French reports conflict of interest

Spokane City Councilman Al French acknowledged this week that he has an apparent conflict of interest in promoting a change in Spokane’s tax exemption for apartments and condominiums that would benefit one of his private clients.

French said he disclosed the potential conflict of interest at two recent City Council meetings.

On Monday, he said he has decided not to vote on an amendment that would expand the area where the exemptions are allowed, including a dozen lots owned by his client, William Butler.

Butler has proposed building a dozen townhouses on a steep pine slope on the south side of Clarke Avenue a few hundred feet from the Spokane River in Peaceful Valley. Butler revealed the plan and his professional connection with French during at least one recent neighborhood meeting, according to people who attended that meeting.

French confirmed that he has been working as the architect for the Butler project, which would require more than $1 million in earth work and shoring walls because the land is on a steep slope, French said.

“I don’t want to run the risk of a conflict,” French said in an interview.

Barbara Morrissey, co-chairwoman of the Peaceful Valley Neighborhood Council, said French clearly has a conflict of interest and is pushing for expansion of the tax-exemption area to benefit his client.

“I think it’s a personal conflict of interest, but I know Spokane does this good-old-boy stuff,” she said. “I think he snuck it in.”

Councilman Bob Apple said French is at risk of violating the city’s ethics code. He said other council members should take a careful look at the French amendment.

“I would hope the rest of the council that was duped would find the impropriety here,” Apple said. “I smelled the stink down at City Hall.”

On Oct. 8, French proposed an amendment that would increase the area along the ridge above Peaceful Valley where multifamily projects could qualify for eight-year property tax exemptions. The area would be expanded to include lots along Clarke Avenue – lots that previously were not eligible for the tax exemption. Those include Butler’s property.

The amendment passed on a 5-2 vote with Council President Joe Shogan and council members French, Nancy McLaughlin, Rob Crow and Brad Stark voting yes. Council members Bob Apple and Mary Verner voted no.

The amendment will be the subject of a public hearing next Monday at 6 p.m. in Council Chambers. The council could reconsider the amendment at that time. If it does, French said he will recuse himself from a second vote on the amendment.

The multifamily tax exemption program was approved by the state Legislature as a way to draw new housing and investment to economically depressed areas. In 2000, the City Council enacted the exemptions for a six-year period, which expired last year, but is in the process of being continued to 2012. Now, the council is revising the target areas where the exemptions are allowed, including the downtown area and commercial centers and corridors.

The program became controversial a few years ago when a group of investors, including Don Barbieri, took advantage of the tax break to build the high-end Upper Falls condominiums adjacent to Riverfront Park and the Flour Mill, overlooking the Spokane Falls.

So far, the council has approved 1,070 units for the tax exemption, of which only 26 percent are considered low-income units and 23 percent are worth more than $500,000.

Part of the idea of the exemption is to draw more upscale residents into urban areas to support shops, restaurants and other services. Investors have reported that their projects were made possible by the tax savings. Council members have said the tax incentive actually increases income to the city because the projects pay sales taxes on construction and the new residents pay utility taxes.

Spokane planning staff recommended removing the ridge above Peaceful Valley from the tax-exemption program because it no longer qualified under the criteria of providing housing in economically depressed areas as required in state law, said Susanne Croft, a planner with the city’s development incentives department. Peaceful Valley and Browne’s Addition both have seen substantial gains in property values and the area is filled with multifamily locations.

Morrissey said Peaceful Valley residents are organizing their opposition to the French-sponsored expansion.

French said that while he will not vote on the amendment that he originally proposed, he will vote on the broader ordinance when it comes up for approval.

Mike Piccolo, assistant city attorney for the council, said he advised French to recuse himself on the amendment vote, but told him that voting on the broader ordinance would not be a conflict. He also said that French should disclose his involvement with Butler in any case.