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PUGET SOUND BUSINESS JOURNAL: Innovative tool for financing infrastructureWith more homes selling this year in King County than 2010, Puget Sound area communities are concerned about the lack of proper infrastructure for development. This ultimately leaves a nightmare of overburdened and underfunded infrastructure, the cost of which is ultimately shifted to current residents. That has been a problem in the past, but it’s exciting to reflect on legislation that will directly benefit Washington state and alleviate this problem in the future. The Legislature passed legislation that gives developers a new financing option by allowing them to form community facilities districts (CFDs). CFDs could provide the much-needed infrastructure financing that will create new jobs, improve roads and other public facilities, and ultimately drive economic development in our region. A CFD is an independently governed district formed with the sole purpose of overseeing the financing and/or construction of infrastructure improvements that are the backbone of creating vibrant, livable communities. CFDs help developers move forward with projects by using their property as collateral to support the construction of important infrastructure such as roads, storm-water facilities, park improvements, traffic lights and libraries. This is especially crucial in today’s economic climate, where state, county and local governments often lack the resources to pay for these improvements. Generally, developers borrow money for these projects at prohibitively high interest rates, which is a disincentive to invest in infrastructure ahead of time. However, CFDs allow property owners to issue bonds that are paid back as homes are sold, thereby creating an incentive for the proactive development of infrastructure before the homes are built. CFDs can only be used when 100 percent of property owners agree, meaning that they cannot be imposed on any home or property owner against their will. CFDs create “special purpose districts,” which, unlike taxing districts, can only be used to finance specific public infrastructure improvements. This finally implements the principle of growth paying for its impacts ahead of time, and not shifting the costs to existing homeowners. Our beautiful mountains, vibrant business culture, and high quality of life make Washington state among the most desirable places to live in the country. Unfortunately, our efforts to build new infrastructure have lagged behind the rapid growth we’ve experienced in recent decades. In Black Diamond, which recently approved two Master Planned Developments, the developer, YarrowBay, should be required to use CFDs to finance roads, public facilities and other important infrastructure for the community. It’s critically important that this cost be shifted to YarrowBay, away from current residents, to ensure that adequate infrastructure precedes development. This could be an exciting opportunity for this region and our state to jump-start the economy by using an innovative funding mechanism for the very first time. CFDs will be an effective, safe and creative way for our state to achieve smart growth that plans for infrastructure improvements from the beginning. Too often, states wait for growth to overwhelm the capacity of their infrastructure before improvements are made. This leads to overcrowded schools, roads clogged by traffic, and insufficient storm-water facilities. Impact fees are helpful, but oftentimes are too slow to address problems before they occur. Our state, county and local governments simply do not have the resources to make these improvements. Because our state had the foresight to allow developers to finance the improvement of infrastructure in advance of a project, we will avoid many of the problems that plague other states. We need to embrace creative tools like the community facilities district, or else face the consequences of not having enough services to continue providing the high quality of life that makes Washington such a wonderful place to work, live and raise a family. REP. CHRISTOPHER HURST, a Democrat, presents the 31st Legislative District, is chair of the House Public Safety Committee and is serving his 10th year in the Legislature.
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