Editorial: Change in utility billing would add sought-after housing downtown

Spokane has a second city within the city.

We walk or drive by it daily, might shop in it, a few call it home. More would, if the city revises the way commercial buildings are billed for utility use. City Council members Steve Salvatori and Amber Waldref are leading a long-overdue effort to do just that.

Their effort would be a boon for the whole city, first and second.

That second city is the many buildings in downtown Spokane, Hillyard, along North Monroe Street and in other neighborhoods that are now or once were commercial buildings: stores, restaurants, even banks. Many remain in use at street level. Upstairs, they’re empty. Many could be redeveloped for low- and moderate-income rentals, but for the way the city bills for utilities.

Commercial buildings have a single water meter, with a basic monthly charge of $56, plus charges based on water and sewer use. If there are residential units in the building, each pays the same charges, a sum that can easily exceed 10 percent of the rent. Those utility bills discourage conversion of former office space and the like into apartments with affordable rents.

Those are the very units for which there is an unmet demand, developers say. Vacancy rates in the downtown area are almost nil, and new units in nearby Kendall Yards quickly fill.

Yet Salvatori, who coined the term “second city,” could identify dozens of under- or unutilized buildings – the Commercial, the Otis, the Norman, the Ridpath, to name a few – that together could provide hundreds of apartments if rents were within reach of the students and millennials, even baby boomers, who like the excitement and convenience of living downtown. The ongoing conversion of the Germond Building across Sprague Avenue from the Davenport Hotel demonstrates the potential.

Converting the upper floors to residences while keeping or restoring commercial uses at street level would generate sales tax and other revenues that would more than offset revenues lost when the few other buildings that are already mixed-use qualify for the break on utilities.

And it would cost the city nothing extra to serve them: The streets, the below-ground utilities, the fire stations and other public safety assets are already in place.

The same holds true in the centers and corridors where the city master plan has tried to encourage growth.

Billing mixed-use buildings for just one meter plus water/sewer use would unlock many of these properties. (Real estate owned by affiliates of The Spokesman-Review is unlikely to qualify.)

Salvatori says the utility break would be limited to existing buildings that have been commercial and would retain some element of commercial activity after remodeling.

Salvatori, who will attend his last council meeting July 7 before moving to Dallas, would like to vote on a resolution endorsing the utility change before he leaves, knowing some code revisions might be necessary to put the new policy into action after he leaves. It would be a great parting gift from him to the first city.