1. What is an Industrial Development District?
Washington ports have authority to access an additional regular property tax levy through the formation of one or more Industrial Development Districts (IDDs). State law allows Ports to create IDDs on “marginal lands” if the Port finds it “proper and desirable in establishing and developing a system of harbor improvements and industrial development in the port district.” [RCW 53.25.010, .040.] The Port can then make improvements within the IDD.
“Marginal lands” are, generally, areas that under-used, under-served, and/or under-developed to the economic detriment of the community and local municipalities. RCW 53.25.030 defines certain conditions, any one of which qualifies an area as “marginal lands,” including: economic underachievement due to faulty planning; poorly shaped or laid out lots negatively affecting development opportunities; inadequate streets, open spaces, and utilities; areas at risk of being submerged by water; economic and social maladjustment causing tax receipts insufficient to pay for public services; unproductive use of land; reduced productive use of land requiring the relocation of public facilities and services; assessed values insufficient to establish a local improvement district; and lands necessary in an industrial area not used for industrial purposes.[1]
2. How Ports Designate an IDD
Given the general nature of the “marginal lands” criteria and the fact that the law does not define what constitutes “harbor improvements” or “industrial development” that would justify the IDD, Ports will typically have significant flexibility in designating IDDs. For instance, a Port can designate a discrete area within its district as an IDD, such that a single port district could contain multiple IDDs. Alternatively, some Ports have designated the entire port district in a single IDD. The IDD area can include land owned by the Port or others. When designating an IDD, keep in mind that the Port can delete land from the IDD per RCW 53.25.040, but cannot add land—so consider an inclusive approach to including lands.
To designate a geographic area as an IDD, a Port Commission must follow the process laid out in RCW 53.25.040. The Commission should first identify the geographic area proposed to be designated an IDD, including identifying the presence of “marginal lands,” and draft a resolution finding the existence of marginal lands and that creating the IDD is proper and desirable in establishing and developing a system of harbor improvements and industrial development in the port district. The statutory terms “harbor improvements” and “industrial development” are not defined, so it may be helpful for the Commission to make specific findings about its proposed improvements in the IDD and how those would relate to harbor improvements and industrial development.
The Commission must then notice and hold a public hearing before adopting the resolution that creates the IDD. The Port should then amend its Comprehensive Scheme of Harbor Improvements (CSHI) accordingly.
Once an IDD is in place, there are certain limitations that restrict how the Port may dispose of the property, see generally chapters RCW 53.25, 53.12, although, as noted above, Ports can delete lands from an IDD once it has been established.
3. IDD Tax Levies
Having an IDD does not require the Port to levy the associated regular property tax, but allows the Port to do so. As of January 1, 2026, RCW 53.36.160 governs the Port’s authority to levy taxes to make improvements within the IDD.[2] Taxes levied pursuant to RCW 53.36.160 are collected from the entire port district, but revenues may only be spent in the IDD.
Ports generally may levy the tax for up to two multi-year levy periods of at least six years and up to a maximum of 20 years.[3] A Port’s first and second IDD levy may be imposed councilmanically (e.g. without voter approval), although the second IDD levy is subject to referendum if a petition containing sufficient signatures are submitted.[4]
The amount the Port can collect in each multi-year period is limited to an aggregate amount equal to the maximum amount the Port could have collected for IDD purposes under RCW 84.55.010 (the levy limit) for the first six years of the collection period, calculated as of the base period, plus new construction increases. This is roughly $2.70/$1,000 AV (6 x the annual maximum of $0.45/$1,000).[5] The possibility of imposing the tax over a period of up to 20 years gives the Port flexibility to levy at a lower rate for a longer period to receive the same aggregate amount. The Port may set different levy amounts resulting in varying rates over different years; however, the levy rate in any single year may not exceed $0.45/$1,000 AV. The 101% levy limit under RCW 84.55.130 does not apply to a Port’s first or second multiyear levy period.[6] If the Port has not collected up to the aggregate authorized amount by the end of the multi-year levy period, it loses the ability to capture that additional amount.
If the Port collects more funds from the tax than it spends on IDD improvements in a year, it may be carried over and kept in a fund for IDD use, and the Port may continue collecting the levy. If at the end of the multi-year levy period more has been collected than ultimately is needed for the Port’s projects as laid out in its CSHI, any additional revenue from the tax may be used only to retire general obligation bond debt.
Levies for IDD purposes are an additional, separate regular property tax levy. WAC 458-19-05001. Because Port levies are not subject to the statutory aggregate levy limit set in RCW 84.52.010 or the constitutional aggregate 1% levy limit set forth in RCW 84.52.050, if the aggregate tax rate in a tax area including (part of) the IDD is above either limit, the IDD levy is not subject to proration, i.e., mandatory reduction or elimination.
4. Conclusion
Washington ports can access an additional regular property tax levy through the formation of IDDs. The processes for creating an IDD and imposing an IDD levy are governed by a complicated statutory scheme; while this Overview can help Ports think through their options, Ports pursuing an IDD and/or an IDD tax levy should work closely with their legal counsel and finance teams to ensure compliance. For
If you have any questions regarding IDDs or other finance tools available to Washington public ports, please contact any of our public finance attorneys.
| Alison Benge | Alison.Benge@pacificalawgroup.com | 206.602.1210 |
| Deanna Gregory | Deanna.Gregory@pacificalawgroup.com | 206.245.1716 |
| Jon Jurich | Jon.Jurich@pacificalawgroup.com | 206.245.1717 |
| Stacey Lewis | Stacey.Lewis@pacificalawgroup.com | 206.245.1714 |
| Faith Li Pettis | Faith.Pettis@pacificalawgroup.com | 206.245.1715 |
| Toby Tobler | Tobias.Tobler@pacificalawgroup.com | 206.602.1215 |
| Emma Daniels | Emma.Daniels@pacificalawgroup.com | 206.602.1213 |
| Kyra Perrigo | Kyra.Perrigo@pacificalawgroup.com | 206.602.1227 |
| Clare Riva | Clare.Riva@pacificalawgroup.com | 206.602.1220 |
[1] These are plain-language summaries; please see RCW 53.25.030 for specific criteria.
[2] A previous statute laying out a scheme for an IDD tax levy, RCW 53.36.100, was repealed effective January 1, 2026.
[3] Ports bordering the Pacific Ocean may, with voter approval, impose a third levy period of six years.
[4] If, within 90 days after notice of the second IDD levy is published, a petition is filed with signatures representing at least eight percent of voters as specified in RCW 53.36.160(2), the IDD levy must be submitted to the voters, and the levy may be imposed only with simple majority approval.
[5] The Port’s finance team can help walk through the specific calculations per RCW 84.55.010. For example calculations, see WAC 458-19-05001.
[6] The levy limit in RCW 84.55.010 applies only to an IDD’s third multi-year levy period.
A Note: This publication is for informational purposes and does not provide legal advice. It is not intended to be used or relied upon as legal advice in connection with any particular situation or facts.
