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What if the Malaga forecast misses?

An interactive stress test of the Port's Malaga Tax Increment Financing (TIF) bond plan — built entirely from the Port's own published numbers.

The Port of Chelan County plans to issue bonds for the Malaga TIF and repay them from property taxes on projected future assessed value — value that doesn't exist yet. The Port's Final Project Analysis (Dec 18, 2025) projects how much value appears each year and how much revenue it generates. This tool asks one question: if that forecast comes in low, who covers the gap — and how big is it?

The dial

How to read it

The first setting, Port scenario, picks which of the Port's own plans you're testing. Full build-out ($106M bonds) is the Port's base case — four bond series ($42M in 2026, $23.5M in 2029, $18M in 2032, $22.5M in 2035), $106M borrowed in total, $183.2M in total debt service through 2051. The second is the Port's own conservative downside (Appendix C), which drops the speculative data centers and issues only $64M across two series.

Slide the dial to 0% miss — the Port's forecast coming true exactly — and notice how thin the cushion is. The Port's base case bottoms out around 1.02× coverage, and its own conservative case runs at roughly 1.01–1.05× for two decades. The Port's own financial advisor, Piper Sandler, says so in the report itself: this schedule models "the maximum amount the Port could realistically borrow," and "more conservative borrowing assumptions would better protect the Port from the financial risk of revenue projections that rely on speculative future construction activity and long-term appreciation." For context, debt repaid from a single revenue stream is normally underwritten at 1.25–1.50× — 25–50% more revenue than the payment. (A fair objection: that benchmark comes from revenue bonds, and these are general-obligation bonds, which usually carry no coverage test because the taxpayer pledge is the security. True — but calling it a GO bond doesn't make the cushion bigger. It only names who absorbs the miss.)

Why does the smaller plan sometimes cost more?

Try a 5% miss on both toggles — the $64M conservative plan shows a bigger shortfall than the $106M full build-out. That's because the shortfall depends on the cushion, not the debt size: the full build-out's revenue projection runs well above its payments in most years, so a small miss stays inside the margin, while the Port sized the conservative bonds so tightly that coverage sits near 1.0× in almost every year — a small miss punches through in twenty years at once. At large misses it reverses, because the bigger plan simply has more debt to cover.

Where this page is conservative toward the Port

Two adjustments cut in the Port's favor, and it's worth naming both.

1. Washington levy rates are budget-based, so a miss partly self-corrects. Taxing districts set a budget, and the rate is whatever it takes to raise it. If the projected value never appears, the rate rises — so the value that does appear is taxed a little harder. This page holds the Port's projected rates fixed, which overstates the shortfall. Not by much:

So the correction is real but small — a few points, never the story. And it has two limits worth understanding: statutory rate ceilings ($1.50 for fire districts, $0.45 for ports, $5.90 aggregate) cap how far rates can climb, and the correction works by shifting the burden onto every other property owner in the district. It doesn't create money. It moves it onto your bill.

2. The "grows over time" model is back-loaded. It starts at 0% in 2027 and widens in a straight line to 2051. Real construction risk is front-loaded — it lands in 2027–2035, which is exactly when coverage is thinnest (1.02× in 2030, 1.04× in 2033). The ramp understates risk in the years that matter most.

Cutting the other way: the forecast counts real property only and excludes servers and equipment, which the Port fairly calls conservatism. But a building that is simply never built doesn't self-correct at all, about 59% of the projected new construction has no signed tenant, and idling or tax delinquency can interrupt collections entirely.

"The $106M is only a ceiling — we can borrow less"

This is the strongest answer the Port has, and it's true: only Series A ($42M, December 2026) is near-term. Series B, C and D get sized in 2029, 2032 and 2035 against updated projections, and the Port has already modeled a smaller $64M version. So why doesn't that settle it?

Because the Port needs two claims at once, and they undercut each other. The legal basis for creating the district is the "but-for" finding — that this private development happens only because the public improvements get built. Put that next to "we can always borrow less," and there are three doors:

1. Build the full plan. $106M borrowed, $183.2M in debt service, coverage at 1.02×. The risk on this page stands exactly as shown.
2. Borrow less to be safe. The Port's own conservative case delivers $52.4M of projects instead of $89.5M — 41% less infrastructure. But by the Port's own but-for logic, less infrastructure means less development, which means less increment, which forces borrowing less again. That's a spiral, not a safety net — and its coverage is worse, 1.01×.
3. Say it's safe to borrow less because the growth comes anyway. Then there is no but-for — and the State Treasurer's review already flagged that Microsoft's development is underway. If the growth arrives regardless, the district isn't financing growth. It's redirecting revenue away from the fire district, the library and the hospital.

Either the infrastructure is necessary for the development — in which case you can't safely build less of it — or it isn't, in which case there's no but-for and no basis for the district. That's the question worth asking.

How the math works

1. Start from the Port's own schedule. For each year 2026–2051, the Port's Final Project Analysis gives three numbers: the bond payment due (debt service), the projected "increment" assessed value (the new taxable value the project is supposed to create), and the tax (levy) rate applied to it.
2. Apply the miss. "Same miss every year" cuts every year's projected assessed value by the dial percentage. "Grows over time" starts at 0% in 2027 and widens in a straight line until it reaches the dial percentage in 2051 — modeling a forecast that drifts further off the longer it runs.
3. Compute revenue. Reduced assessed value × that year's levy rate ÷ 1,000.
4. Compute the shortfall. Wherever revenue is less than that year's bond payment, the difference is what the Port must cover from its general fund, reserves or levy. The chart and totals simply add those gaps up.
5. What the model holds fixed. The bond schedule doesn't change when you move the dial — all four series still issue on time. That's deliberate, so you're comparing against the Port's actual published plan. In practice, at large misses the Port would resize the later series; see "The $106M is only a ceiling" above for why that trade isn't free.

What's behind the forecast

The Port's revenue model counts real property only — buildings and land — and excludes all personal property (servers and equipment). Projected new construction totals $3.6B (2025 dollars), growing to a $10.1B increment by 2051 with assumed 4.6%/yr appreciation. Of that $3.6B: about 41% is known projects (Microsoft and Sabey data centers), 41% is speculative future data centers with no signed tenant, and 18% is speculative other industrial. The Port's own "conservative" Appendix C scenario — offered here as the second toggle — removes the speculative data centers, cutting 25-year revenue about 37%, and still leaves coverage near 1.0×.

Helpful reference points for the dial: the Port's own conservative case is roughly equivalent to a 37% miss concentrated in the speculative bucket. A single large known anchor idling has been sized at roughly 25–30% of new construction; all data centers together are ~81%.

A word about that 4.6% appreciation rate

It's a fair assumption, and this page doesn't dispute it. Washington assessors revalue property every year at full market value, and a tax increment district captures all of that growth above its frozen starting line — so the appreciation really is close to automatic. It's also not aggressive: the Port district's own assessed value ran from $16.2B in 2022 to $21.8B in 2024. Nobody should expect to win an argument that 4.6% a year is too optimistic for North Central Washington.

But appreciation multiplies value that exists. Compound 4.6% on a building that was never built and you get nothing. As the box at the top of this page shows, about 99% of this forecast is new construction — the automatic part is the small part. The appreciation rate isn't the risk. The construction is.

Check the work

The full spreadsheet behind this page — the Port's schedule, every formula, the flat-miss and gradual-miss models, and a "built-then-idled" scenario — is here: download the Excel workbook. Change the yellow cells and watch it recompute. Sources for every underlying figure are on the sources page.