May 14, 2007 in City

Nonprofits wary of Kendall plan

By The Spokesman-Review
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Background and the latest updates

A sentence in a city document giving notice about potential tax subsidies for an 80-acre development near downtown has some neighborhood leaders thinking River Park Square.

Spokane City Council tonight will consider the creation of the tax-increment financing district for Kendall Yards and surrounding land that extends north to Boone Avenue and farther north on Monroe and the Maple-Ash corridor.

If approved, most new city and county tax money earned in the district as values increase will be allocated to pay for infrastructure like sewers, water mains and sidewalks.

The “notice of hearing” about the district lists Community Development Block Grants among “potential funding sources” to pay for public infrastructure.

And that scares neighborhoods and nonprofit agencies that use federal block grants to assist the poor and help in the upkeep of low-income areas.

Tom Reese, Kendall Yards project manager, said Kendall Yards does not want block grants used in the development.

And city officials are adamant that the money will not be used in Kendall Yards. They say it was included in the document because some block grant money already had been allocated in the older part of the West Central neighborhod for some projects that could also get funding from the tax district.

About $2.5 million could be generated in the next 25 years to pay for infrastructure upgrades outside of Kendall Yards, city leaders have said.

The city could pay for improvements upfront by selling bonds, though that decision has not been made. Besides the tax revenue generated by the district, the city could use block grant money to pay off those bonds.

A list of potential projects includes updating the street, sidewalk and lighting along West Broadway, which some believe would help stimulate small businesses.

Spokane Chief Operating Officer John Pilcher said even if the district is approved tonight, any Community Development Block Grant expenditure still would have to be approved by the Community Development Board and City Council.

“This provision doesn’t allocate any dollars whatsoever,” Pilcher said. “It would still have to go through the annual process.”

But that hasn’t drowned the fears of John Downes, vice chairman of the city’s Community Development Board.

“Everyone I talk to remembers River Park Square,” Downes said.

In 1998, the city pledged its Community Development Block Grants as collateral against a $22.6 million construction loan for the downtown mall. The city’s block grant funds were tapped by more than $1.5 million in 2004 to make up for shortages in loan repayments from the mall developer.

The funding later was restored when the city and mall settled lawsuits.

River Park Square is owned by the Cowles Company, which also owns The Spokesman-Review.

Spokane County Treasurer Skip Chilberg, a critic of tax-increment financing, said he would have concerns about the block grants even being connected with the tax-increment district in the older neighborhood.

That’s because the money could be shifted to infrastructure that would be less likely to assist the poor, he said.

“I think they have some explaining to do,” Chilberg said.

Pilcher said the TIF was extended to include older neighborhoods so the tax tool could be used to improve areas outside Kendall Yards.

“This makes a much stronger TIF district that benefits neighborhoods, not just the developer, and that’s good public policy,” Pilcher said.

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