In the endless carrot vs. stick quandary, there was good news this week for those who favor carrots. As expected, the Spokane City Council approved a property tax exemption for Kendall Yards.
The stick faction may not agree, but the decade-old program under which the tax exemption was authorized is a sound development strategy that has produced encouraging results. It’s especially appealing during difficult economic times that have put a damper on construction.
The nearly 80 undeveloped acres that stretch along the north bank of the Spokane River west of the Monroe Street Bridge have thus far defied the hopes and plans that at least three developers have mapped out for the high-potential area over the years. The latest, Greenstone Corp., expects to build 2,100 dwelling units there over the next two decades, but the council’s 5-0 vote on Monday applied only to the first phase.
That means that 279 units – two-thirds of which will be intended for buyers at or below 120 percent of Spokane County’s median income – will be exempt from property taxes for 12 years. The land itself will continue to be taxed; only the structures will be exempt.
Many people who bought homes without the benefit of such an incentive will, understandably, fume over the inequitable treatment.
But for the most part, the taxes being forgone are taxes that wouldn’t have been collected at all, because without the enticement of a tax exemption, they wouldn’t be built or occupied. The subsidy that does exist in this scheme is the cost of delivering services such as police and fire protection to homes that aren’t generating taxes.
But if the development moves forward as the developer intends, construction of 279 living units will create jobs as well as sales tax revenue, and the close-in residential patterns will invigorate street life in Spokane while mitigating the infrastructure pressures and air pollution associated with urban sprawl.
So far, the tax exemption program has approved 706 living units – worth more than $45 million in development expenditures for the local economy. The earliest of them will start paying their full tax bills in another four years, and the city’s property tax rolls will continue to swell thereafter.
Pass the carrots.