State law (RCW 82.02) allows cities to assess TIFs for new development to collect a proportional share of the cost of City investment in the transportation system. Bellingham has been assessing TIF for new development since 1994 (BMC 19.06). The TIF base rate changes each year based on the amount of funding invested in construction of the citywide transportation system during the previous six years and the funding programmed for investment in the current Six-Year TIP. Transportation planners calculate TIFs based on project-specific impacts.
In 2010, Public Works transportation planners created the Urban Village TIF Reduction Program through the collaborative City-Sustainable Connections "Ten in '10" initiative to provide regulatory incentives for more sustainable development. The Bellingham City Council adopted the Urban Village TIF Reduction Program in February 2011 to further promote comprehensive plan goals for mixed use urban infill, multimodal transportation, and financial incentives for new development in designated Urban Villages. Bellingham’s Urban Village TIF Reduction Program received the 2012 American Planning Association/Planning Association of Washington Award for Transportation Planning in Washington State.