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Kendall Yards may seek wider subsidy

Wed., May 30, 2007

With one tax subsidy secured, Kendall Yards developers and the city are considering another.

The upscale commercial and residential project in downtown Spokane may seek a portion of sales tax revenue generated within the development as well as increased property taxes, but probably not this year, city officials say. The money would be used for site preparation such as roads and utilities.

Earlier this month, City Council approved the creation of a “tax-increment financing” district expected to pay for about $25 million of the $43 million needed to build infrastructure on the north bank of the Spokane River.

Kendall Yards Project Manager Tom Reese said officials are considering whether to apply in a state competition to earn a “LIFT” – or “local infrastructure financing tool” designation.

“We are looking at our options to use LIFT, ” he said. “We’re not in any way, shape or form reconsidering our use of TIF.”

Cody George, Spokane’s economic development adviser, said the city is unlikely to apply in the state LIFT competition this year. Applications are due next month. Another competition will be held in 2008.

“It’s not our intent to do it in the near future,” George said. “But we’ll keep our options open for the best tools available.”

Earlier this year, the Legislature amended the LIFT law, which could generate larger subsidies than tax-increment financing, partly with Kendall Yards in mind. But City Council would have to erase the tax-increment financing district it approved in May and create a “revenue development area” – the designation required for LIFT, said Matt Ojennus, LIFT program manager for the Community Economic Revitalization Board, which selects projects for the state subsidy.

Spokane’s Chief Operating Officer John Pilcher said the city used tax-increment financing because that was the only tax incentive program available at the end of last year, when officials started the work to create the district.

The city is studying changes in the law, Pilcher said. “We’re still trying to make sure we understand it well enough to make sure we effectively use it. We’ll sure look at how LIFT can apply to this project or any other.”

The LIFT program allows a site to collect as much as $1 million a year in state aid for 25 years if local governments provide matching funds and the state receives at least that amount in new taxes, said Miki Gearhart, a Department of Revenue tax policy specialist. The total subsidy, which could include a mix of state sales tax, and local sales and property taxes, could pay for all of Kendall Yards’ infrastructure.

Under the arrangement approved May 14 by City Council, Kendall Yards is eligible only to receive extra county and city property taxes generated as property values rise on the site.

Before this year, only the River District Project in Liberty Lake was eligible for the LIFT program in Spokane County. But the law was amended with Kendall Yards in mind so two districts could win support, said state Sen. Chris Marr, D-Spokane.

“We did not want to set up a tug-of-war,” Marr said.

Most of the property in the Liberty Lake project is owned by Centennial Properties, which is owned by the Cowles Co., which owns The Spokesman-Review.

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