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April 29, 2011 in City
Bidding issue complicates Kendall Yards agreement
Developer says public process would impair project
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Background: Browse previous coverage and find the latest updates on Kendall Yards at spokesman.com/ topics/kendall-yards.
Developers of the highly anticipated Kendall Yards project violated an agreement with the city that allows the project to receive tax subsidies to build streets, sewers and other infrastructure.
Greenstone Corp., which began building homes in Kendall Yards last year, constructed about $1.3 million in infrastructure projects without seeking public bids. The bid requirement was part of the 2007 deal with the City Council allowing Kendall Yards to recoup an estimated $12 million or more in property taxes collected on the land over 25 years to pay for public infrastructure.
Greenstone is asking the city to amend the rules so that they can be reimbursed for projects built or under construction.
Jason Wheaton, Greenstone’s president, said the public bidding process would have delayed the project by months, perhaps a year. By moving when Greenstone did – soon after acquiring the project from developer Marshall Chesrown – 40 residential units already will be occupied by the end of June, he said.
“It was important to us to get the project moving,” Wheaton said. “We took that risk understanding how important momentum of the project is.”
Until Greenstone took over the project, momentum had been lagging – to say the least. Developers have proposed projects for the former railroad land for decades, but no homes or structures were completed until Greenstone took over.
Most City Council members say they’re open to the request, although some say they should have been consulted before work began without public bidding.
“The normal course of business would be that they would come to us and request permission in advance,” Spokane’s Chief Financial Officer Gavin Cooley said in response to questioning from council member Amber Waldref. “It is a somewhat awkward position for the city to be when this comes forward in this fashion.”
Councilman Jon Snyder said Kendall Yards is important to the city to improve the tax base and slow urban sprawl.
“The city is quite rightfully trying to look really hard at how we can make infill housing projects like Kendall Yards as successful as possible,” Snyder said.
Supporters of tax-increment financing for the project argued it is helping generate growth, cleaning up a polluted site and generating taxes in the long term even if some of the taxes are diverted to pay for infrastructure that will be publicly owned anyway. Opponents say the concept diverts tax money to developers for projects that they may have built even without the subsidies.
If the council rejects the proposal, Cooley said, the city likely still would get ownership of the infrastructure without reimbursing the projects that didn’t go through a public bidding process.
Under the 2007 deal approved for Kendall Yards’ tax-increment financing district, 75 percent of increased city and county taxes generated by the site will be siphoned to pay for infrastructure like sewers, streets and water mains needed to serve homes and businesses on the land. School taxes aren’t affected. If taxes collected from the district are lower than predicted, the developer covers costs.
Kendall Yards officials say they have complied with prevailing wage requirements under the 2007 agreement.
Greenstone owner Jim Frank told a City Council committee earlier this month that in exchange for allowing Greenstone to skip public bidding, he is willing to give the council more authority over whether certain projects will be reimbursed. Frank said Greenstone wanted to skip public bidding to “streamline the design and construction process.”
“That part of it is really important to us because it allows us to act more quickly to meet the needs of the market,” Frank told the council. “If every project that we had to do had to go through a public design process and a public bid process we’d never get anything done, to be honest with you.”
Closing Geiger: Wise or worrisome? 
Dazzeetrader11 on April 29 at 12:48 a.m.
Oooooooooops to Verner, the Council and to Frank.
SpokaneLiberal on April 29 at 7:01 a.m.
This Huppins ad is SO ANNOYING!! Why would they make an ad that blocks 2/3 of the screen and cannot be closed. It is counter productive if you both make your site unusable and annoy potential customers so much they now are annoyed at your business. . . .
Spokane_Citizen on April 29 at 7:32 a.m.
Normally, Daisy would rant about taxpayer funded entitlements, but in this case it’s alright since the benefit accrues to a rich man.
SpokaneCan on April 29 at 7:41 a.m.
I wish people would realize that Greenstone is currently running the City of Spokane. They could do whatever they wanted right now and the folks inside City Hall would let it happen. All in the name of Economic Development.
ZagChuck on April 29 at 7:54 a.m.
@ Spokane Liberal.
Something we can agree on, this annoying popup ad needs to be gone.
I think I’ll call huppins and ask them request it be removed. My guess is they’ll be more accepting of the information than the website editors…
SpokaneLiberal on April 29 at 8:04 a.m.
I wrote Huppins an email about it, and sent one to the Spokesman. It is just irritating to no end.
Spokane_Citizen on April 29 at 8:26 a.m.
Well…..your comments must have worked….the Huppin’s ad now has a ‘close’ button on the right side!
johno on April 29 at 8:28 a.m.
“We took that risk”? You broke your promise and breached your contract. The reason you have bids is to assure there is no corruption and insider dealing.
Ninch on April 29 at 8:30 a.m.
So what is your definition of a “rich man?” BTW: Greenstone is a successful progressive development corporation that has been working with the City of Spokane for decades toward quality projects… and at no time did Greenstone ever run the City of Spokane.
Disgusting how people would rather let existing land and buildings in Spokane remain vacant than let a developer upgrade and make a profit doing it. This class warfare in Spokane has been going on for quite some time and helps no one. Why does a certain group of people ALWAYS denigrate investors (aka risk takers) but never deem to provide any actions or projects that improve Spokane? Attack, attack, attack others… but no solutions coming from the attack dogs.
Ninch on April 29 at 8:35 a.m.
Public bids do not assure that there is no corruption… it only assures the “lowest” bid which may not mean quality and often costs more because of all the change orders. Public bids are required if City of Spokane headed up the project, but Greenstone was in the lead. The only issue is that Greenstone had agreed to public bids in the Kendall Yards agreement, which can be modified. No violation of state or city law here regarding public bids.
BTW: Are you (johno) accusing Greenstone of corruption and insider dealing?
SpokaneCan on April 29 at 8:38 a.m.
@ Johno - if you are within the walls of City Hall, you would know how much control Greenstone has over this city right now. And, to make it clear, I am happy for what they are doing at Kendall Yards (albiet half of it is a cheap product that will fall apart in 10 years).
Ninch on April 29 at 8:56 a.m.
Greenstone does not do cheap projects. Why is everyone denigrating a reputable developer and construction company? Hint: Greenstone would not be in business for all these decades if they built cheap products that will fall apart in 10 years.
And please explain how Greenstone controls the city. This issue will be decided (as others already were) by City Council in a public venue. Quit the lies.
Disclosure: I have no connection to Greenstone, but I do have extreme disdain for blowhards that promote lies and make false accusations.
de3 on April 29 at 9:00 a.m.
Buyers of buildings in the Kendall Yards development pay no property taxes for up to 12 years. That means their city services are funded by everyone else. This is right on their web site.
Kendall Yards does receive taxpayer subsidies.
SpokaneCan on April 29 at 9:03 a.m.
@ Ninch… you have no idea. truly, you don’t.
jessiepn on April 29 at 9:15 a.m.
Ninch wrote: “Greenstone does not do cheap projects.”
Excuse me? Ninch, have you actually looked at what they’ve built so far? If you don’t think that the homes Greenstone has constructed along Bridge Avenue are cheap-looking, then I don’t know what constitutes cheap in your view.
I live in the West Central neighborhood, and I’m truly discouraged. I thought that the Kendall Yards project was going to help reinvigorate what is a truly unique and historic neighborhood of beautiful old homes (many of which have been shabbily treated), tree-lined streets, and proximity to the river corridor. What I’ve seen of Greenstone’s treatment of the project so far saddens me, and I’m a long way from the only neighborhood resident who feels this way.
DickAdams on April 29 at 9:47 a.m.
SpokaneLiberal on April 29 at 8:04 a.m.
I wrote Huppins an email about it, and sent one to the Spokesman. It is just irritating to no end.
I agree. The spokesman doesn`t seem to care. Money for the ad takes president. Usual for the SR.
Bruce (aka thatoneguy) on April 29 at 10:13 a.m.
“It was important to us to get the project moving,” Wheaton said. “We took that risk understanding how important momentum of the project is.”
Taking a risk means you know things might not turn out in your favor. I know it’s ridiculous to expect this to happen, but Greenstone should just suck it up. They will still make plenty of money out of this deal. (Of course there is no such thing as enough money; I know that.) This is like doing skateboard tricks on a railing and then asking for your wrist to be un-broken after you crash & break your wrist.
Bruce (aka thatoneguy) on April 29 at 10:16 a.m.
P.S. Adblock Plus, guys. It’s an add-on for Firefox, IE, and Chrome. I have never seen the ad you’re talking about. (the Internet Explorer version doesn’t catch quite as much but it’s waaaay better than nothing)
CougarGold on April 29 at 10:34 a.m.
thatoneguy: Greenstone took the risk for probably good reason. Taking the risk doesn’t mean they’ll just swallow hard and accept the outcome. It means they did the work and are now asking for the reimbursement, fully understanding they may not get it; hence the risk. I don’t expect that they’ll just roll over. The cost for the infrastructure is on them, not the City. The caveat for the tax increment financing was to put the work out for bid, not that the City would actually pay for it.
Why the public bid requirement was in there in the first place is an interesting question. I suspect the thinking was that if the City was deferring taxes, they wanted all contractors interested in the work to have a shot at it. But the actual cost of the it is on Greenstone, not the City so that segment of the discussion is really very separate from the tax implication and should not really of concern to the average taxpayers, only those who are in that line of work.
That’s my take on it.
greenlibertarian on April 29 at 10:53 a.m.
Pop-up, pop-over ads?
What are you people, Luddites?
ikoiko on April 29 at 11:17 a.m.
Greenstone knew what it did was not legal and now they want the tax-payer to pick up the tab so that they can pocket millions. The city of Spokane should refuse this “offer” and sue Greendstone Corporation for their illegal activities.
zelda on April 29 at 11:54 a.m.
That’s the way it’s done around here. You just cheat. And you do it in the name of progress.
Dazzeetrader11 on April 29 at 1:22 p.m.
I’d like to be clear on this. Greenstone builds crappy cheap homes. Nobody knows the inside dealings with the US bank, Frank and what happened all throught the city administration.
Deals were made. Big deals with little risk to Greenstone. Much of the work, as detailed in this article will be paid for by the public who will never make a dime from the development. The Taxpayer just doesn’t know it yet. Verner did this to her own citizens.
Greenstone with forthought.broke the law and the rules of building on the public’s dime. Heck, they admit they did it.
THIS is just wrong. So, I do think this should be investigated and prosecuted if the wrongdoings are indeed wrong.
It’s a great deal of money debt that Cooley (no matter what he says here) and Verner foisted on the public in order to favor Greenstone. It’s one thing if a developer risks his own cash. It’s entirely another if somehow the public funded this nonsense.
Daisy favors the rightness of things. This one has been a quiet shady deal from the beginning. Hession did this with the Chesrown group and Verner continues it. I don’t like it.
Am I clear enough for you lefties? The public should NOT have to pay for a parking garage nor should it be chipping in to arrange a Greenstone profit. Daisy’s done lots of this type of thing. Daisy doesn’t take the public’s money. Verner, Frank, Cooley and Coucil have quietly set this up. Verner should be booted……..Cooley shouldn’t even have his job. Frank and his group are just making money. To be clear, it’s Verner and Cooley ( who allegedly work for the public) who have abused the rules. Those two should be gone and this project stopped until this is sorted out. Look for Snyder, Rush etc to continue to find a way to move this project forward. At least Waldref asked the right questions…to her credit. Why stopped? Because abuse of the taxpayer will continue unless it is. Remember Verner’s “transparency”? Ahem. It’s not present on anything. If I was Spokane, I’d be outraged.
zelda on April 29 at 2:34 p.m.
This is a decidely peculiar article. Nowhere does it explain how this bidding violation came to light. How was it discovered? Who let the cat out of the bag?
The “anti” position gets one sentence . The rest of the article sounds like a press release from the developer. Rules just get in the way of “streamlining,” “growth” and “momentum,” don’t they? Kind of like how rules, regulation and the law got in the way of the Bigelow Gulch project.
As for the houses being built at Kendall Yards, from what I can tell some of the homes further into the development plan are shotgun houses. In fact, one of the floor plans for a Kendall Yards shotgun house was the featured floor plan in the Sunday real-estate section of the S-R last year.
DickAdams on April 29 at 5:37 p.m.
If you don`t know who will come out on the short end of the stick, I`ll tell you. The taxpayers stupid.
Dazzeetrader11 on April 29 at 6:08 p.m.
Verner is going to get a lot of “donation” from guess who?
Cohoots……it’s the operant word.
BlindLight on May 02 at 2:10 p.m.
Make no mistake about it. GREENSTONE BUILDS CHEAP HOMES. they are downright disposable. slab on grade grade spec cracker boxes. They are wooden tents or landfill on a detour. not only are they shottily built but they’re downright ugly, my opinion? Sure, but also seems to be popular opinion. it’s a nice already outdated “contemporary”. at first glance one might think Look Walmart is now offering housing. Greenstone has a long legacy of poor development, just look at what they did to liberty lake, once a geographic gem with great potential, now reminds me of the great nothingness from “Never Ending Story” a land of eighties and nineties track homes that all look the same, many of them already in ruin. and the strip malls, trailer lots and light industrial. You couldn’t pay me to live in Liberty Lake, there’s no character there, no flavor, no culture. just a maturing ghetto. How do they get away with it? An uneducated housing market. “It’s new” and this is why people buy. But don’t be fooled it is crap in a land of crap, what happens when new crap becomes old crap? I think we all know the answer to that. So if you want to invest in a home that will depreciate at the same rate as a car, by all means by a Greenstone home, but please do it in liberty lake or the valley don’t bring it to Spokane.
I’m kinda disappointed in John Snyder for stating that this project is good for the community and that it’s a infill project that helps prevent urban sprawl. that’s not true in the least, by not making the most of this project and providing the bare minimum density requirement this is suburban sprawl in an urban area. where are the plazas and public space? where is the quality and character? where is the mixed use, the walkability, sustainability?all those things that make a neighborhood vibrant? They exist only in the developers promotion or the product. So Ninch you think greenstone is Progressive and Reputable. I’m affraid they’ve fooled you too.
SpokaneCan on May 03 at 10:49 a.m.
well said splunker. well said.
this is indeed suburban development in an urban setting. you can’t build single family homes and call it urban. this is in no way infill development.