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University tax district will fund improvements

A new district will siphon new tax revenues for 25 years from in and around the University District in Spokane to pay for pedestrian improvements, beautification and other projects.

The Spokane City Council on Monday unanimously approved the creation of the Spokane University District Revitalization Area.

Creation of the district won’t raise taxes. Instead, 75 percent of city property taxes generated by new construction, and all city sales tax growth up to $650,000 a year from within the boundaries, will be set aside to pay for public infrastructure. The state also pledged to give $250,000 of its sales taxes to the district.

Rick Romero, Spokane’s internal auditor, said over 25 years the district could raise about $6 million from state taxes and $15 million from city taxes. City officials say the project will create a funding source that will help attract matching federal grants and pay for long-desired upgrades to the neighborhood. The first money generated by the district will pay for beautification and pedestrian upgrades along Division Street to act as a gateway to the city from the Interstate 90 off-ramp.

The district covers 770 acres generally between Interstate 90 and Sharp and Browne and Hamilton.

The concept is similar to tax-increment financing boundaries created for the Iron Bridge development on Trent Avenue and the proposed Kendall Yards project in West Central Spokane. Another project, the River District in Liberty Lake is on land owned by Centennial Properties, which is a subsidiary of the Cowles Co., which also owns The Spokesman-Review.

Some of the infrastructure that will be paid for with the tax money normally would have been bought by developers of adjacent projects.

Critics of similar tax districts argue that the programs subsidize developers who would have built their projects without the tax assistance. There was no opposition to the University District tax plan, however, at Monday’s hearing. The first private project expected to receive assistance is a hotel and restaurant development on the site of the old Burgans Furniture.

Officials argue that paying for those public improvements, like street and sidewalk upgrades, will boost tax revenue in the long-run.

“This gives us one more tool to drive private investment in the university district area to help catalyze economic growth,” Mayor Mary Verner said.

Gerald Dicker, of GVD Northwest, said the firm expects to invest $15 million into the Burgans site. The district could reimburse the company about $800,000 for public infrastructure improvements it makes on the site.

“It’s very important to have it because the economic conditions make the project very difficult,” Dicker said.