Spokane will borrow about $4 million from itself to pay for improvements near the University District along Division Street.
The money will be repaid in payments of $250,000 a year over 25 years with sales tax money collected in Spokane that otherwise would have been earmarked for the state.
The Spokane City Council voted 7-0 on Monday to issue the bond and to allow them to be purchased by the city’s investment fund, which is made up mostly of money held in reserve for future sewer, water and trash system upgrades.
The council approved the creation of a Local Revitalization Financing district in 2009 for the area along Division adjacent to the University District. Besides the state sales taxes set aside for the area, property taxes also will be earmarked for the corridor. As the value of properties rise beyond 2009 levels, 75 percent of the increased collections of city property taxes will be used for University District infrastructure projects.
City officials say they hope to beautify the area they call a gateway to the city because many visitors arrive in Spokane from the Division Street exit of Interstate 90.
Spokane’s City Charter says that the city is barred from issuing bonds without the permission of city voters. Chief Financial Officer Gavin Cooley said city attorneys determined that the rule does not apply if the bonds are bought by the city’s own investment fund.
He said the city fund will earn about 3.2 percent interest from deal – more than the fund is making on most investments currently.