Lynnwood council unanimously approves tax increment financing to fund city projects

The Lynnwood City Council Tuesday unanimously approved an ordinance to implement tax increment financing (TIF) to help fund city projects. The mechanism pools property taxes exceeding the base rate generated by new development to fund public infrastructure improvements.

Also during the Tuesday meeting, city prosecutors briefed the council on a request to continue funding a diversion program, and the council also received updates on the state of housing in Lynnwood. In addition, the council interviewed two applicants for city commissions.

The meeting kicked off with a proclamation for 2SLGBTQ+ (Two Spirit, Lesbian, Gay, Bisexual, Transgender, Queer/Questioning) Pride Month, which was received by Charlette LeFevre and Phil Lipson of Lynnwood Pride. The proclamation designated June as LGBTQ+ Pride Month to commemorate the 1969 Stonewall Riots and called upon residents to celebrate the community’s contributions and stand for their safety and being welcome in Lynnwood.

Lipson expressed disappointment upon receiving the proclamation, stating he was “upset that Lynnwood City Council has not given us any support for our upcoming Lynnwood Pride event.” He noted that Lynnwood Pride faced difficulty in securing the Lynnwood Transit Center as a venue for its Pride festival June 7, and that the city refused the group’s request to fly a Pride flag in Wilcox Park.

The city sponsored Lynnwood Pride’s festival last year, but is not a sponsor this year. Lynnwood Parks and Recreation Director Joel Faber said he denied the group’s request to fly the flag because he wanted more input from the community before diverting from the city’s standard practice of only flying the American flag in city parks. Read more on the matter here.

The council then continued with business items, during which it discussed and unanimously approved an ordinance to implement tax increment financing in Lynnwood.

TIF is an economic development tool authorized under Washington State law. It allows local governments to fund public infrastructure using property tax revenue generated from increased assessed value within a designated area due to new private development.

Under this model, a proposed 68-acre tax increment area would capture increased property tax revenue generated by new development to repay public infrastructure investments for three of the city’s public infrastructure projects: City Center Park, 194th Street Southwest and 38th Avenue West Ring Road and the 42nd Avenue West Phase 1 projects.

The TIF program is projected to contribute approximately $24 million of the total $66 million cost for these projects, primarily through bond capacity. This $24 million would be financed through Limited Tax General Obligation (LTGO) bonds, which would be paid back using the incremental property tax revenue generated by new development in the TIA, Lynnwood Economic Development Manager Ben Wolters told the council. The City expects to issue bonds in multiple series from 2027-2030.

The law specifies which regular property tax levies contribute to the TIF revenue, and state property tax and voter-approved school levies are excluded. Analysis indicates the TIA impacts Hospital District No. 2 and South County Fire & Rescue Regional Fire Authority by 0.3% of their assessed value. This falls well below the state’s 20% threshold requiring a mitigation plan, Wolters said.

Washington’s Office of the State Treasurer reviewed and accepted the city’s project analysis in April, giving the city a green light to pursue the next step. The project analysis acknowledges the possibility of TIF revenues falling short in the early years to cover debt services, due to development timelines and tax exemptions such as MFTE developments. If this happens, the costs may need to be covered by other city funds, which could be reimbursed later. City staff also identified other mitigation measures, including developer agreements, different debt structures, utilizing other city tax revenues from the development, drawing from fund reserves, and reprioritizing other capital projects.

Councilmember David Parshall moved to adopt the ordinance, stating that TIF is a way “to fund capital projects without actually costing the people of Lynwood a lot of money in new taxes.” He described it as a “great resource,” noting that Washington state is one of the first to attempt the funding model.

Following a brief break, the council discussed potentially continuing the Washington Organized Retail Crime Association’s Diversion Program used by the city’s police department. Councilmember George Hurst introduced the item, explaining that the program was originally intended to run through 2025 using state grant funds, but is facing early termination on June 15.

If the council approves, the city would allocate $211,330 from the city’s opioid fund to Zachor Stock & Krepps, the city’s prosecuting firm, to fund the program through January 2026.

Hurst proposed using opioid settlement funds to support the program, noting that the city’s fund currently sits at over $1.1 million and around $2.8 million total is expected from lawsuits against pharmaceutical companies. Hurst stated the program reduces retail theft by “attacking it at its root cause, which most of the time is drug addiction.”

Lynnwood Police Chief Cole Langdon clarified the police department is not seeking funding for this program. Assistant City Administrator Julie Moore confirmed that addressing the needs of “criminal justice involved persons” is an approved use for the opioid funds under the memorandum of understanding (MOU) with the state. However, she expressed concern about ensuring participants have a direct connection to “opioid use disorder” and tracking that link, as the state’s MOU is specifically for opioid use. Moore noted there are “no defined reporting requirements” from the state, making it a “self-governing good faith kind of thing,” with uncertainty about potential future audits.

Councilmembers discussed the eligibility criteria for opioid funds and the risks associated with undefined state reporting requirements. Ashley Dawson, representing Snohomish County Law Enforcement Assisted Diversion (LEAD), said LEAD is familiar with reporting requirements from other grants and could provide additional data to the city. Moore indicated that while the issue is “figure outable,” staff would need time to develop a reporting structure and agreement template. The council did not take action but discussed the proposal at length.

The final business item was an introduction to Housing 2025 by Chris Collier, program manager for the Alliance for Housing Affordability (AHA) at the Housing Authority of Snohomish County (HASCO).

Collier presented data showing a deficit between new household creation and new unit creation in Snohomish County since around 2015, primarily impacting ownership housing. Rental housing has seen some recovery, he said

“We’re coming out of a period of intense scarcity,” he told the council. “That scarcity is only being alleviated on half of the spectrum of rental ownership, and alleviated is probably too generous of a word.”

This scarcity drives up prices, he said. The median single-family home price in the county requires an income of $194,000, significantly higher than the median household income.

“That’s the, ‘you must be this tall to ride’ line for what is most of our [home] ownership options in Snohomish County,” he said.

Collier presented Lynwood-specific housing costs as of Dec. 2024, noting required incomes well above median income to purchase most housing types. He highlighted the gap between very low-income households in Snohomish County, at around 86,000 units, and available permanent housing assistance, approximately 22,000, leaving about 64,000 households unassisted. Apartment construction, however, has increased significantly in Lynwood since the sighting of light rail, he said.

Collier also said data shows Lynwood home sales trending toward higher price points, with a growing percentage of homes costing over $600,000 and over $1 million in recent years.

Lynnwood saw major growth in recent years in workers commuting from over 50 miles to work in the city, Collier said, suggesting that the cost of living is a significant factor in people choosing to live further away.

“The status quo in housing is not working for a growing number of people, ” he said. Housing policy, which was traditionally local, is now subject to increased state requirements, some outside of local control.

“It’s a tough battle and I want to recognize that, acknowledge it to the city councilmembers, the city, that this is still something that’s very much in your wheelhouse,” he said. “…And the question remains: What are we going to do? What does the city want to see in its future for apartment construction?”

In other business, the council also interviewed two candidates for the city’s commissions. Martin Munyoko was interviewed for the Human Services Commission and Rebecca Thornton for the Diversity, Equity and Inclusion Committee.

In February, the council initially appointed Thornton to the city council position vacated by former Councilmember Julieta Altamirano Crosby. Thornton, however, stepped down from the seat just hours before scheduled to take an oath of office.

Thornton Tuesday that when she had applied for the council, current councilmembers had strongly suggested she and the other applicants get involved on the city’s boards and commissions if they weren’t appointed to the council. “And I really took that to heart,” Thornton said.

Councilmember Hurst asked about her commitment to the commission, referencing her prior withdrawal from the council seat process.

“Yes, I am very committed,” Thornton said, noting that a part-time council position wasn’t feasible to her at the time, but a volunteer commission position is. She noted that the interview process for the council position also helped her gain more insight into how the city operates, and serving on a commission would give her an opportunity to learn more.

“Having gone through the experience of interviewing for a council seat, it was terrifying,” she said. “It was so terrifying, probably top three scariest things in my life. But now I know I can do it.”

“I’m really hoping that you will all give me the opportunity to give back to my community and to also earn your rest as well,” she said.

Thornton has lived in Lynnwood since 2019 and has experience working consulting small businesses and supporting local nonprofits. She also has experience in construction and vendor management and has managed social impact projects in her professional experience.

Munyoko, who interviewed for the Human Services Commission, has lived in Lynnwood for two and a half years. He has a background in human services at agencies such as Mary’s Place, the YMCA and his current role at the Downtown Emergency Service Center in Seattle.

A full meeting recording can be found at the city’s website.

— Contact Ashley at ashley@myedmondsnews.com.