have been possible
without the participation, collaboration, and guidance from
the following individuals and groups.
Pasco City Council
• Mayor Blanche Barajas, District 1
• Mayor Pro-Tem Craig Maloney, District 6
• Councilmember Joseph Campos, District 2
• Councilmember Irving Brown, Sr., District 3
• Councilmember Pete Serrano, District 4
• Councilmember David Milne, District 5
• Councilmember Zahra Roach, At Large
City of Pasco Staff
• Dave Zabell, City Manager
• Adam Lincoln, Deputy City Manager
• Darcy Buckley, Finance Director
• Rick White, Community & Economic Services Director
• Steve Worley, Public Works Director
• Dan Ford, City Engineer
• Mike Gonzalez, Economic Development Manager
Legal and Financial Consultants
• Eric Ferguson, City Attorney
• William Tonkin & Lee Marchisio, Foster Garvey P.C.,
Bond Counsel
• Dave Trageser, DA Davidson, Bond Underwriter
• Scott Bauer, Northwest Municipal Advisors, Financial
Advisors
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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ACKNOWLEDGEMENTS
Continued
Broadmoor Project Development Team
• Dale and Kathy Adams, Broadmoor Properties
(property owner)
• Timothy Ufkes, Senior Vice President/Director.
National Multi Housing Group, Marcus & Millichap
• Brian Mayer, First Vice President, National Retail
Group, Marcus & Millichap
• Jason Mattox, Principal Civil Engineer/Survey
Department Manager/Operations Manager, PBS
Tax Increment Financing Consultants
• Bob Stowe, Stowe Development & Strategies (TIF
Project Manager)
• Morgan Shook, ECONorthwest
• Briahna Murray, Gordon Thomas Honeywell
Governmental Affairs
About Pasco 1
Introduction/Summary 2
Proposed Private Development 4
Infrastructure Needs 6
But-For-Requirement 9
Tax Increment Area 15
Tax Increment Revenue Projections 15
TABLE OF CONTENTS
Tax Increment Revenue Projections 18
Debt Service Payments and Coverage 20
Jobs Analysis 22
Financing Plan/Duration of TIA 26
Early Outreach to Taxing Districts 27
Additional Incremental Taxes 28
Risk Assessment and Mitigation Plan 30Risk Assessment and Mitigation Plan 32
Pasco TIF Team 36
Future TIF Actions 37
Timeline 38
Findings | Bottom Line 39
Appendices - Following Page 39)
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Source: Stowe Development & Strategies, 2022 based on Office of State Treasurer May 31, 2022 Memo
TIF Check List
Page 36 Name and contact information for members of the
financing team;
Pages 2 to 4, &
15
Comprehensive description of the Tax Increment Area,
including land ownership and leasing or sale arrangements;
Pages 4 to 9 A description of the Project being undertaken, in connection
with the Tax Increment Area;
Pages 6, 18 t0
21, 26, 28 to 35
Proposed budget for the Project, including the available
funding sources, expected costs, and plan of finance;
Page 38 An estimated timeline for the Project;
Pages 5, 6, &
15 to 19
Detailed assessed value growth and tax increment revenue
projections that have been prepared in connection with the
Project, including a description of the assumptions used and
the source of the projections;
Pages 4 to 6 &
15 to 17
Description of Tax Increment Area taxpayer base, and, if
possible, a breakdown by property / industry type;
Pages 20 & 26,
27 Description of the expected bond structure;
Pages 26, 27,
& 32 to 35
Description of the specific revenue pledge and revenues that
will support the debt to be issued;
Page 29 Calculations showing the Issuer’s projected debt service
coverage, based on current and expected pledged revenues;
Page 27 Calculations demonstrating compliance with the Issuer debt
limitations;
Appendices
Five years of the most recent historical and one year of
projected financial statements for the Issuer, identifying
the specific revenues that will be pledged towards
supporting debt service payments;
Pages 32 to 36 Description of potential project risk factors.
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Figure 1. Columbia River Cable Bridge
Source: Broadmoor Development, Marcus Millichap
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About Pasco: Pasco is a
thriving community of more
than 80,000 residents that has
seen substantial growth and
development over the last two
decades. Pasco’s economy is
booming. Two Amazon
industrial centers comprising
of more than 2 million square
feet are under construction in
Pasco. Due to the surrounding
agricultural region, several
major food processing
companies have a presence in
Pasco, including Lamb
Weston, Reser’s Fine Foods,
Twin Cities Foods, Simplot,
and Grimmway.
By utilizing tax increment financing, the Port of Pasco is facilitating Darigold building its largest
ever mild drying plant in Pasco, cementing the region’s status as one of the Northwest’s leading
centers for food processing. Recently the City has become a player in the booming Washington
wine industry with companies like Gordon Brothers Cellars, Fidelitas Winery, Kamiak Vineyards
and Preston Premium Wines.
The local economy benefits from the nearby Tri-Cities Airport, Interstate 182, U.S. Highway 395,
State Route 12, and the Port of Pasco, providing access to shipping along the Columbia River.
Pasco hosts several major events for the Tri-Cities area, using its historic downtown as a regional
gathering place. Downtown Pasco is home to the area’s largest farmer’s market and hosts the Fiery
Foods Festival, the Cinco de Mayo Celebration, the Sacajawea Blue Grass Festival, and Heritage
Days. The City has a seemingly limitless variety of recreational activities and is an outdoor
enthusiast’s dream. Pasco has 24 public tennis courts, 20 soccer fields, seven baseball fields, eight
softball fields, a professional indoor rodeo arena, 15+ miles of hiking/biking paths, and a
multipurpose outdoor stadium with a 10-lane all-weather running track capable of hosting state-
level football and track events. The City is also recognized for strong schools served by the Pasco
School District, including Pasco High School and Chiawana High School. Pasco offers residents
a great mix of culture, education, employment and recreation that promotes a positive lifestyle and
encourages future growth.
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Introduction/Summary
Tax Increment Financing (TIF) is a powerful economic development tool that was adopted into
law in Washington State in 2021. The Washington State Legislature created the TIF authority
through House Bill 1189 for a city, county, or port to create a tax increment area (TIA). TIFs
are used throughout the United States.
In general, our State’s TIF is a financing option that allows a public agency (city, county, or port)
to fund publicly-owned infrastructure determined necessary to encourage the envisioned private
development within a TIA designated by the public agency. As private development occurs (a
result of the public agencies investment in the identified public improvements), property values
rise, and the public agency uses the increased property tax generated by that development to pay
for the public improvement projects. After the project costs are paid, the public agency retires the
TIA. There are also inherent risks that are paired with the opportunity with any real estate
development that can dramatically impact the revenues that are projected from a development
within a TIA. This Project Analysis provides for a comprehensive examination of both the
opportunities and risks associated with the proposed TIA.
Figure 2: Basic TIF Model
Source: Stowe Development & Strategies, 2022
The City of Pasco started planning for the Broadmoor area by developing a Master Plan in 2017
for a 1600-acre site which is situated in the geographical center of the Tri-Cities (Pasco,
Kennewick and Richland). This area has unprecedented potential for development and ability to
support the areas growth projections. This master planning effort involved an analysis of a variety
of land use designations, roadway alignments and relevant best practices related to land use
planning. Over the last several years, the City has worked with the largest property owner in the
Broadmoor area (Broadmoor Properties) on a large-scale mixed-use development of 671 acres
within the Broadmoor Master planning area, now called the Broadmoor Development. Both the
City and Broadmoor Properties recognize the development of this site represents a once-in-a-
lifetime opportunity to provide significant housing, office, retail and placemaking elements while
achieving the goals of the Pasco community and region.
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Figure 3: Broadmoor Vacant Property Map
Source: Broadmoor Properties Map Recreated by Stowe Development & Strategies, June 2022
The Broadmoor Development is currently vacant land, and as such, needs significant infrastructure
such as roads and utilities. In 2019, the City of Pasco began working with property owners in the
Broadmoor area to fund and construct over 12,000 linear feet of new sewer trunk line to serve the
area at a project cost of just under $7 million through a Utility Local Improvement District (ULID)
Assessment. Remaining infrastructure needs exceed $70 million, of which a range between $33 to
$39 million is proposed to be funded with TIF. The property tax revenue estimates generated from
the anticipated private development within the TIA are sufficient to support the public
improvement costs at the end of the projected term of the TIA (25-years), requiring the City to
make interim gap funding contributions while the development stabilizes as indicated in Figure
14. It is also important to recognize that any debt the City issues in anticipation of TIF revenues,
the City will still be responsible for this debt from other revenue sources, regardless if the
anticipated development occurs. The City of Pasco has undertaken a comprehensive analysis of
evaluating: (i) the nexus between the proposed infrastructure improvements and the envisioned
developments (AKA the “But-For-Requirement”); (ii) various private development scenarios that
would occur following the City’s infrastructure investment along with financial mitigation options
that could be implemented if development is less than or takes longer than what is projected in the
various scenarios: (iii) any impacts and proposed measures regarding affordable housing, local
business community, local schools and local fire service.
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
Source: Broadmoor Properties Map Recreated by Stowe
Development & Strategies, June 2022
The Broadmoor Development and the ability to achieve the City’s community goals would not be
possible without TIF. The City of Pasco is enthusiastic to showcase how TIF can be used
strategically for a project site that meets the letter and spirit of Washington State’s new legislation
and achieves significant benefits for the Pasco community.
Proposed Private Development
The Broadmoor Development is a unique and large-scale development of over 451 gross acres of
vacant land that is available now for development. There is another 220 acres that is currently
being leased for sand and gravel operations until May 2025; after which it will become available
for redevelopment following reclamation. For purposes of evaluating the Broadmoor
Development, we have excluded any development potential of the sand and gravel operations and
reduced the gross acres by 25 percent to account for circulation, open space, and landscaping which
generates a net area of 328 acres. At completion, the Broadmoor Development will include the
following land uses: single family residential, multi-family residential, mixed-use, and
commercial.
Broadmoor Properties, LLC (property owner) own and are currently marketing each of the parcels
for sale. Most parcels are either closed, under contract, under letter of intent, or under discussions
between Broadmoor Properties and prospective developers. All of the developers that have been
identified to date who have either purchased property or in discussions to purchase property, are
experienced developers for that particular product type. Development permits are under review
on multiple parcels by the City, however building permits have yet to be issued. Developers are
anxiously awaiting for the adoption of the TIA before proceeding to construction.
Figure 4: Broadmoor Development Area Map
The consultant team, in collaboration with
the City and Broadmoor Properties, LLC
has generated several development
program scenarios from which to evaluate
potential property tax revenue from the
TIA as well as other tax revenue that is
generated from the expected Broadmoor
development. Market absorption
projections were based on discussion with
interested developers, Broadmoor
Properties, LLC and general knowledge of
the real estate industry. The three
Development Program scenarios created
can be categorized as follows:
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Figure 5: Broadmoor Development
Possible Conceptual Development
Renderings
Source: Broadmoor Development,
Marcus Millichap
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
Aggressive Development Program. Key development
assumptions include:
• Absorption rate of 300 multi-family units to be
constructed each year starting in 2023 for a 16-year
build-out;
• Commercial development starting in 2024 and mostly
completed by 2030;
• Reduced gross development area by 25 percent to
account for internal circulation, open space and
landscaping;
• Absorption rate of 60 single family homes per year for
a 4-year build-out.
Moderate Development Program. Key development
assumptions include:
• Absorption rate of 150 multi-family units to be
constructed each year starting in 2023 for a 25-year
build-out;
• Reduced highest multi-family density from 45 units
per acre to 30 units per acre (reduction of 817 multi-
family units);
• Commercial development starting in 2025 and most
completed by 2031;
• Reduced gross development area by 25 percent to
account for internal circulation, open space and
landscaping;
• Absorption rate of 40 single family homes per year for
a 6-year build-out.
Conservative Development Program. Key development
assumptions include:
• No development after 2030;
• Absorption rate of 150 multi-family units to be
• constructed each year and starting in 2023 and ending
in 2030;
• Commercial development starting in 2024 and most
completed by 2030;
• Reduced gross development area by 25 percent to
account for internal circulation, open space and
landscaping;
• Absorption rate of 60 single family homes per year for
a 4 -year build-out.
The following product types and market values are assumed
in each of the above Development Program scenarios and
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Figure 6: Summary of Nominal Year Assessed Values and TIF Allocation Revenues
City of Pasco | Broadmoor Development TIF Project Analysis August 2022
are based on multi-family properties and cost estimates in Franklin County and the region to
approximate the new improvement value.
• Multifamily housing: $375,000 per unit for denser product and $250,000 for less dense
product
• Senior housing: $200,000 per unit
• Single family detached housing: $600,000 per unit
• Commercial (retail/personal services): $200 per square foot
• Retail warehousing: $165 per square foot
• Medical office: $400 per square foot
Assessed property tax values for each Development Program have been projected at the following
5-year periods (nominal values per year – not discounted values). The City has determined that
the Moderate Program is the most likely to occur for purposes of this analysis. A summary of
assessed property tax values at 5-year intervals is shown in Figure 6.
Source: ECONorthwest Calculations
Infrastructure Needs
The City has identified improvements that are necessary for the development and improvements
that are to be supported by TIF. These TIF improvements were strategically located to support the
development type or product that were identified as needing the improvements most, or in other
words, those proposed developments that would not be financially viable without these
improvements.
The proposed improvements are illustrated in the Appendices section of this report. The TIF public
improvements include arterial street construction and associated infrastructure (water, sewer,
storm), and key intersections and ramp improvements to Interstate 82 that provides access and
primarily supports the commercial and mixed-use land uses within the Broadmoor Development.
The total cost for the TIF improvements is estimated to be a range between $33 to $39 million.
The higher amount allows for additional infrastructure improvements that are under consideration
based on private development needs. The City will finalize the TIF infrastructure and projected
cost as part of the TIA adoption ordinance by the Pasco City Council. For purposes of the Project
Incremental Assessed Value 2023 2028 2033 2038 2043 2048
Tax Year
Aggressive $0 $1,130,730,000 $1,681,980,000 $1,811,970,000 $1,952,010,000 $2,102,870,000
Moderate $0 $763,400,000 $1,470,220,000 $1,620,620,000 $1,761,900,000 $1,898,070,000
Conservative $0 $553,440,000 $825,660,000 $889,470,000 $958,210,000 $1,032,270,000
TIF Allocation Revenues 2023 2028 2033 2038 2043 2048
Tax Year
Aggressive $0 $2,790,000 $4,050,000 $4,270,000 $4,490,000 $4,720,000
Moderate $0 $1,880,000 $3,540,000 $3,810,000 $4,050,000 $4,260,000
Conservative $0 $1,360,000 $1,990,000 $2,090,000 $2,200,000 $2,310,000
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Analysis, we have assumed the larger scope and amount of $39 million for the proposed TIF
infrastructure. The owner of Broadmoor Development is dedicating approximately 29.3 acres of
land for the TIF improvements resulting in an average value range between $6.4 and $12.7 million
in project benefit. Additionally, the owner of the Broadmoor Development and/or future
developers of the site will be funding and constructing additional public improvements at an
estimated cost of $39 million to $45 million along with dedicating an additional 34 acres of land
to support those public improvements. The City’s TIF infrastructure will start construction in 2023
and is expected to be largely completed that same year. Design is currently occurring and is
expected to be publicly bid in late 2022 or early 2023. Where integral to the TIF funded
improvements, infrastructure funded and constructed by private development will begin in 2023
and be closely coordinated with the TIF projects. For developer funded projects not integrated
directly into the TIF improvements, they will be constructed as development occurs on each
individual parcel.
The TIF improvements are described below.
Corridors
1. Sandifur Parkway – Bedford Street to Proposed Road 105
• Widen the existing Sandifur Parkway from Bedford Street to Broadmoor Blvd;
• Fully construct Sandifur Parkway from Broadmoor Blvd east to proposed Road 105,
including but not limited to, as much as 7-lanes of roadway and frontage improvements
including curb/gutter, stormwater, sidewalk, street lighting and landscaping on the north
side and curb/gutter and stormwater on the south side.
• Construction of public utilities within the roadway prism will be included within this
corridor from Broadmoor to Road 105.
2. Broadmoor Boulevard – Interstate 182 to Burns Road
• Road widening of the existing road, west side only to, include the addition of 7-lanes of
asphalt roadway, curb/gutter, stormwater, multi-use pathway, and streetlights from
Interstate 182 to Buckingham Road;
• Road widening of the existing road, west side only to include the addition of 5-lanes of
asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and
landscaping from Buckingham Road to Burns Road;
• Utility adjustments of existing utilities is included in this corridor from Interstate 182 to
Burns Road.
3. Buckingham Drive – Broadmoor to Road 105
• Fully construct Buckingham Drive from Broadmoor Blvd west to proposed Road 105
including but not limited to 3-lanes of new roadway improvements including
curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street lighting
and landscaping on the south side of the roadway.
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Figure 7: Interstate
Improvements
Source: City of Pasco, 2022
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4. Road 105 – Sandifur Parkway to Buckingham Drive
• Fully construct Road 105 from Sandifur Parkway north to proposed Buckingham
Drive including but not limited to 3-lanes of new roadway improvements including
curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street
lighting and landscaping on the east side of the roadway.
5. Road 103 – Sandifur Parkway to Buckingham Drive
• Fully construct Road 103 from Sandifur Parkway north to proposed Buckingham
Drive including but not limited to 3-lanes of new roadway improvements including
curb/gutter, utilities, stormwater within the roadway prism, and sidewalk, street
lighting and landscaping on the west side of the roadway.
Interstate Associated Improvements
6. Interchange Improvements - Interstate 182 at Road 100
• Construction of an additional (Broadmoor Blvd)
eastbound off-ramp lane, a loop ramp for north bound
Broadmoor Blvd traffic and roundabout to replace the
signal at the ramp terminals.
Intersections
7. Burns Road / Broadmoor Boulevard
• Full improvements to the existing intersection to include signalization, widening,
curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping;
• Utility extension and/or adjustments of existing utilities;
• This intersection will have participation in cost from other developers through a
participation technical memorandum, prepared by the City’s consultant.
8. Buckingham Drive / Broadmoor Boulevard
• Full improvements to the existing intersection including signalization, widening on the
west side, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping,
and landscaping;
• Utility extension and/or adjustments of the existing utilities will be included within this
intersection;
• Signalization improvements provided by Broadmoor Properties, LLC.
9. Sandifur Parkway / Broadmoor Boulevard
• Full improvements to the existing intersection including signalization, widening,
curb/gutter, sidewalk with ADA ramps, street lighting, striping, and landscaping;
• Utility extension and/or adjustments of existing utilities.
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10. Extended Sandifur Parkway / Proposed Road 108
• Construction of a "core" roundabout that includes all of the asphalt necessary to extend
2 feet past the proposed final toe-of-curb/gutter. This effort will also include temporary
gravel shoulder drainage swale, as well as striping and lighting, and full construction of
a center truck apron and landscaped feature and entry delineators including curb/gutter
and internal surfacing as determined;
• Frontage improvements including curb/gutter, sidewalk, stormwater, and landscaping
will be completed by adjacent parcel owners at the time of development;
• Construction of domestic water main, sanitary sewer main, and irrigation main
improvements.
11. Extended Sandifur Parkway / Proposed Road 103
• Construction of a full intersection including signalization, widening, curb/gutter,
stormwater, sidewalk with ADA ramps, street lighting, striping, and landscaping;
• Construction of domestic water main, sanitary sewer main, and irrigation main
improvements will be included within this intersection;
• Signalization provided by Broadmoor Properties, LLC.
12. Extended Sandifur Parkway / Road 105
• Construction of a core intersection, including but not limited to, as much as 3-lanes of
asphalt road surface (curb-to-curb);
• Construction of domestic water main, sanitary sewer main, and irrigation main
improvements will be included within this intersection;
• Traffic control determined at time of design.
But-For-Requirement
Washington State’s TIF law requires its local government sponsor to make the following findings:
The public improvements proposed to be paid or financed with tax allocation revenues are
expected to encourage private development within the increment area and to increase the assessed
value of real property within the increment area; (ii) Private development that is anticipated to
occur within the increment area as a result of the proposed public improvements will be permitted
consistent with the permitting jurisdiction's applicable zoning and development standards; (iii) The
private development would not reasonably be expected to occur solely through private investment
within the reasonably foreseeable future without the proposed public improvements; and, (iv) The
increased assessed value within the increment area that could reasonably be expected to occur
without the proposed public improvements would be less than the increase in the assessed value
estimated to result from the proposed development with the proposed public improvements. These
findings (specifically Sections i, ii, and iv) are commonly referred to as the “But-For
Requirement”. The name comes from the assertion that private development would not occur but-
for the use of TIF. This requirement is a foundational element of TIF which directs public tax
dollars generated by the development to only those projects that need it; thereby, avoiding a gift
of tax dollars in the form of infrastructure funding paid for by the local government that should
have been funded by the developer. Although TIF is new to Washington State governments, the
But-For-Requirement and associated analysis is not. Many local governments that have invested
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Source: Marcus Millichap
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
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Source: Marcus Millichap
in infrastructure as part of economic development projects have examined the public agencies
return on its infrastructure investment from the generation of on-going tax revenues associated
with new development. Additionally, most local governments’ infrastructure demand exceeds its
revenue capacity, forcing local governments to make priority decisions regarding infrastructure
projects that get funded with tax dollars and determining which projects can be paid for by
developers. The But-For-Requirement for TIF formalizes the analysis and requires the local
government sponsoring TIF to provide convincing evidence showing that tax dollars from the TIA
are necessary to make the development possible.
If a proposed development would occur without TIF, public tax dollars should not be used because
it will cost taxpayers more than it should for the resulting development or growth. However, if TIF
is used to encourage a development that would not otherwise happen, the tax base can be increased.
A larger tax base helps pay for needed services and can control the growth of new taxes. The But-
For-Requirement is critical as a means to determining the proper use for public tax dollars.
The following criteria has been developed to evaluate the Broadmoor Development and provide
sufficient evidence to support or deny TIF for projects based on the But-For-Requirement.
Lack of Growth and/or History of Development: One measure to determine if TIF is appropriate
is to evaluate if there has been any growth in the region that is similar with the type of development
desired or envisioned. There is no project in the Tri-Cities that is remotely close to the scope and
scale of the Broadmoor Development. The commercial development that has occurred in the City
of Pasco did so based on locations where key infrastructure (streets, water, sewer) were already in
place. Broadmoor Development’s planned commercial buildings would likely not be built in
today’s economic environment without the proposed TIF Infrastructure.
Figure 8: Park Place Apartments
In terms of multi-family construction,
the City of Pasco has not yet seen any
development above 3-stories.
Construction costs for multi-family
developments above three-stories, due
to construction standards/requirements
are significantly higher and require
higher rents than the market is currently
able to support. There is only multi-
family development above three-
stories in the Tri-Cities area.
Constructed in 2021, the Park Place Apartments, situated in Richland, WA, has 106 units among
4-stories with one level of below grade parking (less than 30 parking spaces). Some retail is also
provided under the 106 residential units and within two separate one-story buildings.
The average construction costs for newer multi-family housing in the Tri-Cities ranges from $260
to $350 per square foot depending on the type of unit being constructed. The average rents in the
Tri-Cities is $1.90 to $2.30 per square foot, which provides sufficient revenue to support a cost per
square foot of between $180 to $220, resulting in the likely scenario that development above three-
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stories will not occur until rents are higher or construction costs decrease. Rents have been rising
in the region, with nominal rents increasing 20% in the past decade according to CoStar (a
commercial real estate data firm). With continued tight vacancies, it is likely that upward pressures
on prices will continue fueling the demand for new housing units in the near future at market
clearing prices for new construction. Adding in any of the cost of the infrastructure proposed to be
funded by TIF to the construction cost of the development would only make any of the proposed
five, six, and seven-story and mixed-use construction for the Broadmoor Development project
even more unlikely, counteracting price gains in apartment rents.
Developer Commitment: Another measure to evaluate if TIF should be used is from the lack of
any private vertical development commitment to build a project without the infrastructure first
being in place. Stated differently, the private sector will only build the project if the TIF
infrastructure is built and funded with public tax dollars. Over the last year the City has been
working with Broadmoor Properties (property owner) and prospective purchasers/developers of
two key sites along Broadmoor Boulevard, comprising of over 50 acres of commercial
development. Both private developments have confirmed as part of purchase and sale agreements
with Broadmoor Properties that their development will not occur unless the proposed TIF
improvements are publicly funded and constructed. Other discussions with developers interested
in commercial and mixed-use type development envisioned for the Broadmoor Development site
have echoed a similar requirement.
Impact of Financial Feasibility | Residual Land Value Analysis
Another way to evaluate the But-For-Requirement is to examine how the cost of the public
infrastructure impacts the financial viability of real estate. To inform the evaluation of this
condition, ECONorthwest completed an economic analysis that reflects the developer’s decision-
making process and cash flow equation. The findings from this analysis bear on the “but-for” test
by including information on the impact of financial returns. The central question is: How does the
public provision of the infrastructure solve for a value deficit to support real estate investment? In
other words, could development happen if the private development was required to self-fund the
proposed public improvements.
To understand the potential for development under TIF (and without TIF), ECONorthwest
employed an Excel-based financial model that used the Residual Land Value methodology. The
model considered the prototypes, entitlement limits, open space and right-of-way needs, and the
financial market conditions (e.g., rents, operating and construction costs, and investment return
requirements). Residual land value (RLV) is an estimate of what a developer would be able to pay
for land given:
• The property’s income from rental or sales revenue;
• The cost to build as well as to operate the building;
• The investment returns needed to attract capital for the project.
In other words, it is the budget that developers have remaining for land after all other development
constraints have been analyzed.
The RLV approach has several advantages:
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• It does not rely on land prices as an input. Rather, observed land prices can be compared
with the model outputs to help calibrate the model and ensure it reflects reality;
• It can assess the impacts of changes to the development code and accompanying
development incentives because these policies principally affect land value, especially in
the short run.
Each of the development concepts was analyzed using this RLV approach. The results from this
method describe a general analysis of prototypes in the Broadmoor area and do not consider the
many potential unique conditions that could be a factor in development feasibility (e.g., increased
predevelopment costs, low land basis from longtime land ownership, unique financing, etc.).
For these reasons, a RLV analyses should be thought of as a strong indicator of the relative
likelihood of feasibility, rather than an absolute measure of return to the investor or developer.
Though the RLV estimate is relevant for developers seeking to purchase land for new
development, it is also applicable for understanding the development decisions of those that
already own land. In the case where the property owners have owned the land for many years such
that the mortgage/debt is now paid off, an RLV estimate of $0 would reflect a set of development
constraints that could be feasible. The Broadmoor area has experienced recent land transactions
which helps the analysis compare and understand the value of maximum and base entitlements.
For the Broadmoor area, ECONorthwest used the following methodology to compare the budget
remaining for land between prototypes built under multiple hypothetical base entitlements and
prototypes built under the proposed maximum entitlements. To complete this analysis,
ECONorthwest:
1. Compiled financial inputs such as rent, operating costs, and development costs for each
type of development product.
2. Defined the available building areas of the prototypes (for this analysis a mixed-use/
multi-family and commercial retail center are used as examples of projects that have
not been built in the study area and could be supported with TIF investments).
3. Used the pro forma to calculate the revenue from the leasable square feet and then
removed the vacancy and operating costs (such as taxes, insurance, maintenance,
management, select utilities) to arrive at an annual net operating income (NOI).
4. Derived the value from each NOI by dividing by the respective return on cost threshold
5. Summed those values to arrive at a total value for each development concept.
6. Calculated the total development costs by applying the cost per square foot values to
the gross square feet for each product type
7. Summed those values to a total hard cost and calculated the soft cost, contingency, and
developer fee to arrive at the total development cost.
8. Calculated the land budget (also known as the RLV) by subtracting the total
development cost from the total value
9. Divided the total land budget by the site square feet to arrive at a residual land value
per square foot.
10. Compare RLV of a baseline scenario where the project is not encumbered with a pro-
rata share of the $39 million in TIF infrastructure to one where they are encumbered
with it.
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The TIF improvements are estimated to cost $39 million and are concentrated at the southern end
of the site. The owner of the Broadmoor Development (and/or future developers of the site) will
be funding and constructing additional public improvements at an estimated cost of $39 million to
$45 million along with dedicating an additional 32 acres of land to support those public
improvements (these values are in addition to the $39 million in proposed TIF projects).
Currently, land values in the area are about $1 per square foot of land as assessed by the Franklin
County Assessor. These values reflect the current use of the land without any of the contemplated
TIF projects. Raw land that has sold in the immediate area in recent time has ranged between $2
to $9 per square foot on land, depending on where these parcels are located and the relative
proximity to the TIF improvements (higher values where sites are already served by infrastructure
and lower where there is a deficit). The summary below compares three different land value
perspectives from both the purchase price and the RLV analysis.
• Current Land Value: This is the range of sales prices of recent raw land sales within the
TIA that are closer to the sites most impacted by needed improvements that could be funded
by TIF.
• Baseline RLV: This RLV estimates what the current land value might be under considering
projected revenues and costs.
• Impacted RLV: This RLV estimates the effect of the land having to account for the $39
million in infrastructure costs on top of the other $39-$45 million in infrastructure costs
that would be borne by the project.
• Impact on Feasibility: In the RLV analysis, financial feasibility is expressed as a land
value. From a developer’s perspective, it frames what they can pay for land. The percent
change refers to the change in the absolute value of the baseline to impacted RLV. A
negative value in this case, means that the additional cost of the TIF infrastructure
(allocated on per square foot basis of the building lot) proportionally reduces the land
budget for the development.
Figure 9: Summary of RLV Analysis
Source: ECONorthwest Calculations
Figure 9 summarizes the results of the RLV analysis. The table shows the type of prototype
analyzed and some basic parameters of their development conditions. The Baseline RLV shows
the land residual if the project does not have to bear the cost of the TIF infrastructure. In this case,
the values are lower than where land is trading in the area and reflect financial conditions that may
not support development in the near future and are uncertain given current macroeconomic
conditions. This also is congruent with the observation that no development has taken place in the
area, in part due to the deficit of infrastructure.
In comparison, the Impacted RLV (with the incorporation of the pro rata share of the TIF
infrastructure is more negative and reflects an added value that the land must bear for the cost of
the infrastructure – approximately adding almost $3 of negative land value due to the need to
provide the infrastructure. This in theory lowers the value of land and may put pressure on financial
Use Protoype Current Land Baseline RLV Impacted RLV Impact on Feasibility
Mixed Use Multifamily 4 story, 100 units $5.00-$5.50 -$1.10 -$3.80 -245%
Commercial 20,000 sqft retail $5.00-$5.50 $2.70 -$0.10 -104%
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viability of development, ultimately impacting either the rate, quality, or timing of development
and is reflected in the impact on feasibility. In the case of a mixed-use project (retail and multi-
family), there is a 245% reduction in the RLV and 104% reduction for a commercial retail project.
The ultimate impact of this reduction and the magnitude on these types of projects is the inability
to secure land at market prices, and therefore enable their production. This type of RLV analysis
is not intended to be definitive with respect to the “but-for” test and should be understood as
reflecting the challenging conditions that development in the area currently faces along with the
added challenge of supporting needed infrastructure. In summary, these additive figures
demonstrate that any development scenario is would be very challenging without the TIF
infrastructure investments.
Expected Development Without TIF Improvements:
Because the Interstate 182 interchange is near capacity and commercial and mixed-use
development would likely not invest in the Broadmoor Development without the proposed TIF
infrastructure improvements, the development forecast is significantly limited. Without
TIF improvements, development of approximately 240 single family homes (market absorption of
60 homes per year) and 410 multi-family homes (market absorption of 205 homes per year) would
likely be built based on development interest. These homes gain access to their development from
Burns Road and would not necessitate the development of any improvements funded by TIF. The
projected assessed value of these developments with the use of TIF is provided in Figure 10 below.
Figure 10: Comparison of Assessed Value Growth Between TIF Scenarios and No TIF
Source: ECONorthwest calculations, 2022
Summary of “But-For-Requirement”
Based on the above criteria, the proposed Broadmoor Development could not occur without the
identified TIF infrastructure improvements. Additionally, the assessed values from projected
private development without any TIF improvements would be less than the increase in assessed
values from private development with the TIF improvements. It is important to reiterate that the
Broadmoor Development still requires additional infrastructure investment beyond those
improvements identified to be funded with TIF. In fact, private development will be responsible
for infrastructure improvements estimated between $39 million to $45 million compared to the
$39 million identified for the TIF improvements (see Risk Assessment and Mitigation Plan below).
Additionally, land valued between $5.5 million and $ 10.6 million will be dedicated by Broadmoor
Properties to the City for its infrastructure improvements.
Incremental Assessed Value 2023 2028 2033 2038 2043 2048
Tax Year
Aggressive $0 $1,130,730,000 $1,681,980,000 $1,811,970,000 $1,952,010,000 $2,102,870,000
Moderate $0 $763,400,000 $1,470,220,000 $1,620,620,000 $1,761,900,000 $1,898,070,000
Conservative $0 $553,440,000 $825,660,000 $889,470,000 $958,210,000 $1,032,270,000
No TIF $0 $323,500,000 $348,500,000 $375,440,000 $404,450,000 $435,710,000
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Tax Increment Area
The TIA includes the entire Broadmoor Development site of approximately 671 acres. With the
exception of the gravel and sand operation parcels, the entire site is vacant. The assessed valuation
of the TIA in 2022 is approximately $30 million (Figure 12), well below either the $200 million
assessed valuation threshold or 20 percent of the City of Pasco’s total assessed valuation of
$6,502,962,700 (0.46% of total valuation).
Tax Increment Revenue Projections
Overview of TIF Allocation Revenues
Following guidance issued by the Washington State Department of Revenue, the analysis estimates
the apportionment of taxes to the TIA. These revenues are available to the sponsoring local
jurisdiction for funding of the identified public infrastructure projects (that are named in the
ordinance). Under the TIF legislation, only certain regular levies are available to the TIA. Using
2022 levy rates in the Broadmoor TIA, only $2.62 of the $8.80 total levy, approximately 30%,
would be available (Figure 11).
Figure 11: Overview of Levy Rates and TIF Levy Rate Allocation
Source: ECONorthwest and Franklin County Assessor
Since these are regular levies, the taxes must conform with the constitutional 1% limit as well as
the $5.90 aggregate limits. Both parts of the State School levy as well as local school district excess
levies are excluded. In addition, any taxes levied by port districts for the purpose of making
payment on bonds would be excluded.
Current 2022
Levy Taxes
Exempt: State
Schools
Exempt: Excess
and Other Levies
Available for TIF
allocation
Total $8.7952 $2.8043 $3.3671 $2.6238
State
Part 1 $1.8229 $1.8229 $0.0000
Part 2 $0.9814 $0.9814 $0.0000
Franklin County
Regular_Current Expense $0.9046 $0.9046
Regular_Veterans Aid $0.0113 $0.0113
Regular_Mental Health $0.0250 $0.0250
Bond Fund_Courthouse $0.0638 $0.0638 $0.0000
Port of Pasco
General Fund $0.2177 $0.2177
Bond Fund $0.0000 $0.0000 $0.0000
City of Pasco $1.4653 $1.4653
Pasco School District
Pasco Enrichment $1.4557 $1.4557 $0.0000
Pasco Bond $1.8476 $1.8476 $0.0000
Pasco Building $0.0000 $0.0000
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Broadly, TIF in Washington allocates a portion of incremental property taxes to the TIA based on
the amount of assessed value added to the TIA. This means that each taxing district in the TIA will
receive that portion of its regular property taxes produced by the rate of tax levied by the taxing
district based on the assessed value of real property located in the area for taxes imposed in the
year that the TIA was created. This amount will flow to the member districts for the period that
the TIA is in place. The local government that created the TIA will receive a portion of the regular
property taxes levied by each taxing district based off the increment value within the increment
area. For the local government that created the TIA, this includes their own portion of their regular
levy. Property taxes from the TIA begin on the calendar year following the passage of the
ordinance. The county treasurer will distribute these funds to the agency that created the TIA.
TIA Allocation Revenue Modeling
New incremental development in the TIA will drive future growth in incremental assessed value.
These values will then be multiplied by the levy rate in the respective years to estimate the amount
of TIA allocation revenues. To accomplish this, there are four separate analyses that must be
completed:
• Forecast incremental TIA assessed value. Based on the development program, the future
assessed value is estimated by assigning market-based improvement prices based on the
land use and size of the proposed development.
• Forecast jurisdiction assessed value. Outside of growth in the incremental assessed value
in the TIA, it is necessary to forecast growth in the City’s overall assessed value (not
counting the incremental growth in the TIA.
• Forecast highest lawful levy. For each taxing jurisdiction in the TIA, future levies must
be estimated. To do so, the amount of new construction, other add-on value, 101% limit
factor, total levy limit, and the maximum allowable levy must be taken into consideration.
From that interplay, it is possible to estimate what the given levy will be for any respective
jurisdiction in the future.
• Forecast levy rates. Once the levy and assessed value are known in future years, it is
possible to calculate the levy rate (divide levy by thousands of assessed value). TIA
allocations are made by multiplying the levy rate by the incremental TIF assessed value.
To model TIA allocation property tax revenues, a 25-year cash flow model was created to reflect
development over time and applied the appropriate property tax base productivity and property tax
rates to estimate the stream of future property tax revenues. Additional assumptions in the forecast
modelling include:
• The City’s assessed valuation growth is assumed to grow at a rate of 1.5% a year.
• Once new built structures are placed on the tax assessments, these properties are also
assumed to grow at a real rate of 1.5% a year (inflation adjusted) after their initial
assessment.
• Outside of new construction growth within the tax increment area, new construction within
the City is limited to no more than 1.2% of the City’s assessed value base.
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TIA Allocation Results
Assessed Value in the TIA.
Figure 12 identifies the parcels in the TIA and their current valuation. Based on 2022 values for
2023 taxes, the district has approximately $30 million in real property assessed value. The $30
million figure is below the assessed value cap of the lesser of 20% of the city’s assessed value or
$200 million.
Figure 12: Current Parcels in TIF District and 2023 Valuation
Source: Franklin County Assessor, 2022
Assumptions on Incremental Assessed Value Growth
Using assumptions identified in the Development Program for the Aggressive, Moderate, and
Conservative growth scenarios, future assessed values of those improvements are estimated and
serve as a foundation for the expected TIA allocation revenues.
Parcel 2023 Land Assessed
Value
2023 Improvement
Assessed Value
2023 Total Assessed
Value
115210046 $4,001,300 $0 $4,001,300
115210039 $1,522,400 $0 $1,522,400
115210038 $1,856,300 $0 $1,856,300
115210037 $2,217,200 $0 $2,217,200
115210048 $344,100 $0 $344,100
115210045 $1,843,600 $0 $1,843,600
115210044 $2,947,200 $0 $2,947,200
115210043 $1,455,300 $0 $1,455,300
115210040 $2,939,300 $0 $2,939,300
115210042 $1,023,500 $0 $1,023,500
115210041 $668,700 $0 $668,700
115210036 $1,477,700 $0 $1,477,700
115210035 $1,329,000 $0 $1,329,000
115210034 $2,780,500 $0 $2,780,500
115210033 $1,223,800 $0 $1,223,800
115210032 $1,232,300 $0 $1,232,300
115210031 $1,234,800 $0 $1,234,800
Total $30,097,000 $0 $30,097,000
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TIA Allocation Revenues
The following table (Figure 13) summarizes the present value of 25 years of TIA allocation
revenues that would flow to the Broadmoor TIA created by the City of Pasco (first year of revenues
is 2025). The revenues are discounted at a rate of 4.5% to approximate the City’s cost of capital
(debt and issuance costs). Figure 13 shows that the Aggressive scenario can accommodate
approximately a present value of $50.9 million in debt, whereas the Moderate scenario can
accommodate $42.3 million in debt and Conservative scenario can accommodate $25 million in
debt.
Figure 13: Present Value of TIF Allocation Revenues
Source: ECONorthwest calculations, 2022
Figure 13A summarizes the incremental assessed value and respective levy rates from 2023 to
2048 where the TIA is assumed to be in place for the Moderate Scenario as an illustration of how
the base value, increment value, and levy rate are forecasted to grow under the development
assumptions. Subsequently, the total property taxes for the contributing tax levies are shown with
allocated TIF revenues and the remaining portion that would continue to flow to the taxing
jurisdiction split out from each other.
Jurisdiction Aggressive Moderate Conservative
City $28,390,000 $23,630,000 $13,940,000
County $18,250,000 $15,190,000 $8,980,000
Port District $4,220,000 $3,510,000 $2,080,000
Total $50,860,000 $42,330,000 $25,000,000
24
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Figure 13A: TIF Allocation Revenues – Moderate Scenario
City of Pasco
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value 0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112
Levy Rate $1.40758 $1.40073 $1.39397 $1.38736 $1.38095 $1.37468 $1.36849 $1.36233 $1.35624 $1.35017 $1.34411 $1.33802 $1.33193
Total Property Tax $42,364 $42,158 $251,869 $466,594 $802,596 $1,090,802 $1,323,322 $1,437,760 $1,730,162 $1,910,071 $2,016,589 $2,046,177 $2,076,144
Tax Allocated to TIF $0 $0 $209,915 $424,839 $761,034 $1,049,428 $1,282,134 $1,396,758 $1,689,343 $1,869,435 $1,976,135 $2,005,907 $2,036,057
Tax Allocated to City $42,364 $42,158 $41,954 $41,755 $41,562 $41,374 $41,188 $41,002 $40,819 $40,636 $40,454 $40,270 $40,087
Franklin County
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value $0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112
Levy Rate $0.90821 $0.90380 $0.89941 $0.89506 $0.89073 $0.88640 $0.88208 $0.87780 $0.87353 $0.86928 $0.86505 $0.86084 $0.85665
Total Property Tax $27,334 $27,202 $162,509 $301,027 $517,684 $703,351 $852,965 $926,407 $1,114,367 $1,229,755 $1,297,845 $1,316,436 $1,335,296
Tax Allocated to TIF $0 $0 $135,440 $274,088 $490,876 $676,674 $826,417 $899,988 $1,088,077 $1,203,592 $1,271,810 $1,290,527 $1,309,513
Tax Allocated to County $27,334 $27,202 $27,069 $26,939 $26,808 $26,678 $26,548 $26,419 $26,291 $26,163 $26,035 $25,909 $25,782
Port of Pasco
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value $0 $0 $150,588,381 $306,221,473 $551,095,153 $763,398,629 $936,894,594 $1,025,273,701 $1,245,609,229 $1,384,588,893 $1,470,221,781 $1,499,156,778 $1,528,653,112
Levy Rate $0.21009 $0.20907 $0.20805 $0.20705 $0.20604 $0.20504 $0.20404 $0.20306 $0.20207 $0.20108 $0.20010 $0.19913 $0.19816
Total Property Tax $6,323 $6,292 $37,592 $69,634 $119,752 $162,701 $197,310 $214,298 $257,778 $284,469 $300,220 $304,521 $308,883
Tax Allocated to TIF $0 $0 $31,330 $63,402 $113,550 $156,529 $191,168 $208,187 $251,696 $278,417 $294,198 $298,527 $302,919
Tax Allocated to Port $6,323 $6,292 $6,262 $6,232 $6,201 $6,171 $6,141 $6,111 $6,082 $6,052 $6,023 $5,993 $5,964
City of Pasco
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536
Levy Rate $1.32583 $1.31973 $1.31363 $1.30754 $1.30146 $1.29539 $1.28933 $1.28328 $1.27725 $1.27123 $1.26523 $1.25925 $1.25328
Total Property Tax $2,106,503 $2,137,263 $2,168,435 $2,200,029 $2,232,053 $2,254,379 $2,276,907 $2,299,641 $2,322,585 $2,345,744 $2,369,120 $2,392,719 $2,416,542
Tax Allocated to TIF $2,066,599 $2,097,543 $2,128,899 $2,160,676 $2,192,883 $2,215,392 $2,238,102 $2,261,018 $2,284,144 $2,307,484 $2,331,041 $2,354,819 $2,378,821
Tax Allocated to City $39,903 $39,720 $39,536 $39,353 $39,170 $38,987 $38,805 $38,623 $38,441 $38,260 $38,080 $37,900 $37,720
Franklin County
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536
Levy Rate $0.85248 $0.84833 $0.84420 $0.84009 $0.83600 $0.83193 $0.82788 $0.82385 $0.81984 $0.81585 $0.81188 $0.80792 $0.80399
Total Property Tax $1,354,429 $1,373,838 $1,393,528 $1,413,503 $1,433,766 $1,447,813 $1,462,004 $1,476,338 $1,490,819 $1,505,448 $1,520,225 $1,535,152 $1,550,232
Tax Allocated to TIF $1,328,772 $1,348,306 $1,368,120 $1,388,219 $1,408,605 $1,422,775 $1,437,087 $1,451,543 $1,466,145 $1,480,893 $1,495,790 $1,510,836 $1,526,034
Tax Allocated to County $25,657 $25,532 $25,408 $25,284 $25,161 $25,039 $24,917 $24,795 $24,675 $24,555 $24,435 $24,316 $24,198
Port of Pasco
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Base Value $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000 $30,097,000
Increment Value $1,558,721,556 $1,589,373,092 $1,620,618,910 $1,652,470,411 $1,684,939,216 $1,710,213,304 $1,735,866,504 $1,761,904,501 $1,788,333,069 $1,815,158,065 $1,842,385,436 $1,870,021,217 $1,898,071,536
Levy Rate $0.19720 $0.19624 $0.19528 $0.19433 $0.19338 $0.19244 $0.19151 $0.19057 $0.18965 $0.18872 $0.18780 $0.18689 $0.18598
Total Property Tax $313,309 $317,799 $322,354 $326,974 $331,662 $334,911 $338,194 $341,510 $344,859 $348,243 $351,661 $355,115 $358,603
Tax Allocated to TIF $307,374 $311,893 $316,476 $321,126 $325,841 $329,119 $332,430 $335,774 $339,152 $342,563 $346,009 $349,490 $353,005
Tax Allocated to Port $5,935 $5,906 $5,877 $5,849 $5,820 $5,792 $5,764 $5,736 $5,708 $5,680 $5,652 $5,625 $5,597
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Debt Service Payments and Coverage
Assuming the City issues $39 million in debt sometime in late 2022 or early 2023 to fund the
infrastructure projects, it will need to service that debt with available resources regardless if the
anticipated private development occurs. However, given the nature of TIF, incremental revenues
early in the TIF period may not be sufficient to service the debt as private development
construction will be in progress it will take time to build incremental assessed values contributions
that ultimately determine the TIF allocation revenues estimated in this report. Figure 14
summarizes potential debt service payments (assuming equal debt service) relative to the different
TIF tax allocation revenue scenarios that would flow to the City. Until private development catches
up and matches the City’s debt service payment, it will need to cover these early deficits by using
revenues identified in this Project Analysis (see Additional Incremental Tax and Impact
Assessment and Mitigation Sections below) or structure their debt payments in line with their
revenue stream.
26
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Figure 14: Summary Equal Debt Payments and TIF Revenue Allocations
Source: ECONorthwest calculations, 2022
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TIF Allocation Revenues
Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Aggressive
TIF Revenues $0 $0 $680,000 $1,480,000 $2,300,000 $2,790,000 $3,160,000 $3,580,000 $3,860,000 $3,970,000 $4,050,000 $4,100,000 $4,140,000
TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit $0 ($2,630,000)($1,950,000)($1,150,000)($330,000)$160,000 $530,000 $950,000 $1,230,000 $1,340,000 $1,420,000 $1,470,000 $1,510,000
Tax Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Aggressive
TIF Revenues $4,180,000 $4,220,000 $4,270,000 $4,310,000 $4,350,000 $4,400,000 $4,440,000 $4,490,000 $4,530,000 $4,580,000 $4,620,000 $4,670,000 $4,720,000
TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit $1,550,000 $1,590,000 $1,640,000 $1,680,000 $1,720,000 $1,770,000 $1,810,000 $1,860,000 $1,900,000 $1,950,000 $1,990,000 $2,040,000 $2,090,000
Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Moderate
TIF Revenues $0 $0 $380,000 $760,000 $1,370,000 $1,880,000 $2,300,000 $2,500,000 $3,030,000 $3,350,000 $3,540,000 $3,590,000 $3,650,000
TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit $0 ($2,630,000)($2,250,000)($1,870,000)($1,260,000)($750,000)($330,000)($130,000)$400,000 $720,000 $910,000 $960,000 $1,020,000
Tax Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Moderate
TIF Revenues $3,700,000 $3,760,000 $3,810,000 $3,870,000 $3,930,000 $3,970,000 $4,010,000 $4,050,000 $4,090,000 $4,130,000 $4,170,000 $4,220,000 $4,260,000
TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit $1,070,000 $1,130,000 $1,180,000 $1,240,000 $1,300,000 $1,340,000 $1,380,000 $1,420,000 $1,460,000 $1,500,000 $1,540,000 $1,590,000 $1,630,000
Tax Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Conservative
TIF Revenues $0 $0 $270,000 $640,000 $970,000 $1,360,000 $1,800,000 $1,870,000 $1,950,000 $1,970,000 $1,990,000 $2,010,000 $2,030,000
TIF Debt Service $0 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit $0 ($2,630,000)($2,360,000)($1,990,000)($1,660,000)($1,270,000)($830,000)($760,000)($680,000)($660,000)($640,000)($620,000)($600,000)
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Conservative
TIF Revenues $2,050,000 $2,070,000 $2,090,000 $2,110,000 $2,130,000 $2,160,000 $2,180,000 $2,200,000 $2,220,000 $2,240,000 $2,270,000 $2,290,000 $2,310,000
TIF Debt Service $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000 $2,630,000
Surplus/Deficit ($580,000)($560,000)($540,000)($520,000)($500,000)($470,000)($450,000)($430,000)($410,000)($390,000)($360,000)($340,000)($320,000)
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Figure X: Broadmoor Development Possible Conceptual Development Rendering
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Jobs Analysis
Figure 15: Broadmoor Development Possible Conceptual Development Rendering
Source: Broadmoor Development, Marcus Millichap
The job analysis considers two sources of employment tied to the Broadmoor TIA. First, the
construction of the development program will create jobs in the construction industry. These jobs
will occur during the construction and are therefore “one-time” events. In contrast, once the
buildings are constructed, commercial-oriented buildings will be occupied by firms and workers
engaged in different sectors of the economy. These jobs are “on-going”, meaning they are
permanent on the condition of occupation within the TIA. The following sections summarize these
job estimates, and the methods used to derive them.
Construction Employment
Construction of the development over the anticipated build-out period would create temporary
construction jobs within the region and state. The jobs estimated in Figure 1 are derived by using
the 2022 value of construction investment for the Development Program Scenarios (Aggressive,
Moderate, Conservative) and interpolating them into the Washington State Office of Financial
Management’s Input/Output model. The model relates spending in an industry sector to the
number of jobs that would be directly supported by that same investment. While the model
estimates the number of jobs generated in the state of Washington, it is likely that most of these
workers would come from the immediate Tri-Cities region. The region is rapidly growing in
population, meaning many of these jobs would be additive to existing jobs within the region.
Ultimately, the income earned by workers would bring additional spending to the City that would
not have otherwise occurred. ECONorthwest estimates the total number of construction jobs based
on the spending by scenario. The number of jobs at any given time would vary depending on how
development buildings are phased and developed. As expected, the scale of the investment in the
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Aggressive scenario produces the largest amount of construction jobs, in this case, 6,600
construction jobs.
Figure 16: Construction Jobs
Source: ECONorthwest calculations and Office of Financial Management Input/Output Model, 2022.
On-going Employment
Based on the types of uses and square feet of building area, ECONorthwest estimated the potential
number of jobs the development would support when built. These numbers are derived from ratio
estimates building area to number of employees. The U.S. Energy Information Administration
releases data from the 2018 Commercial Buildings Energy Consumption Survey (CBECS) that
provides building characteristics information for commercial buildings in 2018 in the U.S. (the
latest year of data). The data contain the average building square foot per worker by building use.
Using the amount of planned development square footage by building use at full buildout of the
scenarios, these ratios can be applied (less a vacancy rate of 5 percent) to estimate the number of
on-going jobs. The Moderate scenario, by measure of having more commercial space than either
of the other scenarios has the largest number of on-going jobs at 1,170.
Figure 17: On-going Jobs
Source: 2018 CBECS, Table B1. Summary table: total and means of floorspace, number of workers, and hours of
operation, 2018 (Release date: September 2021)
Impact Assessment and Mitigation
Affordable Housing: The Broadmoor Development will provide additional single family and
multi-family housing options as part its development program. As the property is vacant, no
residential housing will be displaced from the development. It is expected that as additional
housing is built, demand is lowered and housing costs are reduced over the long-term and become
more affordable. The increased number of units stemming from this development will help house
the growing population base, meeting the demand with supply. Without additional housing in the
Tri-Cities region, affordability will only become increasingly challenging. Additionally, the City
has partnered with the County to ensure affordability levels for units that the market cannot
support.
The City of Pasco has developed the Community Housing Improvement Program (CHIP) for the
purpose of expanding affordable home ownership opportunities by offering financial assistance
for low to moderate income home buyers in Pasco with priority given to targeted neighborhoods.
The Pasco City Council formed the Pasco Housing Authority in 1942 to provide for safe affordable
housing options. In 1981, Franklin County officials approached the Pasco City Council with a
proposition to form a joint housing authority designed to meet the needs of not only low-income
Aggressive Moderate Conservative
Construction Jobs 6,600 5,650 1,880
Investment (millions)$1,867 $1,600 $533
Employment Uses Jobs: Aggressive Jobs: Moderate Jobs: Conservative Mean SqFt/Work
Retail Warehousing 130 130 130 1,589
Commercial 340 400 150 992
Medical Office 640 640 0 573
Total Jobs 1,110 1,170 280
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individuals within City limits, but those in the rest of Franklin County, as well. A joint housing
authority was born and named the Housing Authority of the City of Pasco and Franklin County
(HACPFC).
HACPFC works to provide housing and housing assistance to more than 600 families. The U.S.
Department of Housing and Urban Development provides Public Housing subsidy for 280 units
owned by and managed by HACPFC. HACPFC owns, and serves as landlord for, 68 housing units
not subsidized by HUD. The rent is kept affordable for families earning between 50% and 80% of
median income for the Tri-Cities area. In 2014, HACPFC constructed a 38-unit tax credit property
named Varney Court.
HACPFC also administers 318 Housing Choice Vouchers (HCV). The HCV program provides
rental assistance to extremely low-income individuals and families who rent from local landlords
in the Tri-Cities area. Through an agreement with the Kennewick Housing Authority (KHA),
Housing Choice Voucher holders from HACPFC and KHA may search for a suitable unit in either
agency’s jurisdiction. Both the City and the HACPFC will look for opportunities to encourage the
development of affordable housing units throughout the City, including the Broadmoor
Development.
More recently, following the adoption of the 2018-2038 Comprehensive Plan (October 2020), staff
began utilizing a variety of local, regional, and state resources and guidance to identify practical
housing policy solutions. While some of these efforts were initiated prior to 2021, the alignment
of them have been emphasized over the past year. Over the past 12 months, the City of Pasco has
adopted significant zoning reforms that have eliminated restrictive zoning policies while also
increasing housing opportunities that improve mobility options.
In January 2022, the Pasco City Council completed its efforts, under Engrossed Second Substitute
House Bill 1923 (HB 1923) to increase residential building capacities. The City of Pasco was one
of 52 communities that were awarded funding from the Washington State Department Commerce
to address housing capacities. The City selected three code amendments that increased lot size
flexibility (cluster zoning/lot size averaging), allowed accessory dwelling units citywide, and re-
allowed missing middle housing on residentially zoned parcels. These changes effectively
increased the residentially zoned land that allows for attached and multi-family housing from 10
percent to 78 percent on all residential parcels. Additionally, density and flexibility incentives were
added into the code itself allowing more housing near public transit, parks, schools, hospitals, and
civic facilities.
In the fall of 2021, the City of Pasco was one of five cities selected, after a national call for
applications to participate in the Housing Solutions Lab. The Lab was hosted by the New York
University Furman Center’s Housing Solutions Lab, with support from Lincoln Institute of Land
Policy. Cities were selected that have a demonstrated interest in developing or refining a
comprehensive local housing strategy, including evidence of recent steps taken that indicate its
commitment to addressing housing challenges. Throughout the program, city staff learned and
evaluated our existing policies, and identified gaps to be addressed to help with the development
of a balanced housing policy framework. Following the completion of the Housing Solutions Lab,
City staff embarked on an effort to further housing with phased effort to update its zoning code to
increase flexibility and choices to meet demands. The updates to the zoning code will provide
practical parameters and guidance for the creation and/or redevelopment missing middle housing,
multifamily housing, and small lot residential housing.
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The Association of Washington Cities recognized the City of Pasco for increasing housing access
and opportunities at its 2022 annual conference with a municipal excellence award.
Local Business Community: The local business community is expected to experience positive
impacts in terms of commercial sales from new residents living and working within the Broadmoor
Development. Although there will be significant commercial development within the Broadmoor
Development, the demand for goods and services is expected to positively spill over to businesses
throughout the City. Because the land is vacant and miles away from other commercial centers
and the downtown, commercial gentrification is not expected to be an issue.
In addition to the new residents, between 280 and 1,100 on-going jobs will be introduced
depending on which Development scenario occurs. Likewise, between 1,880 and 6,600
construction jobs will be introduced based on private investment for the vertical development that
would be between $533 million to $1.8 billion based on the specific Development Program growth
scenario. These new jobs supported by significant private investment will benefit other businesses
in the City of Pasco as well as the Tri-Cities area.
Local School Districts: The Pasco School District will significantly benefit from additional
property taxes generated by new construction in the TIA from the Broadmoor Development. Their
existing property taxes are preserved under the law. School district Enrichment and Capital Levies
are excess levies, and the districts periodically ask voters to maintain existing levels of purchasing
power via voted ballots. Bond levies ask voters to approve bonds to expand or improve their
facilities. The effect of growth in the tax base coming from TIF will have two implications. First,
it increases the tax base of the district, meaning that lower overall tax rates are needed to fund a
similar level of service. Second, it increases the proportion of the tax base that is commercial which
leverages the relative voting power of residential households to support school expenditures
backed by these excess levies (voter approved or otherwise). The City also collects impact fees on
behalf of the Pasco School District to accommodate student growth associated with new
development.
Local Fire Service: State law requires a mitigation plan if the TIA will impact at least 20 percent
of the assessed value of an impacted fire district. Local fire service is provided by the City of Pasco
and therefore there is no impact to another taxing district. Additionally, the total assessed value
of the City of Pasco is $8,065,205,843 along with a Fire Department Budget of $9,270,268,
resulting in only a 0.1 percent impact on local fire service. Increased revenues from the Broadmoor
Development are expected to be sufficient, to provide at a minimum, the City’s existing levels of
services to the area.
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Financing Plan/Duration of TIA
The City anticipates issuing Limited Term General Obligation (LTGO no-voted debt) tax exempt
bonds to pay for the TIF infrastructure projects in the amount not to exceed $39 million. The City
anticipates issuing the debt in 2022 or early 2023 to coincide with the public infrastructure and
private development timelines.
The City plans the LTGO bonds to be structured with a 25-year amortization and a 10-year par
call. Additionally, the City is not currently expecting to capitalize interest during the first three
years of the financing when TIF revenues alone are not expected to be sufficient to cover debt
service. Instead, the City plans to pay any difference between debt service and TIF revenues from
non-TIF revenues. The City will reimburse itself for any feasibility studies, including engineering
design work to accurately project costs that occurred prior to the expected adoption of the
Ordinance designating a TIA in October 2022. The City also plans to reimburse itself for any non-
TIF revenue sources that are needed to meet the City’s debt service payments associated with the
TIF Infrastructure.
Debt Capacity
The maximum limit for LTGO non-voted debt cannot exceed 1.5 percent of the value of taxable
property within the City. Based on an assessed value of $8,065,205,983 in 2022, the City has
$23.9 million in total non-voted debt. As shown below, the City has sufficient capacity for the
issuance of the proposed $39 million LTGO bonds related to the TIF public improvements and is
expected to have approximately $58 million, or 48 percent of its debt capacity available after the
proposed issuance.
Figure 18: Debt Capacity
Source: City of Pasco, August 2022.
The estimated terms of indebtedness, including principal amount of $39 million for the TIF
infrastructure improvements, interest rate and maturity schedule are shown in Figure 19 below.
For the purposes of this analysis, it is assumed that the entire issuance will be tax exempt.
2021 Assessed Valuation for 2022 Collections 8,065,205,983
Non-Voted Debt Capacity (1.5% of AV) 120,978,090
Less: Outstanding Non-Voted Debt 23,920,000
Voted Debt Capacity -
Non-Voted Debt Capacity 97,058,090
Less: Financing Proposed 39,000,000
Projected Remaining Non-Voted Capacity $58,059,090
Projected Remaining Non-Voted Capacity % 48%
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Above Debt Service Schedule based on 4.5 percent interest rate
City of Pasco | Broadmoor Development TIF Project Analysis August 2022
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
Figure 19: Debt Service Schedule
Source: City of Pasco, August 2022
Early Outreach to Impacted Taxing Districts
While Washington State law requires formal notice to be provided to the Franklin County
Commissioners, Franklin County Treasurer, Franklin County Assessor, and impacted taxing
districts upon approval of the Tax Increment Area (TIA), the City of Pasco has engaged these
stakeholders earlier in the process. This early outreach has allowed the City to collect feedback
focused on the logistics of implementing TIF.
The taxing districts whose property tax levy would be impacted by TIF include the City of Pasco,
Franklin County, and the Port of Pasco. As approved in Washington State, TIF ensures that each
of these taxing districts will remain whole and continue to collect the same amount of tax revenue
Payment
No./year Principal Interest Principal Balance Total Payment
39,000,000
1 - 2024 875,122 1,755,000 38,124,878 2,630,122
2 - 2025 914,503 1,715,620 37,210,375 2,630,122
3 - 2026 955,655 1,674,467 36,254,720 2,630,122
4 - 2027 998,660 1,631,462 35,256,060 2,630,122
5 - 2028 1,043,599 1,586,523 34,212,461 2,630,122
6 - 2029 1,090,561 1,539,561 33,121,900 2,630,122
7 - 2030 1,139,637 1,490,485 31,982,263 2,630,122
8 - 2031 1,190,920 1,439,202 30,791,343 2,630,122
9 - 2032 1,244,512 1,385,610 29,546,831 2,630,122
10 - 2033 1,300,515 1,329,607 28,246,317 2,630,122
11 - 2034 1,359,038 1,271,084 26,887,279 2,630,122
12 - 2035 1,420,195 1,209,928 25,467,084 2,630,122
13 - 2036 1,484,103 1,146,019 23,982,981 2,630,122
14 - 2037 1,550,888 1,079,234 22,432,093 2,630,122
15 - 2038 1,620,678 1,009,444 20,811,415 2,630,122
16 - 2039 1,693,608 936,514 19,117,807 2,630,122
17 - 2040 1,769,821 860,301 17,347,986 2,630,122
18 - 2041 1,849,463 780,659 15,498,523 2,630,122
19 - 2042 1,932,689 697,434 13,565,835 2,630,122
20 - 2043 2,019,660 610,463 11,546,175 2,630,122
21 - 2044 2,110,544 519,578 9,435,631 2,630,122
22 - 2045 2,205,519 424,603 7,230,112 2,630,122
23 - 2046 2,304,767 325,355 4,925,345 2,630,122
24 - 2047 2,408,482 221,641 2,516,863 2,630,122
25 - 2048 2,516,863 113,259 (0) 2,630,122
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as though the Broadmoor development did not occur. The levy rate from each of these jurisdictions
will be applied to the increased assessed valuation within the TIA and remitted to the pay the bonds
associated with constructing the public infrastructure to support the site. Alternatively, if TIF
revenues exceed estimates then excess revenues will be distributed to these taxing districts. Other
taxing districts in the region, including Benton-Franklin County Transit and Pasco School District,
may experience indirect impacts and are being contacted as well.
The City has held initial discussions with the Franklin County Administrator, Franklin County
Treasurer and Franklin County Assessor, and the Port of Pasco Commissioners. Simultaneous to
the submittal of the project analysis, the City is meeting with each county commissioner, the Pasco
School District and Benton-Franklin Transit. Additionally, the City is participating in meetings
with the Department of Revenue to ensure that the TIA analysis provided herein utilizes
assumptions consistent with the Department’s interpretation of state law.
The City intends to provide the formal notice once the City Council approves the ordinance
establishing the TIA in October 2022.
Additional Incremental Taxes
The City’s LTGO bonds will be backed the City’s full faith and credit, meaning bond holders can
make a legal claim against the general revenue of the City if a default occurs. However, the City
can use any unrestricted revenue sources it has available to satisfy its debt obligations. Washington
state tax policy has conditions that allow governments that grow their tax bases to collect additional
revenues. This relationship creates a mutually reinforcing benefit of housing and commercial
development with additional tax revenues. New land development represents a direct financial
investment in land preparation and building structures. Those structures are then occupied by
residential neighborhoods and businesses that increase the lands' productive economic capacity.
That economic value generates taxable bases at the land, business operation, and transaction levels,
represented in land value, retail sales, business income, etc. State tax policy allows government
jurisdictions to tax these bases to fund needed public services and infrastructure.
Outside of the TIF allocations and the base value of property tax that would flow to TIF
jurisdictions, the development and occupation of buildings in the Broadmoor TIA will generate
other incremental taxes to those jurisdictions. Tax revenues can be differentiated into three
categories:
• One-time Revenues. These revenues are tied to construction. Specifically, they include
the retail sales tax on construction (materials and labor), which is taxable under
Washington state law.
• Recurring Revenues. These revenues are derived from the occupation of structures by
residents and businesses. Specific revenues include retail sales tax, and utility taxes.
• Capital Restricted Revenues. These revenues are restricted to capital and include real
estate excise taxes.
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City of Pasco
The City of Pasco is the local service provider for police, fire, public works, community
development, parks, and other local services. To support these services, the City collects a range
of general and restricted taxes, these include the following.
Sales & Use Taxes
• Local Option Sales Tax: Of the 8.7 percent sales tax currently collected in the City of
Pasco, a 1 percent “local” share of the tax accrues to the local jurisdictions. In incorporated
areas, the city receives 85 percent of the 1 percent local tax and Franklin County receives
15 percent (less administrative costs collected by the Department of Revenue). This tax is
levied on businesses in the area, and on construction activity and some transactions related
to housing and business, such as certain online purchases and the delivery of personal and
business goods.
• Criminal Justice Sales Tax: A 0.1 percent sales tax is levied by the County for criminal
justice programs. Ten percent of revenue goes directly to the County and the remaining 90
percent is distributed to the County and cities within the county on a per capita basis.
• Public Safety Sales Tax: A 0.3 percent sales tax is levied by the County for public safety
programs like expansion of county jail, construction of new police station and hiring of
new public safety officers. Sixty percent of the revenue goes directly to the County and the
remaining 40 percent is distributed to cities on a per capital basis.
Utility Taxes
The analysis uses current utility taxes rates for water, sewer, electricity, natural gas, cable, and
telephone utility purchases. These taxes are only collected by cities in Washington. The analysis
creates effective purchasing estimates of these utilities based on land use types and applies the
appropriate tax policy to estimate tax. The City of Pasco imposes utility taxes (currently 8.5
percent) on the following services but only 6 percent is allocated to the City’s General Fund
revenues:
• Cable television
• Electricity
• Garbage
• Irrigation
• Natural gas
• Sewer
• Storm drain
• Telephone
• Water
State Shared Motor Vehicle Fuel Tax & Liquor Board/Taxes
Local governments receive a gas tax distribution that is unrestricted for street purposes from the
State. The distribution is determined using a formula that is heavily weighted towards population.
ECONorthwest used a proxy of this formula to derive these revenues to the City. Cities also
receive pro rata payments from Liquor Excise Tax & Liquor Board Profits.
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Real Estate Excise Tax (REET)
Real estate transactions are subject to a 0.5 percent tax on the value of the transaction. REET
revenues are placed in the capital restricted funds to finance capital projects. REET revenues are
uncertain given volatility in the real estate market. Since REET is based on the total value of real
estate transactions in a given year, the amount of REET revenues the City receives can vary
substantially from year to year based on the normal fluctuations in the real estate market. During
years when the real estate market is active, revenues are higher, and during softer real estate
markets, revenues are lower. For the purposes of this analysis, it is assumed that all new completed
projects would be sold and then 5 percent of all property value would turn over (re-sold) in any
given year.
Franklin County
Broadmoor TIF is in Franklin County. The County is also the regional service provider for a range
of human and health services, criminal justice, and other regional services. To support these
services, the County collects a range of general and restricted taxes, including the following.
Sales & Use Taxes
Local Option Sales Tax: A 0.15 percent tax rate on retail sales – full option split with the
cities in the county.
• Criminal Justice Sales Tax: A 0.1 percent tax rate on retail sales – shared with cities in the
county.
• Juvenile Corrections Facilities Sales Tax: A 0.1 percent tax rate on retail sales dedicated to
correctional facilities.
• Public Safety Sales Tax: A 0.3 percent tax rate on retail sales dedicated to public safety
uses. 40 percent of the revenues are shared with the cities on a per capita basis.
• Mental Health Sales Tax: A 0.1 percent tax rate on retail sales dedicated to mental health
expenditures.
Tax Base Productivity Assumptions
It is assumed that each housing unit will house on average 2.45 persons and that the development
will be 90 percent occupied (to account for times when homes sit vacant). Construction costs
represent the average per square foot cost for different building types based on recent construction
comparable projects (note: these costs are different from what a project is assessed at for property
tax purposes. In some cases, the investment cost may be lower than the actual construction cost).
These below costs are subject to retail sales taxes:
• Retail Warehouse: $150 per square foot
• Commercial: $250 per square foot
• Medical Office: $250 per square foot
• Multi-family Unit: $350,000 per unit
• Single Family Unit: $600,000 per unit
• Senior Housing Unit: $170,000 per unit
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Taxable retail sales are based on assumed comparable businesses:
• Retail Warehouse: $550 per square foot
• Commercial: $250.00 per square foot
• Medical Office: $25.00 per square foot
• Multi-family Unit: $2,500 per unit
• Single Family Unit: $5,000 per unit
• Senior Housing Unit: $1,000 per unit
Summary of Additional Tax Results
Based on the approximate timing of the new development of the Development Program scenarios,
the Aggressive Scenario is estimated to generate approximately $53.8 million in tax revenues for
the City and $23.8 million for the County over the same 25-year period of the TIF district. These
figures represent a 25-year cash flow (2023-2048) of tax revenues to the respective taxing
jurisdiction in 2022 dollars (e.g., all future tax revenues have been discounted at 4.5% back to
2022 values). The Moderate and Conservative are respectively less (Figure 20).
Figure 20: Summary of additional tax benefits (present value, 2022$)
Source: ECONorthwest calculations, 2022
AGGRESSIVE SCENARIO
Revenue Source City County
Sales Tax on Construction $11,230,000 $6,310,000
Ongoing Sales Tax $31,050,000 $17,440,000
Criminal Justice $360,000 $40,000
Utility Taxes $6,000,000 N/A
State Shared $200,000 N/A
REET $4,980,000 N/A
Total Incremental Revenues $53,820,000 $23,790,000
MODERATE SCENARIO
Revenue Source City County
Sales Tax on Construction $9,790,000 $5,500,000
Ongoing Sales Tax $30,660,000 $17,230,000
Criminal Justice $290,000 $30,000
Utility Taxes $5,220,000 N/A
State Shared $160,000 N/A
REET $4,150,000 N/A
Total Incremental Revenues $50,270,000 $22,760,000
CONSERVATIVE SCENARIO
Revenue Source City County
Sales Tax on Construction $5,460,000 $3,070,000
Ongoing Sales Tax $25,010,000 $14,050,000
Criminal Justice $180,000 $20,000
Utility Taxes $3,120,000 N/A
State Shared $100,000 N/A
REET $2,450,000 N/A
Total Incremental Revenues $36,320,000 $17,140,000
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Figure 20A summarizes these values on an annual basis for the City of Pasco to illustrate how
these revenues occur during both construction and occupancy of the building structures.
Figure 20A: Summary of Additional Tax Benefits for Moderate Scenario for City of Pasco
(Annual)
Risk Assessment and Mitigation Plan
TIF is a powerful tool available to local governments for encouraging development. Using local
property tax revenues to finance certain public improvements can encourage and generate the
desired or envisioned private development; however, using TIF has risks. The largest risks are
that: 1) the expected private development does not occur; occurs slower than expected; and/or, the
type of development and its magnitude is less than expected (including both the infrastructure that
will be funded, built, and dedicated by the private sector to the City and the envisioned vertical
development); and, 2) The cost projected for the infrastructure improvements is higher than
projected. These risks impact the expected revenues to be generated within the TIA or the costs for
the identified public infrastructure improvements. If risks are not mitigated, a local government
must then use other sources of revenue to pay for the public improvements. The City will be obligated
to pay for the TIF infrastructure even if little or no private development materializes. As stated
previously in this report, the City anticipates issuing LTGO bonds which will backed the City’s
full faith and credit, meaning bond holders can make a legal claim against the general revenue of
the City if a default occurs.
Other related risks include over-investment of infrastructure funding by TIF which can waste limited
tax dollars for other uses. Local governments can guard against and potentially avoid the over-
investing and under-investing by carefully evaluating the local market conditions and performing
the analysis associated with the But-For-Requirement identified in this report. When TIF is used
correctly, the growth and development pay for the infrastructure investments that encouraged it.
For purposes of this Project Analysis, the City has identified the Moderate Development Program
as the likely scenario that will occur. Based on the Moderate Development Program, the TIA is
projected to generate approximately $50 million (present value) in additional tax revenue over a
25-year TIF period (2023-2048). This value far exceeds the projected infrastructure cost of $39
million. The City will need to fill the financial gap (e.g., the difference between TIF allocation
revenues and debt payments) that is projected to occur in the first six years for a total gap of
$9,220,000 with other sources of revenue that are identified below. This amount can then be repaid
back from increased TIF revenues after the proposed private development stabilizes in later years
or from additional local taxes coming from the development. Notwithstanding these projections,
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Sales Taxes
Construction $0 $1,280,000 $1,300,000 $2,020,000 $1,710,000 $1,370,000 $770,000 $2,010,000 $1,110,000 $630,000 $60,000 $60,000 $60,000
On-going $0 $0 $10,000 $20,000 $1,310,000 $1,350,000 $1,390,000 $1,870,000 $2,460,000 $2,520,000 $2,800,000 $2,850,000 $2,900,000
Criminal Justice $0 $0 $0 $10,000 $10,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $30,000
Utility Taxes $0 $0 $40,000 $80,000 $140,000 $190,000 $230,000 $260,000 $310,000 $350,000 $370,000 $370,000 $380,000
State-shared $0 $0 $0 $0 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
REET $0 $0 $40,000 $80,000 $140,000 $190,000 $230,000 $260,000 $310,000 $350,000 $370,000 $370,000 $380,000
Total $0 $1,280,000 $1,390,000 $2,200,000 $3,310,000 $3,130,000 $2,650,000 $4,420,000 $4,220,000 $3,880,000 $3,630,000 $3,700,000 $3,770,000
2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Sales Taxes
Construction $60,000 $70,000 $70,000 $70,000 $0 $0 $0 $0 $0 $0 $0 $0 $0
On-going $2,960,000 $3,010,000 $3,070,000 $3,130,000 $3,190,000 $3,240,000 $3,300,000 $3,370,000 $3,430,000 $3,490,000 $3,560,000 $3,620,000 $3,690,000
Criminal Justice $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000
Utility Taxes $390,000 $400,000 $410,000 $410,000 $420,000 $430,000 $430,000 $440,000 $450,000 $450,000 $460,000 $470,000 $470,000
State-shared $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
REET $390,000 $400,000 $410,000 $410,000 $420,000 $430,000 $430,000 $440,000 $450,000 $450,000 $460,000 $470,000 $470,000
Total $3,840,000 $3,910,000 $3,990,000 $4,060,000 $4,070,000 $4,140,000 $4,220,000 $4,290,000 $4,370,000 $4,440,000 $4,520,000 $4,600,000 $4,680,000
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
the City has prepared a mitigation plan to respond to: 1) less development occurring than projected
as programmed in the Conservative Development scenario; and 2) further safeguard against
economic or development issues outside of the City’s control, if only two commercial lots were
developed.
The following mitigation plan has been created to respond to various development and financial
risks related to the Broadmoor Development:
Development Mitigation
Development Program Sensitivity Analysis: Three different private development program
scenarios (Aggressive, Moderate, and Conservative) have been developed and evaluated to
identify potential TIF revenues and sufficient mitigation measures should development not occur
(worst case) or occur at a different speed and magnitude.
Infrastructure Agreement: The City of Pasco has executed a Letter of Understanding (LOU) with
the owner of the Broadmoor Development regarding the infrastructure investments that each party
will make to incentivize and encourage private development. City management will bring forward
an agreement between the City and the owner of the Broadmoor Development that further
memorializes the infrastructure improvements and expected development timing. This agreement
will provide for an additional safeguard that private development is anticipated to occur based on
the conservative development program being relied upon by the City.
Additional Infrastructure Assurances: Several factors provide assurances that private development
will fund and construct the infrastructure proposed outside of the public improvements funded by
TIF:
• The land to be sold by Broadmoor Properties, LLC has a projected value over $155 million,
providing sufficient resources to support the remaining infrastructure costs. Land value is
expected to rise once the TIA is adopted by the Pasco City Council and development
initiates.
• The projected construction cost for the proposed vertical development is between
approximately $650 million (Conservative) to $1.3 billion (Aggressive). This level of
investment is orders of magnitude larger than the contemplated TIF infrastructure of $39
million.
• Residential development typically has a greater ability to support infrastructure expenses
based on sales and rents versus commercial and mixed-use properties.
• Broadmoor Properties, LLC real estate brokers believe the Pasco market is underserved
with upscale mixed-use luxury apartments and further believe rents will rise sufficiently to
support construction cost in the near future. This property in particular is unique to the
region in that it is elevated and within close proximity to the Columbia River and city views
to the south and west. From a view perspective, these units will be among the most
desirable in the region.
• We have conservatively estimated the number of units as part of each development scenario
with a high of 45 units per acre to a low or 28 units per acre. In comparison, you would
likely see 80 to 120 units per acre with a 5-story wood construction on top of a concrete
podium with parking plus other amenities. This conservative density estimate allows for
surface parking if rents are insufficient to support the envision 5 over 1 or 5 over 2 mixed-
use podium development.
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
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• To further mitigate the City’s exposure related to the timing and scope of private
development and the projected TIA property tax revenues, the City will schedule the timing
of any bond debt issuance to coincide with certain development milestones (e.g., property
closings, entitlements obtained, etc.) that near term developments will move forward
providing for greater development certainty and additional tax revenue beyond property
taxes to help pay for any debt service.
Financial Mitigation
The following mitigation plan is proposed to provide multiple levels of financial protection to fill
any financial gaps that occur in the early years of the TIA until private development and TIF
revenues stabilize or should the expected private development occur slower than planned.
Level 1:
Moderate Development Scenario: Based on the Moderate Development Program, it is projected
the City will receive a present value of $50 million in incremental tax revenues generated by the
proposed development. A portion of these incremental taxes can be used to support any
infrastructure debt service gap in TIF revenues. In a Moderate scenario, TIF allocation revenues
would not cover debt service payments (presented as equal payments) over the course of the bond
and additional incremental revenues would be needed to service the debt. This comparison is
shown in the figure below.
The additional taxes would cover 3 of the 5 years where deficits might be expected. In such a case,
the two deficit years would need temporary cash flow coverage from other funds (e.g., reserves as
described below) until either incremental taxes or TIF revenue allocations could be used to repay
them. The total value of these shortfalls is $2,210,000 (note: only values up to 2035 are shown
since no shortfalls are expected afterward).
Figure 21: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes
Source: ECONorthwest Calculations, 2022
Level 2:
Conservative Development. Based on the Conservative Development Program, (no development
after 2030), it is projected the City will receive a present value of $36 million in incremental tax
revenues generated by the proposed development. A portion of these incremental taxes can be used
to support any infrastructure debt service gap in TIF revenues. In a Conservative scenario, TIF
allocation revenues would not cover even debt service payments over the course of the bond and
additional incremental revenues would be needed to service the debt. This comparison is shown in
the figure below.
The additional taxes would cover 18 of the 20 years where deficits might be expected. In such a
case, the two deficit years would need temporary cash flow coverage from other funds (e.g.,
reserves as described below) until either incremental taxes or TIF revenue allocations could be
used to repay them. The total value of these shortfalls is $2,750,000.
TIF Allocation Revenues
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Surpus/Deficit $0 ($2,630,000)($2,250,000)($1,870,000)($1,260,000)($750,000)($330,000)($130,000)$400,000 $720,000 $910,000 $960,000 $1,020,000
Additional Tax Revenues $0 $1,280,000 $1,390,000 $2,200,000 $3,310,000 $3,130,000 $2,650,000 $4,420,000 $4,220,000 $3,880,000 $3,630,000 $3,700,000 $3,770,000
Gap $0 ($1,350,000)($860,000)$330,000 $2,050,000 $2,380,000 $2,320,000 $4,290,000 $4,620,000 $4,600,000 $4,540,000 $4,660,000 $4,790,000
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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Figure 22: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes
Source: ECONorthwest Calculations, 2022
Level 3:
Limited Taxes on Commercial. If only two of the commercial developments that are expected to
occur first within each development program, the City will receive sales and utility taxes from
these projects which can be used to off-set any infrastructure debt service gap of local property tax
revenues from the TIA. On a present value basis, these revenues amount to $26 million over the
TIF time frame.
The additional taxes would cover 4 of the 25 years where deficits might be expected. The total
value of these shortfalls is $10,480,000. In such a case, the remaining 21 years would need
temporary cash flow coverage from other funds (e.g., reserves as described below). Future year
excess additional taxes or TIF revenue allocations would not be available to repay these cash flow
shortfalls given the extent and timing of the deficits.
Figure 23: Comparison of Debt Payment Surplus/Deficits and Other Additional Taxes
Source: ECONorthwest Calculations, 2022
Level 4:
Reserves. The City has approximately $49,000,000 in reserves that are not allocated to any
specific operating or capital expense that can be used for payment of debt service for its
infrastructure obligations for the Broadmoor Development if property tax revenue from the TIA is
insufficient. The City’s policy is to maintain 60 days of average operating expenditures within its
General Fund. The City’s current reserve balance is approximately $36,500,000 above this policy
threshold allowing for funds to be used if property tax revenues from the TIA are insufficient with
minimal reserve policy impact to the City’s other funds and operations.
The revenue sources in Level 4 exceed the projected cost of the TIF infrastructure. The City’s
reserves are the last line of defense against lower TIF revenues than projected.
Additional Mitigation Measures
Debt Issuance Timing. The City will reduce its financial exposure related to the timing and scope
of private development by strategically timing the issuance of LTGO bond debt to coincide with
certain development milestones (e.g., property closings, entitlements obtained, etc.) that near term
TIF Allocation Revenues
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Surpus/Deficit $0 ($2,630,000)($2,360,000)($1,990,000)($1,660,000)($1,270,000)($830,000)($760,000)($680,000)($660,000)($640,000)($620,000)($600,000)
Additional Tax Revenues $0 $910,000 $1,330,000 $2,570,000 $3,090,000 $3,600,000 $2,400,000 $2,460,000 $2,330,000 $2,370,000 $2,410,000 $2,450,000 $2,500,000
Gap $0 ($1,720,000)($1,030,000)$580,000 $1,430,000 $2,330,000 $1,570,000 $1,700,000 $1,650,000 $1,710,000 $1,770,000 $1,830,000 $1,900,000
TIF Allocation Revenues
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Surpus/Deficit ($580,000)($560,000)($540,000)($520,000)($500,000)($470,000)($450,000)($430,000)($410,000)($390,000)($360,000)($340,000)($320,000)
Additional Tax Revenues $2,540,000 $2,590,000 $2,630,000 $2,680,000 $2,730,000 $2,780,000 $2,830,000 $2,880,000 $2,930,000 $2,980,000 $3,030,000 $3,090,000 $3,140,000
Gap $1,960,000 $2,030,000 $2,090,000 $2,160,000 $2,230,000 $2,310,000 $2,380,000 $2,450,000 $2,520,000 $2,590,000 $2,670,000 $2,750,000 $2,820,000
TIF Allocation Revenues
Assessment Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Surpus/Deficit $0 ($2,630,000)($2,630,000)($2,530,000)($2,490,000)($2,440,000)($2,440,000)($2,430,000)($2,430,000)($2,430,000)($2,430,000)($2,430,000)($2,420,000)
Additional Tax Revenues $0 $0 $340,000 $1,490,000 $1,750,000 $1,790,000 $1,820,000 $1,860,000 $1,890,000 $1,930,000 $1,960,000 $2,000,000 $2,030,000
Gap $0 ($2,630,000)($2,290,000)($1,040,000)($740,000)($650,000)($620,000)($570,000)($540,000)($500,000)($470,000)($430,000)($390,000)
TIF Allocation Revenues
Assessment Year 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048
Surpus/Deficit ($2,420,000)($2,420,000)($2,420,000)($2,420,000)($2,410,000)($2,410,000)($2,410,000)($2,410,000)($2,410,000)($2,400,000)($2,400,000)($2,400,000)($2,400,000)
Additional Tax Revenues $2,070,000 $2,110,000 $2,150,000 $2,190,000 $2,230,000 $2,270,000 $2,310,000 $2,350,000 $2,400,000 $2,440,000 $2,490,000 $2,530,000 $2,580,000
Gap ($350,000)($310,000)($270,000)($230,000)($180,000)($140,000)($100,000)($60,000)($10,000)$40,000 $90,000 $130,000 $180,000
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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City of Pasco | Broadmoor Development TIF Project Analysis August 2022
developments will move forward (if infrastructure improvements are made by the City) providing
for greater development and TIA revenue certainty.
Public Infrastructure Cost Containment. Municipal agencies have vast experience with building
horizontal infrastructure (streets, water, sewer, etc.). The City of Pasco is no exception and takes
pride in its ability to provide conservative construction estimates, create clear construction bid
documents, and effectively manage the construction delivery process. The cost estimates for the
TIF public infrastructure improvements are currently based on 30 percent design levels and include
a 30 percent contingency at this time to buffer any volatility in the construction industry.
Construction costs will be further refined with either the 60 percent or 90 percent design level in
the coming months. The City plans to support the design costs for all of the identified TIF
infrastructure projects (with repayment from future TIF funds) up to receiving public bids and
contract(s) awarded prior to the issuance of debt providing for additional certainty of costs.
There are other risks that a municipal government faces regularly such as: construction delays
which increase costs for public infrastructure improvements; economic slowdown or recession;
higher borrowing costs; and lower levy rates within the TIA than anticipated. The City of Pasco
has been successful in addressing these secondary type risks by using conservative estimates and
adherence to prudent fiscal and construction management policies. The City will continue these
same practices as it implements the proposed TIA and the associated infrastructure improvements.
Pasco TIF Team
City of Pasco
• Dave Zabell, City Manager
• Adam Lincoln, Deputy City Manager
• Darcy Buckley, Finance Director
• Rick White, Community & Economic Services Director
• Steve Worley, Public Works Director
• Dan Ford, City Engineer
• Mike Gonzalez, Economic Development Manager
Tax Increment Financing Consultants
• Bob Stowe, Stowe Development & Strategies (TIF Project Manager)
• Morgan Shook, ECONorthwest
• Briahna Murray, Gordon Thomas Honeywell Governmental Affairs
Legal & Financial Advisors
• Eric Ferguson, City Attorney
• William Tonkin & Lee Marchisio, Foster Garvey P.C., Bond Counsel
• Dave Trageser, DA Davidson, Bond Underwriter
• Scott Bauer, Northwest Municipal Advisors, Financial Advisors
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37
Future TIF Actions
There are a number of actions that will occur before the Pasco City Council formally considers the
formation of a TIA for the Broadmoor Development Project. First, is to receive and review
feedback offered by the Office of the State Treasurer related to this Project Analysis. Second,
based on any feedback, the TIF team will evaluate and make appropriate adjustments to its
proposed TIF program. Third, it will conduct two separate public briefings on the proposed TIA
for the Broadmoor Development Project and provide formal notice in the local newspaper. The
City will continue to engage its local partners including Franklin County and the Port of Pasco, as
discussions continue. There are also a number of planning, engineering, finance, and legal
activities that will occur to advance the proposed public infrastructure and private development
for the Broadmoor Development. Below is an expected schedule for the future TIF actions.
43
Timeline
City of Pasco | Broadmoor Development TIF Project Analysis August 2022
38
Source: Stowe Development & Strategies, 2022
Figure 24: Timeline
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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City of Pasco | Broadmoor Development TIF Project Analysis June 2022
Findings |Bottom Line
The envisioned Broadmoor Development would not be viable without the City’s intervention to
provide the identified infrastructure via the establishment of a TIA. This city has demonstrated an
extremely strong nexus between the proposed development and the proposed infrastructure. The
City is conservatively estimating the potential revenues that will be generated by the formation of
a TIA and has sufficient resources to pay for infrastructure debt service should the expected TIA
revenues not materialize.
There are no negative impacts to affordable housing, the local business community, the local
school districts, or to local fire districts. The Broadmoor Development will provide for significant
jobs and investment into the local and regional economy. Each taxing district will benefit from
increased taxes generated by the development, even with the financial support provided by
property taxes within the TIA due to the scope and magnitude of the expected development.
Based on all of the above findings and information contained in this Project Analysis, the
Broadmoor Development and its proposed TIA meets both the spirit and the letter of Washington’s
State’s new law. Furthermore, there is no better project to demonstrate the power and
appropriateness of TIF than Pasco’s Broadmoor Development.
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
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Appendices Appendices
• Office of State Treasurer May 31, 2022 Memo
• TIF Infrastructure Improvements
• State Audit Report Summary
o 2016 - https://egov-pasco.com/weblink/DocView.aspx?id=769076&dbid=0
o 2017 - https://egov-pasco.com/weblink/DocView.aspx?id=792162&dbid=0
o 2018 - https://egov-pasco.com/weblink/DocView.aspx?id=855058&dbid=0
o 2019 - https://egov-pasco.com/weblink/DocView.aspx?id=948969&dbid=0
o 2020 - https://egov-pasco.com/weblink/DocView.aspx?id=954279&dbid=0
• Pasco City Council Resolution Declaring its intent to form a
Tax Increment Area in the Broadmoor Area
• Consultant Team Bio’s
Office of State Treasurer Letter
Legislative Building, P.O. Box 40200 Olympia, Washington 98504 -0200
(360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037
www.tre.wa.gov
Office of the Treasurer
State of Washington
Mike Pellicciotti
TO: City of Pasco
FROM: Jason Richter, Deputy State Treasurer
DATE: May 31, 2022
RE: Information Needed for OST Review of TIF Project Analysis
RCW 39.114.020 requires a Project Analysis to be submitted to the Office of the State Treasurer (OST)
for review and comment. To assist OST in performing its review), we ask the Issuing Jurisdiction to
ensure that the materials listed below are included in their Project Analysis:
1. Name and contact information for members of the financing team;
2. Comprehensive description of the Tax Increment Area, including land ownership and leasing or
sale arrangements;
3. A description of the Project being undertaken, in connection with the Tax Increment Area.
4. Proposed budget for the Project, including the available funding sources, expected costs, and
plan of finance;
5. An estimated timeline for the Project;
6. Detailed assessed value growth and tax increment revenue projections that have been prepared
in connection with the Project, including a description of the assumptions used and the source
of the projections;
7. Description of Tax Increment Area taxpayer base, and, if possible, a breakdown by property /
industry type;
8. Description of the expected bond structure;
9. Description of the specific revenue pledge and revenues that will support the debt to be issued;
10. Calculations showing the Issuer’s projected debt service coverage, based on current and
expected pledged revenues;
11. Calculations demonstrating compliance with the Issuer debt limitations;
12. Five years of the most recent historical and one year of projected financial statements for the
Issuer, identifying the specific revenues that will be pledged towards supporting debt service
payments;
13. Description of potential project risk factors.
OST requests Issuing Jurisdictions provide final or near-final draft Project Analysis. Please note that
substantial revisions to the Project Analysis may result in delays and necessary extensions to OST’s
Legislative Building, P.O. Box 40200 Olympia, Washington 98504 -0200
(360) 902-9000 • TTY USERS: CALL 711 • FAX (360) 902-9037
www.tre.wa.gov
review. Providing all of these requested items will help OST perform its review as quickly as possible. If
you have any questions, please do not hesitate to contact us.
TIF Infrastructure Improvements
LOT 4
LOT 1
LOT 2
LOT 3
LOT 5
LOT 6
LOT 11
LOT 12
LOT 13
LOT 14
LOT 15
LOT 18
LOT 7
(MIXED USE - RETAIL/RESIDENTIAL)
(MIXED USE - RETAIL/RESIDENTIAL)
(HIGH DENSITY RESIDENTIAL)
(RESIDENTIAL)
(COMMERCIAL)
(COMMERCIAL)
(COMMERCIAL)
(COMMERCIAL)
(COMMERCIAL)
(COMMERCIAL)
(MIXED USE - RETAIL/RESIDENTIAL)
(HIGH DENSITY RESIDENTIAL)
ROAD 108 ROAD 108
BURNS ROADLOT 8(RESIDENTIAL)
LOT 9(HIGH DENSITY RESIDENTIAL)
LOT 10
(COMMERCIAL)
DENT ROAD
HARRIS ROADI-
8
2
(COMMERCIAL)
ROAD 103
(FUTURE REDEVELOPMENT AREA)SANDIFUR PKWYROAD 103
ROAD 105 ROAD 105
BUCKINGHAM DRBROADMOOR BLVD
BEDFORD STLOT 19
(MIXED USED -
RETAIL/RESIDENTIAL)
PROPOSED CURB LINE
ROW PER PLAT
EXTG. RIGHT OF WAY
PROPOSED STRIPING
5 LANE SECTION
5 LANE SECTION
7 LANE SECTION
7 LANE SECTION
CITY SIGNAL
INTERSECTION CLOSED
3 LANE SECTION
CORE
ROAD
SECTION
CORE
ROAD
SECTION
CORE ROAD
SECTION EDGE OF
PAVEMENT
INTERSECTION CLOSED
DEDICATED RIGHT TURNBROADMOOR PROPERTIES
FINANCED SIGNAL
BROADMOOR PROPERTIES
FINANCED SIGNAL
DEDICATED RIGHT TURNDUAL RIGHT TURN 6 LANE SECTION
CORE
ROUNDABOUTFUTURE REALIGNMENT
HARRIS
REALIGN HARRIS
ROAD 108
INTERCHANGE IMPROVEMENTS
(TIF PROJECT)
IMPROVEMENTS EXTEND
TO 100' PAST BEDFORD ST.
EXISTING
ROAD TO BE
VACATED
CORE
ROAD
SECTION
POSSIBLE FUTURE
ROAD 105 EXTENSION
POSSIBLE FUTURE
ROAD 103 EXTENSION
SEWER ONLY
Scale 1" =
0 300 600
300'
150
BROADMOOR - IMPROVEMENTS
NEW SIGNAL
EXISTING SIGNAL
TIF PROJECTS (CITY)
1ST PHASE OF BROADMOOR
PROPERTIES PROJECT
REMAINING BROADMOOR
PROPERTIES/DEVELOPER PROJECTS
NOTES:
1.FULL BUILD ROADS TO INCLUDE STREET WATER, SEWER, STORM,
CURB, GUTTER, SIDEWALK, LANDSCAPING, LIGHTING AND REQUIRED
SIDEWALK FURNITURE.
2.CORE ROADS TO ONLY INCLUDE STREET WATER AND SEWER.
BROADMOOR PROPERTIES/DEVELOPER TO BE RESPONSIBLE FOR
STORM.
CITY TIF PROJECTS
BROADMOOR PROPERTIES/DEVELOPER
29.3 ACRES
33.9 ACRES
DEDICATED RIGHT-OF-WAY TABLE
State Audit Reports
2017 2018 2019 2020 2021 2022 - Budgeted
OFFICE OF THE TREASURER REPORT* Total Total Total Total Total Total
Beginning Cash Available for Debt Service
22,484,159
22,586,901
26,838,971
54,039,616
52,289,555
57,645,923
Operating Revenue Available for Debt Service
Operating Revenue
49,705,779
53,049,409
60,596,166
62,236,539
73,795,716
82,493,491
Operating Expenditures 46,216,719 47,712,016 48,680,035 50,994,626 56,654,356 71,289,394
Operating Income (Loss) 3,489,060 5,337,393 11,916,131 11,241,913 17,141,360 11,204,097
Total Revenue Available for Debt Service 25,973,219 27,924,294 38,755,102 65,281,529 69,430,915 68,850,020
Debt Service (General Obligation)
GO Debt Obligation
1,183,106
1,167,300
1,298,413
2,377,995
1,893,922
3,780,250
TIF GO Debt Obligation - - -
Total Debt Service 1,183,106 1,167,300 1,298,413 2,377,995 1,893,922 3,780,250
Other Inflows (Outflows) (3,386,318) (1,067,056) 15,023,991 (13,104,639) (11,784,992) (23,121,950)
Ending Cash Available for Debt Service
22,586,901
26,857,238
53,779,093
52,176,890
57,645,923
45,728,070
Footnotes:
Report includes financial information for City's General Fund, Economic Development Fund, and Capital Improvement Fund (Real Estate Excise Taxes).
General Fund includes minimal level of grant revenues that are offset by corresponding expenses in the same year.
Cash balances presented do not include proceeds from previously issued bonds.
Pasco City Council TIF Resolution
RESOLUTION NO. 4179
A RESOLUTION OF THE CITY OF PASCO, WASHINGTON,
DECLARING ITS INTENT TO FORM A TAX INCREMENT AREA IN THE
BROADMOOR AREA
WHEREAS, for many years the City has been studying, evaluating, designing and
completing key infrastructure improvements to enable a mixed use development within the
Broadmoor area; and
WHEREAS, Broadmoor Properties, LLC owns over 400 acres of property that is being
planned for mixed use development and is in need of substantial infrastructure improvements to
support the desired development; and
WHEREAS, the Broadmoor area has the opportunity, if built, to serve as a significant
economic engine for the Pasco community providing for increased tax revenues to support City
services and providing significant employment opportunities for the residents of the City; and
WHEREAS,the Washington State Legislature,during its 2021 legislative session,enacted
Engrossed Substitute House Bill 1189 as Chapter 207, Laws of 2021, titled "AN ACT Relating to
tax increment financing" and codified as RCW 39.114, which authorizes local governments,
including cities, to carry out tax increment financing of public improvements needed to support
vital private economic development projects; and
WHEREAS, Tax Increment Financing (TIF) is a program that allocates revenues
generated from the increased assessed valuation of properties improved by the development that
are within a designated tax increment area (TIA) to pay for public improvements that are needed
to support the private development; and
WHEREAS, City management has identified the key preliminary TIF infrastructure
improvements in Exhibit A (shown as City TIF Projects) that have been identified at this time as
outside of a developer's ability to fund and achieve the desired development based on market
conditions necessary to accommodate commercial and mixed-use tenants; and
WHEREAS, the key preliminary TIF Projects have been estimated to cost approximately
24 million to $30 million to construct; and
WHEREAS, Broadmoor Properties, LLC will be dedicating approximately 24.3 acres of
land for the identified TIF Projects resulting in an average value range between $5,292,540 to
10,585,080 in project benefit; and
WHEREAS, City management and Broadmoor Properties, LLC have developed and
agreed upon the infrastructure responsibilities as shown in Exhibit A for each party necessary to
achieve the desired development; and
Resolution—Tax Increment Area- 1
WHEREAS, City management anticipates bringing forward for Council consideration an
agreement between the City and Broadmoor Properties, LLC that memorializes the infrastructure
improvement responsibilities provided in Exhibit A; and
WHEREAS,the TIF law requires the City to prepare a Project Analysis when considering
forming a TIA which includes the following key items:
Boundaries and duration of the increment area.
A description of the expected private development within the increment area,
including a comparison of scenarios with and without proposed public
improvements (AKA the `But for" analysis — the development would not occur
but for"the public improvements).
A description of the public improvements,estimated public improvement costs, and
the estimated amount of bonds or other obligations expected to be issued.
Assessed value of real property within the increment area and an estimate of the
increment value and tax allocation revenues expected.
Estimate of the job creation reasonably expected to result from the public
improvements and the private development.
An assessment of any impacts and necessary mitigation to address impacts on the
following:
Affordable and low-income housing
Local business community
Local school districts
Local fire service; and
WHEREAS,the Project Analysis is expected to be completed by the end of May 2022 and
then submitted to the State Treasurer as required by TIF law, allowing the Treasurer 90 days to
review the analysis; and
WHEREAS, the City will conduct public briefings on the proposed TIA to inform the
community and other public agencies about the anticipated benefits and impacts associated with
the development; and
WHEREAS, the City Council will consider adoption of an Ordinance in September 2022
creating a TIA following any comments by the State Treasurer and testimony resulting from the
public briefings; and
WHEREAS,the City has created several preliminary development scenarios based on the
type and timing of development that may occur within the proposed Broadmoor TIA in which even
the most modest development scenario and timing would generate revenues (Exhibit B) sufficient
to support the necessary infrastructure improvements needed to support the private development;
and
WHEREAS, the City anticipates issuing LTGO (no-voted) tax exempt bonds to pay for
the identified infrastructure projects based on the additional TIA revenues from the Broadmoor
development; and
Resolution—Tax Increment Area-2
WHEREAS, LTGO bonds pledge the City's tax revenues as a guarantee to receive the
best possible tax-exempt terms, and the City can pay debt service associated with these bonds with
any non-restricted tax revenue such as sales tax; and
WHEREAS, to mitigate the City's exposure related to the timing and scope of private
development and the projected TIA property tax revenues,the City will schedule the timing of any
bond debt issuance to coincide with certain development milestones (e.g., property closings,
entitlements obtained, etc.) that near term developments will move forward (if infrastructure
improvements are made by the City) providing for greater development certainty and additional
tax revenue beyond property taxes to help pay for any debt service; and
WHEREAS, as part of the above-mentioned Project Analysis, the City will refine the
projected TIA revenues,conduct a"but-for"analysis,coordinate with the other taxing entities,and
complete other items required by law.
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PASCO, WASHINGTON:
That the City Council directs the City Manager to develop a TIF program for the
Broadmoor area and prepare an Ordinance for Council's consideration to form a TIA in accordance
with state law.
Be It Further Resolved that the City Council supports the preliminary infrastructure
projects that are identified as described in Exhibit A and recognizes that such projects may be
refined as part of the City's TIF Analysis.
PASSED by the City Council of the City of Pasco, Washington, the 2nd day of May, 2022.
Blanche Barajas
Mayor
ATTEST: APPROVED AS TO FORM
J
r x9
e ra Barnham, CMC F g n La C
City Clerk City Attorney
Resolution—Tax Increment Area- 3
Broadmoor Area Tax Increment Financing (TIF) Projects
Corridors
1. Sandifur Parkway—Bedford Street to Road 108
This work will consist of:
Road widening of the existing road from Bedford Street to Broadmoor Blvd.
Full road construction, including but not limited to, as much as 7-lanes of roadway and frontage
improvements on the north including curb/gutter, stormwater, sidewalk, street lighting and
landscaping and Curb/gutter and stormwater on the south side from Broadmoor Blvd. to Road
103.
Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road
surface (toe-to-toe of curb)from Road 103 to Road 108.
Construction of domestic water main, sanitary sewer main, and Irrigation main improvements
will be included within this corridor from Broadmoor to Road 108.
2. Broadmoor Boulevard—Interstate 182 to Burns Road
This work will consist of:
Road widening of the existing road, west side only, including the addition of as much as 7-lanes
of asphalt roadway, curb/gutter, stormwater, muti-use pathway, and the relocation of existing
streetlights from interstate 182 to Sandifur Parkway.
Road widening of the existing road, west side only, including the addition of as much as 7-lanes
of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and
landscaping from Sandifur Parkway to Buckingham Road.
Road widening of the existing road, west side only, including the addition of as much as 5-lanes
of asphalt roadway, curb/gutter, stormwater, muti-use pathway, street lighting, and
landscaping from Buckingham Road to Burns Road.
Utility adjustments of the existing utilities will be included in this corridor from Interstate 182 to
Burns Road.
3. Road 108—Harris Road to Sandifur Parkway
This work will consist of:
Construction of a core road, including but not limited to, as much as 3-lanes of asphalt road
surface (toe-to-toe of curb)from Harris Road to Sandifur Parkway.
Construction of domestic water main, sanitary sewer main, and Irrigation main improvements
will be included within this corridor from Harris Road to Sandifur Parkway.
Interstate Associated Improvements
4. Interchange Improvements- Interstate 182 @ Road 100
This work will consist of:
Improvements to the existing interchange including construction of an eastbound off-ramp and
intersection along with restriping.
A second phase shall include bike/ped facilities connecting north to south.
Intersections
5. Burns Road/ Broadmoar Boulevard
This work will consist of:
Full improvements to the existing intersection including signalization, widening, curb/gutter,
sidewalk with ADA ramps, street lighting, striping, and landscaping.
Utility extension and/or adjustments of the existing utilities will be included within this
intersection.
This intersection will have participation in cost from other developers through a separate
participation technical memorandum, prepared by the City's consultant.
6. Buckingham Drive/Broadmoor Baulevard
This work will consist of:
Full improvements to the existing intersection including signalization,widening on the west
side, curb/gutter, stormwater, sidewalk with ADA ramps, street lighting, striping, and
landscaping.
Utility extension and/or adjustments of the existing utilities will be included within this
intersection.
The signalization will be provided by Broadmoor Properties, LLC.
7. Sandifur Parkway/ Broadmoor Boulevard
This work will consist of:
Full improvements to the existing intersection including signalization, widening, curb/gutter,
sidewalk with ADA ramps, street lighting, striping, and landscaping.
Utility extension and/or adjustments of the existing utilities will be included within this
intersection.
8. Sandifur Parkway/Road 108
This work will consist of:
Construction of a "core" roundabout that includes all the asphalt necessary to extend 2' past
the proposed final toe- of-curb/gutter.This effort will also include temporary gravel shoulder
drainage swale as well as striping and lighting as well as the full construction of a center truck
apron and landscaped feature and entry delineators including curb/gutter and internal
surfacing as determined.
Frontage improvements including curb/gutter, sidewalk, stormwater, and landscaping will be
completed by the parcel owner at the time of development.
Construction of domestic water main, sanitary sewer main, and Irrigation main improvements
will be included within this intersection.
9. Sandifur Parkway/ Road 103
This work will consist of:
Construction of a full intersection including signalization,widening, curb/gutter, stormwater,
sidewalk with ADA ramps, street lighting, striping, and landscaping.
Construction of domestic water main, sanitary sewer main, and Irrigation main improvements
will be included within this intersection.
The signalization will be provided by Broadmoor Properties, LLC.
10. Road 108/Road 103
This work will consist of:
Construction of a core intersection, including but not limited to, as much as 3-lanes of asphalt
road surface (toe-to-toe of curb).
Construction of domestic water main, sanitary sewer main, and Irrigation main improvements
will be included within this intersection.
Stop control determined at time of design.
Consultant Team Bio’s
Bob Stowe - Principal
Bob Stowe is the principal and founder of Stowe Development & Strategies —
a company he formed in 2016 to help public sector clients succeed with their
economic and community development interests. With 34 years of experience
in progressive community transformations, Bob is one of the Northwest’s
most innovative and entrepreneurial real estate and community developers.
He uses sound long- range fiscal planning skills and has achieved enviable
results in leading redevelopment efforts from the dream stage to construction.
This is true for projects large and small, straightforward and complex.
Bob’s understanding and experience with tax increment financing, master plan development, transit
oriented development, placemaking, negotiation of purchase and sale agreements, development
agreements, public benefit agreements, and his ability to create public private partnerships make him an
ideal public sector development partner.
Bob has been responsible for leading, managing, coordinating, and implementing a wide variety of complex
and multi-faceted projects including, downtown revitalization plans, civic center plans and development,
master plans, public-private partnerships, and transit-oriented developments to name a few.
Bob was the City Manager for the City of Bothell, Washington from 2005 to 2016 where he was the architect
and leader of Washington’s largest and most successful publicly-led downtown revitalization. Under Bob’s
leadership, this project utilized a Local Infrastructure Financing Tool award (AKA TIF light) as part of the
funding package that stimulated private investment of over $300 million; a very big step in achieving the
City’s 25-year goal of $650 million. The fact that nearly half that goal was reached in just a few years, during
the Great Recession, and with leverage from public/private collaboration, made it all the more remarkable.
Bob guided the development of approximately $150 million in public sector improvements (relocation of
a state highway, creation of new streets, storm water system, parks, environmental clean-up, etc.)
identified as necessary to achieve the revitalization vision. The massive public development plan and
schedule also needed to align with private sector purchase of surplus land from the City, environmental
remediation, public streets to be developed by the private sector, and on-site mixed-use development.
Precise scheduling, communication and the ability to respond to changing conditions were skills that Bob
successfully delivered on this project.
Before arriving in Bothell, Bob was the City Manager for the City of Mill Creek for nine years and helped
lead development of the award-winning Mill Creek Town Center in the early 2000s. His first downtown
transformation project began with the revitalization of Downtown Dayton, Washington in the late 1980s.
The hallmark of Bob’s effort is his commitment to create well designed and environmentally sustainable
places where people want to live, work, and come together to celebrate. Bob has tackled the most difficult
and complex projects, achieving the redevelopment and economic dreams of several communities with his
failure is not an option approach.
EDUCATION
• MBA, Albers School of Business & Economics, Seattle University (with honors).
• BA, Urban and Regional Planning, Eastern Washington University.
Morgan Shook - Director/Partner
Morgan Shook is a Senior Policy and Economic Analyst working in
real estate, land use, and transportation economics, and finance. He
has deep expertise in economic, market and financial analytics that
he brought to bear in business, enterprise, and policy settings.
Morgan has worked for a range of government, business, and non-
profit clients to advance their missions that in diverse set areas
and topics.
Morgan has worked on every form of tax increment financing in Washington including
Community Revitalization Financing, Local Infrastructure Financing Tool, Local
Revitalization Financing LRF, Landscape Conservation and Local Infrastructure Program, as
well as the recently passed Tax Increment Financing bill in the 2021 legislative session.
Before joining ECONorthwest, Morgan worked in biotechnology development at the Institute
for Systems Biology, and health disparities research at the University of Chicago. Morgan
recently served on the Seattle Planning Commission.
EDUCATION
• M.U.R.P., Portland State University
• B.S. Molecular Biology, University of Puget Sound
• Certificate in Commercial Real Estate Development, University of Washington
Extension
Areas of Expertise
• Economic Development
• Affordable Housing
• Land Use Planning
• Market & Feasibility Analysis
• Infrastructure & Finance Funding
• Transit-Oriented Development
Briahna Murray – Vice President
Briahna Murray has lobbied the Washington State Legislature on
behalf of public agency and nonprofit clients for over 15 years.
She was one of the key lobbyists intimately involved in the
advocacy for House Bill 1189, authorizing tax increment
financing in Washington State. She is familiar with the legislative
intent behind the new statutory language and is prepared to
advise clients on how to use tax increment financing in a manner
consistent with what was intended by state policymakers.
More broadly, her clients have formally recognized her
exceptional service, professionalism, responsiveness, and
advocacy. She takes an information-driven, bi-partisan and professional approach to
lobbying and advocacy. Briahna’s knowledge of public policy issues and her ability to
strategically navigate Washington State government is an invaluable combination. Through
her advocacy for public agencies, she has developed expertise in advocating for issues
intersecting with state budgets, tax and finance, growth management, transportation,
criminal justice, housing, human services, and more. Briahna is respected and well-liked by
legislators from across the entire state of Washington and from both political parties.
Briahna graduated cum laude from Seattle University School of Law, where she also served
as a member of Seattle University Law Review. Briahna graduated summa cum laude from
Pacific Lutheran University with a Bachelor of Arts in Political Science and English-Writing.
She now lives in Tacoma, Washington.
City of Pasco | Broadmoor Development TIF Project Analysis June 2022
46
Prepared by:
In association with:
Page 2 of 12
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More specifically, in the Aggressive Development Program, the projections indicate that the City will be
required to pay a portion of the debt service due on the LTGO Bonds from 2024 to 2027, and then will be
fully reimbursed from tax allocation revenues by 2034. In the Moderate Development Program, it is
expected that the City will be required to pay a portion of the debt service due on the LTGO Bonds from
2024 to 2030, and then will be fully reimbursed from tax allocation revenues by 2040. However, in the
Conservative Development Program, the projections show that the City will be required to pay a portion
of the debt service due on the LTGO Bonds in every year, and the City will never be fully reimbursed for
these expenditures.
Statutory Role and Purpose of Review
As enacted by the 2021 Washington State Legislature, RCW 39.114.020 requires that prior to the adoption
of an ordinance authorizing the creation of a TIF project area, the local government proposing the TIF
project area must provide a project analysis to OST for review. OST must complete the review within 90
days of receipt of the project analysis. Upon completing the review, OST must promptly provide to the
local government any comments regarding suggested revisions or enhancements to the project analysis
that OST deems appropriate. OST received the first draft of the City’s project analysis on July 22, 2022.
Project Overview
Issuing Jurisdiction:
City of Pasco
County:
Franklin County
Project Title:
Broadmoor Development
Development Team:
Broadmoor Properties, LLC (property owner),
Marcus & Millichap, Inc.,
PBS Engineering and Environmental Inc.
Municipal Advisor:
Northwest Municipal Advisors
Bond Counsel:
Foster Garvey P.C.
Bond Underwriter:
D.A. Davidson
Consultants:
Stowe Development & Strategies, LLC,
ECONorthwest,
Gordon Thomas Honeywell Governmental Affairs
In 2017, the City started planning for the Project by developing a master plan for a 1600-acre site, which
is situated in the geographical center of the Tri-Cities region. The City is planning to designate 671 acres
of this area as a TIA. At completion, the Broadmoor Development is expected to include single family
residential, multi-family residential, mixed-use, and commercial properties. The Broadmoor Development
is currently vacant land (except for an operating gravel pit), and as such, needs significant infrastructure
improvements, such as roads and utilities, in order for the planned development to take place.
The total cost for the TIA infrastructure improvements is estimated to be between $71 million and $84
million. The City expects to issue tax-exempt LTGO Bonds to fund approximately $33 million to $39 million
of these improvements. For the purposes of the TIF project analysis and this review, the assumed LTGO
Bonds issuance is $39 million. According to the project analysis, the developer(s) will be funding and
constructing approximately $39 million to $45 million of public infrastructure improvements.
Page 3 of 12
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Tax Increment Area
The proposed TIA includes the entire Broadmoor Development site of approximately 671 acres. With the
exception of 220 acres consisting of the gravel and sand operation parcels, the entire site is vacant. The
assessed valuation of the TIA in 2022 is approximately $30 million, which is less than the statutory
limitations of $200 million and 20% of the City’s total assessed valuation of $8,065,205,983 (it is equal to
0.37% of the City’s total valuation).
Source: Broadmoor TIF Project Analysis, City of Pasco
Public Project Description and Timeline
Plans for the Broadmoor Development include public infrastructure improvements to be paid for by the
City, spread over approximately 29.3 acres of land. These planned public infrastructure improvement
projects in the TIA include arterial street construction; water, sewer, stormwater infrastructure; and
interstate ramp and intersection improvements. The improvements are broken into the following
categories and sub-components and detailed more completely in the City’s project analysis:
Corridors
- Sandifur Parkway – Bedford Street to Proposed Road 108
- Broadmoor Boulevard – Interstate 182 to Burns Road
- Road 108 – Harris Road to Sandifur Parkway
Interstate Associated Improvements
- Interchange Improvements - Interstate 182 at Road 100
Page 4 of 12
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Intersections
- Burns Road / Broadmoor Boulevard
- Buckingham Drive / Broadmoor Boulevard
- Sandifur Parkway / Broadmoor Boulevard
- Extended Sandifur Parkway / Proposed Road 108
- Extended Sandifur Parkway / Proposed Road 103
- Road 108 / Road 103
The City-funded public infrastructure improvements are currently in the design stage with the $39 million
cost estimate based on a 30% design level. According to the project analysis, the projects are expected to
go to bid late in 2022 or early 2023, with construction beginning in March of 2023, and completion
expected by October 2023.
In addition to the City’s plans for the public infrastructure improvements described above, the owner of
the Broadmoor Development and/or future developers in the TIA will privately fund and construct
additional public infrastructure improvements. The privately funded infrastructure improvements are
expected to cost between $39 million and $45 million. The project analysis indicates that these privately
funded and developed improvements will be completed concurrently with the private development on
each parcel. It is important to note that to the extent the development projects are delayed we would
expect that some portion of the privately funded infrastructure improvements would also see a similar
delay, potentially having a negative impact on tax allocation revenues.
Private Development Timeline
The private development timeline varies depending on each scenario. Generally, development is expected
to begin in 2023 and continue through at least 2030. The development programs vary greatly in their size
and absorption rates. The table below summarizes the key development assumptions of the three
programs provided in the report. The City has identified the Moderate Development Program as the most
likely to occur.
Table 1
Aggressive Development
Program
Moderate Development
Program
Conservative
Development Program
Multi-Family Unit
Absorption Rate
300 units per year for 16
years, starting in 2023
150 units per year for 25
years, starting in 2023
150 units per year for 8
years, starting in 2023
Commercial
Development
Starting in 2024
Completed in 2030
Starting in 2025
Most completed by 2031
Starting in 2024
Most completed by 2030
Single Family Home
Absorption Rate
60 homes per year in a
4-year build-out
40 homes per year in a
6-year build-out
60 homes per year in a
4-year build-out
Final Year of
Development
Not indicated Not indicated No Development after
2030
Gross Development
Area
Reduced by 25% to account for internal circulation, open space, and landscaping
Page 5 of 12
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Permits
At this point in time, our understanding is that there are no permits in place for the construction expected
to take place in the Broadmoor Development. The City’s consultant, Stowe Development & Strategies, is
confident that developers will be successful in getting the required permits, as they expect that the
proposed private development will be permitted consistent with the permitting jurisdiction's applicable
zoning and development standards. While we have no reason to doubt this assessment, it should be noted
that unforeseen delays in permits could negatively impact construction of the residential, commercial,
and mixed-use properties within the TIA, which in turn could negatively impact the amount and/or timing
of the tax allocation revenues the City expects to use to pay debt service on the bonds.
Financing Structure
The City anticipates issuing LTGO non-voted tax-exempt bonds to pay for its portion of the public
infrastructure projects in an amount not to exceed $39 million. According to the project analysis, the City
anticipates issuing the debt in late 2022 or early 2023 to coincide with the public infrastructure and private
development timelines.
The City plans to structure the LTGO Bonds with level debt service amortized over 25-years, with a 10-
year par call. The City does not currently expect to capitalize interest during the early years of the financing
when tax allocation revenues alone are not expected to be sufficient to cover debt service. Instead, the
City plans to pay any difference between debt service and tax allocation revenues from general City
revenues.
According to the project analysis, the City plans to reimburse itself for any feasibility studies, including
engineering design work, that occurred prior to the expected adoption of the Ordinance designating a TIA
in October 2022. The City also plans to reimburse itself for any general City revenues that are needed to
meet the City’s debt service payments associated with the TIF Infrastructure, to the extent sufficient tax
allocation revenues are available for such reimbursement.
Tax Allocation Revenue Projections
The construction of the planned private developments in the TIA is expected to begin in 2023 and continue
through at least 2030, with the assessed values beginning to hit the tax rolls in 2025 and continuing to
grow thereafter at different rates and varying timeframes depending on the development program. The
project analysis assumes that the assessed value of new construction is recognized one year after
completion. The City’s consultants indicated that they have confirmed with the Franklin County Assessor’s
Office that this is a reasonable assumption that is consistent with the Office’s property assessment
practices.
Through a combination of new construction and assessed value growth, the assessed value in the TIA is
projected to grow from approximately $30.0 million in 2022 to between approximately $1.0 billion and
$2.8 billion in 2048 (depending on the development program).
Page 6 of 12
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Table 2
Incremental Assessed Value – Tax Year
2023 2028 2033 2038 2043 2048
Aggressive $0 $1,146,690,000 $2,080,970,000 $2,386,540,000 $2,570,980,000 $2,769,680,000
Moderate $0 $774,450,000 $1,681,750,000 $2,002,550,000 $2,173,350,000 $2,341,320,000
Conservative $0 $546,280,000 $825,400,000 $889,190,000 $957,910,000 $1,031,940,000
No TIF $0 $323,500,000 $348,500,000 $375,440,000 $404,450,000 $435,710,000
Source: Broadmoor TIF Project Analysis, City of Pasco
The project analysis indicates that the City will begin receiving tax allocation revenues in 2025. In the
Aggressive Development Program scenario revenues are forecast to be $680,000 in this initial year. These
revenues are projected to then increase substantially each year as new construction occurs through
completion. After 2030 revenue growth as a percentage decreases to just under 3% in 2032 before falling
to 1% in 2035 and remaining at approximately 1% growth per year thereafter. Revenue growth for the
Moderate Development Program follows the same relative pattern: large increases through 2032, an
almost 6% increase in 2033, and roughly 1% increases thereafter. The pattern for revenue growth in the
Conservative Development Program sees revenue growth leveling out earlier at 1% in the year 2032 as no
new development is assumed past 2030.
Projected Debt Service Coverage
It is important to note that the tax allocation revenue projections provided in the project analysis show
debt service coverage below 1.00x until 2028 in the Aggressive Development Program and until 2031 in
the Moderate scenario. Under the Conservative scenario tax allocation revenues never reach a sufficient
amount to fully cover debt service. During the period where tax allocation revenues are insufficient the
City will be required to fund the TIF debt service deficit with general City revenues or other City resources.
Depending on the pace and final features of the completed private development, the amount of debt
service shortfalls the City would be required to fund varies greatly.
In the Aggressive Development Program, the City will be required to fund debt service shortfalls
in years 2024 through 2027 with general City revenues and is fully reimbursed in 2034.
In the Moderate Development Program, the debt service shortfalls extend from 2024 to 2030 and
the City is fully reimbursed in 2040.
For the Conservative Development Program, debt service shortfalls will need to be funded with
general City revenues in every year bonds are outstanding, and the City will never be fully
reimbursed by tax allocation revenues.
The tables below summarize the total tax allocation revenues, revenue shortfalls and debt service
coverage of the three potential development programs.
Page 7 of 12
Table 3
Development
Program
First Year Tax
Allocation
Revenues Exceed
TIF Debt Service
Year that TIF
Revenues
Reimburse Shortfall
Total
Projected
TIF Revenue
Total
Projected TIF
Debt Service
Projected
Maximum
Shortfall
Total
Surplus/
(Shortfall)
Total Debt
Service
Coverage Ratio
Aggressive 2028 2034 $91,890,000 $65,750,000 ($6,060,000) $26,140,000 1.40x
Moderate 2031 2040 $78,320,000 $65,750,000 ($9,220,000) $12,570,000 1.19x
Conservative Never Never $45,180,000 $65,750,000 ($20,570,000) ($20,570,000) 0.69x
Table 4
1. Total row for DSC reflects average coverage ratio.
2. Assumes interest rate of 4.50%.
Source: City of Pasco
Aggressive Moderate Conservative
Year
Tax
Allocation
Revenues
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF DSC
Tax
Allocation
Revenues
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF DSC
Tax
Allocation
Revenues
TIF Debt
Service
Surplus
(Shortfall)
Cumulative
Surplus
(Shortfall)
TIF DSC
2023
2024 0 2,630,000 (2,630,000) (2,630,000) 0.00x 0 2,630,000 (2,630,000) (2,630,000) 0.00x 0 2,630,000 (2,630,000) (2,630,000) 0.00x
2025 680,000 2,630,000 (1,950,000) (4,580,000) 0.26x 380,000 2,630,000 (2,250,000) (4,880,000) 0.14x 270,000 2,630,000 (2,360,000) (4,990,000) 0.10x
2026 1,480,000 2,630,000 (1,150,000) (5,730,000) 0.56x 760,000 2,630,000 (1,870,000) (6,750,000) 0.29x 640,000 2,630,000 (1,990,000) (6,980,000) 0.24x
2027 2,300,000 2,630,000 (330,000) (6,060,000) 0.87x 1,370,000 2,630,000 (1,260,000) (8,010,000) 0.52x 970,000 2,630,000 (1,660,000) (8,640,000) 0.37x
2028 2,790,000 2,630,000 160,000 (5,900,000)1.06x 1,880,000 2,630,000 (750,000) (8,760,000) 0.71x 1,360,000 2,630,000 (1,270,000) (9,910,000) 0.52x
2029 3,160,000 2,630,000 530,000 (5,370,000)1.20x 2,300,000 2,630,000 (330,000) (9,090,000) 0.87x 1,800,000 2,630,000 (830,000) (10,740,000) 0.68x
2030 3,580,000 2,630,000 950,000 (4,420,000)1.36x 2,500,000 2,630,000 (130,000) (9,220,000) 0.95x 1,870,000 2,630,000 (760,000) (11,500,000) 0.71x
2031 3,860,000 2,630,000 1,230,000 (3,190,000)1.47x 3,030,000 2,630,000 400,000 (8,820,000)1.15x 1,950,000 2,630,000 (680,000) (12,180,000) 0.74x
2032 3,970,000 2,630,000 1,340,000 (1,850,000)1.51x 3,350,000 2,630,000 720,000 (8,100,000)1.27x 1,970,000 2,630,000 (660,000) (12,840,000) 0.75x
2033 4,050,000 2,630,000 1,420,000 (430,000)1.54x 3,540,000 2,630,000 910,000 (7,190,000)1.35x 1,990,000 2,630,000 (640,000) (13,480,000) 0.76x
2034 4,100,000 2,630,000 1,470,000 1,040,000 1.56x 3,590,000 2,630,000 960,000 (6,230,000)1.37x 2,010,000 2,630,000 (620,000) (14,100,000) 0.76x
2035 4,140,000 2,630,000 1,510,000 2,550,000 1.57x 3,650,000 2,630,000 1,020,000 (5,210,000)1.39x 2,030,000 2,630,000 (600,000) (14,700,000) 0.77x
2036 4,180,000 2,630,000 1,550,000 4,100,000 1.59x 3,700,000 2,630,000 1,070,000 (4,140,000)1.41x 2,050,000 2,630,000 (580,000) (15,280,000) 0.78x
2037 4,220,000 2,630,000 1,590,000 5,690,000 1.60x 3,760,000 2,630,000 1,130,000 (3,010,000)1.43x 2,070,000 2,630,000 (560,000) (15,840,000) 0.79x
2038 4,270,000 2,630,000 1,640,000 7,330,000 1.62x 3,810,000 2,630,000 1,180,000 (1,830,000)1.45x 2,090,000 2,630,000 (540,000) (16,380,000) 0.79x
2039 4,310,000 2,630,000 1,680,000 9,010,000 1.64x 3,870,000 2,630,000 1,240,000 (590,000)1.47x 2,110,000 2,630,000 (520,000) (16,900,000) 0.80x
2040 4,350,000 2,630,000 1,720,000 10,730,000 1.65x 3,930,000 2,630,000 1,300,000 710,000 1.49x 2,130,000 2,630,000 (500,000) (17,400,000) 0.81x
2041 4,400,000 2,630,000 1,770,000 12,500,000 1.67x 3,970,000 2,630,000 1,340,000 2,050,000 1.51x 2,160,000 2,630,000 (470,000) (17,870,000) 0.82x
2042 4,440,000 2,630,000 1,810,000 14,310,000 1.69x 4,010,000 2,630,000 1,380,000 3,430,000 1.52x 2,180,000 2,630,000 (450,000) (18,320,000) 0.83x
2043 4,490,000 2,630,000 1,860,000 16,170,000 1.71x 4,050,000 2,630,000 1,420,000 4,850,000 1.54x 2,200,000 2,630,000 (430,000) (18,750,000) 0.84x
2044 4,530,000 2,630,000 1,900,000 18,070,000 1.72x 4,090,000 2,630,000 1,460,000 6,310,000 1.56x 2,220,000 2,630,000 (410,000) (19,160,000) 0.84x
2045 4,580,000 2,630,000 1,950,000 20,020,000 1.74x 4,130,000 2,630,000 1,500,000 7,810,000 1.57x 2,240,000 2,630,000 (390,000) (19,550,000) 0.85x
2046 4,620,000 2,630,000 1,990,000 22,010,000 1.76x 4,170,000 2,630,000 1,540,000 9,350,000 1.59x 2,270,000 2,630,000 (360,000) (19,910,000) 0.86x
2047 4,670,000 2,630,000 2,040,000 24,050,000 1.78x 4,220,000 2,630,000 1,590,000 10,940,000 1.60x 2,290,000 2,630,000 (340,000) (20,250,000) 0.87x
2048 4,720,000 2,630,000 2,090,000 26,140,000 1.79x 4,260,000 2,630,000 1,630,000 12,570,000 1.62x 2,310,000 2,630,000 (320,000) (20,570,000) 0.88x
Total1 91,890,000 65,750,000 26,140,000 1.40x 78,320,000 65,750,000 12,570,000 1.19x 45,180,000 65,750,000 (20,570,000) 0.69x
Page 8 of 12
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Debt Capacity
Based on the City’s total 2022 assessed value of $8,065,205,983, the City has $120,978,089 in total non-
voted debt capacity (1.5% of 2022 AV). The City currently has $23,920,000 outstanding non-voted debt,
leaving sufficient net non-voted debt capacity of $97,058,089 before the proposed $39,000,000 financing.
Table 5
2021 Assessed Valuation for 2022 Collections $8,065,205,983
Non-Voted Debt Capacity (1.5% of AV) 120,978,090
Less: Outstanding Non-voted Debt (23,920,000)
Current Net Non-Voted Debt Capacity 97,058,090
Less: Financing (proposed) (39,000,000)
Projected Remaining Non-voted Capacity $58,058,090
Projected % of Non-voted Capacity Remaining 48.0%
Source: Broadmoor TIF Project Analysis, City of Pasco
Interest Rate Assumptions
The debt service figures included in the project analysis assume interest rates for the TIA project bonds of
4.50% for an issuance in late 2022 or early 2023, with maturities ranging from 2024 through 2048. The
project analysis assumes a debt structure with level debt service, and that the bonds will be sold on a tax-
exempt basis.
While the 4.50% assumption appears to include some cushion compared to current market conditions,
interest rates are expected to continue rising over the near- to mid-term as the Federal Reserve continues
to battle inflation. A recent survey of market participants conducted by Bloomberg indicated that a majority
of economists expect that the Federal Open Market Committee will increase short-term interest rates by
an additional 1.25% by the end of 2022, when the City anticipates that it will sell the bonds for the TIA public
improvements.
Given the current level of interest rates, increased market volatility, inflation levels at 40-year highs, and
the market’s expectation for higher interest rates going forward, we encourage the City to maintain
conservative assumptions and monitor interest rates carefully as it moves forward with the Project. As
increases in interest rates will translate to higher debt service costs for the proposed bonds, interest rates
will remain a risk factor for the City until the bonds are sold.
City of Pasco Financials
The City provided Table 6 below, summarizing its historical financial performance and highlighting the cash
balance available to ensure the payment of debt service. As indicated in the footnote to Table 6, the
available cash balance consists of amounts from three City funds that would be considered to be generally
available in order to make debt service payments should tax allocation revenues prove insufficient to cover
all of the debt service on the proposed LTGO Bonds. The available cash balance has grown significantly over
the past five years from $22.6 million in 2017 to $57.6 million in 2021. The available cash balance is
budgeted to drop to $45.7 million by the end of 2022.
As shown in Tables 3 and 4, all three development programs indicate significant periods when projected tax
allocation revenues will not be sufficient to meet annual debt service requirements. Under the Conservative
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Development Program scenario there is a projected cumulative shortfall of TIF revenues compared to debt
service of $20.6 million. In the event of a temporary or long-term tax allocation revenue shortfall, the City
will need to rely on some combination of existing revenues, new non-property tax revenues generated from
the TIA, or cash balances to fund debt service payments associated with the bonds.
Table 6
Source: Broadmoor TIF Project Analysis, City of Pasco
Key Risks to the City
From our review of the project analysis, it appears that the Project is well-conceived and will provide
significant benefit to the City and region. Nonetheless, the Project comes with certain risks to the City,
primarily related to the sufficiency of projected tax allocation revenues to repay LTGO Bonds that the City
expects to issue to finance certain public infrastructure improvements.
During years with shortfalls, the City will be required to pay any difference between debt service due and
tax allocation revenues received from general City revenues. While the City plans to reimburse itself for
such debt service payments made from general City revenues, it is important for decision makers to be
aware of the potential magnitude and timing of such payments and reimbursements. In addition, since the
TIF legislation limits the ability to collect tax allocation revenues to a period of 25 years, delays could also
reduce the overall amount of tax allocation revenues that would be received by the City, limiting the City’s
ability to be fully reimbursed.
On a granular level, some of the various factors that could impact tax allocation revenues include permits,
interest rates, economic conditions, delays in construction, and future demand for/assessed value of the
property within the TIA.
Permits: Unforeseen delays in permits could negatively impact the construction of the expected residential,
commercial, and mixed-use properties within the TIA. Delays to either the public improvements or the
private developments could negatively impact the timing and/or amount of tax allocation revenues.
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Interest Rate Risk: The City is exposed to interest rate risk until its bonds are sold. The key assumption of a
4.5% interest rate for the LTGO Bonds offers a small amount of cushion compared to current market
conditions. Current market sentiments generally expect continued increases in interest rates, which could
produce debt service on the City’s bonds that exceeds the amounts assumed in the project analysis.
Economic Conditions: The timing of tax allocation revenues could be negatively impacted by a downturn of
economic conditions. The planned development is multi-faceted with commercial, mixed-use, multi-family
residential, and single-family residential components, and a variety of economic factors could negatively
impact the timeline and ultimate demand for development, jeopardizing the rate and scale of private
development and reducing potential tax allocation revenues.
Construction Delays: Any setback or hinderance to the private developers’ capacity for completing
construction projects could negatively impact tax allocation revenues. Whether the cost of the
improvements themselves or some unforeseen change in the developers’ ability to complete both their
public improvements and private developments, the City will remain responsible for repaying the LTGO
Bonds issued for the Project, once issued.
Assessed Valuations: As private developments are completed, tax allocation revenues may be less than
anticipated if the assessed value projections do not track projections. If assessed valuations come in lower
than expected, projected tax allocation revenues would be reduced.
Risk Summary: The general impact to the City, if any of the risk factors outlined above are realized and tax
allocation revenues end up being lower than expected, could be the requirement that the City apply some
amount of its general revenues or reserves towards the repayment of the LTGO Bonds, reducing the City’s
ability to allocate those funds to other projects or operations. Depending on the actual tax allocation
revenues received, it is possible that the City may not be fully reimbursed from tax allocation revenues for
such general fund expenditures.
Recommendations
The Broadmoor Development is a significant long-term and large-scale project. To help ensure the long-
term financial success of the Project and to minimize risk, we recommend the City carefully monitor the
risks identified and consider the following measures.
1. We recommend that the City discuss how much risk exposure is appropriate for the Project and
how much potential debt service costs it is willing to cover in order to advance the project through
years of tax allocation revenue shortfalls.
2. Given the general obligation pledge of the bonds, and the potential requirement for the City to
cover some amount of debt service costs from general revenues and reserves, we recommend the
City consider budgeting for and setting aside funds to cover potential tax allocation revenue
shortfalls.
3. As the project moves forward, coordinate closely with the Franklin County Assessor’s Office to help
ensure that the tax allocation revenue projections match the County’s assessment process and are
as realistic as possible.
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4. The City’s interest rate assumptions contain only a small amount of cushion compared to current
market conditions. We recommend that the City consider using somewhat more conservative
interest rate assumptions, especially if the issuance of the bonds extends into 2023.
Thank you for the opportunity to review the City’s Broadmoor Development TIA project analysis. Based
upon the information provided to date in connection with this Project, this concludes our review. If there
are material changes in the scope, timing, or cost of the Project, please let us know. We wish the City all the
best with the Project.
Respectfully,
Mike Pellicciotti
Washington State Treasurer
Jason Richter
Deputy Treasurer
Appendix Page 12 of 12
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Attachment A: Broadmoor Development TIA Timeline
City of Pasco Adopts TIA
Ordinance
October 2022
LTGO Bonds Issued
Late 2022 or Early 2023
TIA Public Improvments
Begin
March 2023
Broadmoor Development
TIA takes effect
June 1, 2023
TIA Public Improvments
Completed
October 2023
Private Development
Projects Begin
Throughout 2023
Tax Allocation Revenue
Collection Begins
2025
TIA Expires, LTGO Bonds
Mature, Tax Allocation
Revenue Collection Ends
2048