Downtown Taxing District Relying On Good Will With Voluntary Billings Lawsuit Prevents Collection, But Some Paying Up And Saying Spend It

FOR THE RECORD: Saturday, August 19, 1995 CLARIFICATION: City officials want Spokane business and property owners to pay their first bills for a downtown taxing district even though the money can’t be used until a lawsuit is resolved. A Friday article may have implied otherwise.

The first bills are out for a taxing district hailed as a way to revitalize downtown Spokane.

Property and business owners might not know it by reading the bills, but paying up is voluntary for now.

A lawsuit filed in June aims to block the district, leaving recent moves to collect payments in legal limbo, said Stan Schwartz, a city attorney.

“They are bills, but the city isn’t engaging in collection activities until we resolve the lawsuit,” Schwartz said.

The council formed the district in June. Two days later, attorney Steve Eugster filed a suit challenging its legality.

Similar to taxing districts used to build sewers or pave roads, the Parking and Business Improvements Area is expected to raise $675,000 a year by taxing downtown businesses, organizations, buildings and properties.

The money is slated for improvements such as more security, better lighting and widespread advertising.

Eugster’s suit against the city alleges the taxing district violates the state constitution. It challenges the district in several areas, including the way assessments are levied and how the revenue would be used.

Eugster asked for but hasn’t received a judge’s order blocking assessments. But “in fairness to business owners, we suspended collection,” Schwartz said.

Not forcing payment is a smart move by the city, Eugster said. “They’re exposing themselves to some liability by collecting the tax if it proves to be invalid.”

Some merchants and property owners are upset about being asked to pay the bills before they have to. At the other extreme, some are paying now and signing waivers stating they won’t ask for their money back even if the suit succeeds in blocking the district.

The waivers allow assessments received by the city to be used by the district, said Karen Valvano, president of the Downtown Spokane Partnership, which proposed the district.

Payments made by business and property owners who don’t sign the waiver will be held by the city until the suit is over, Valvano said.

“We’re anticipating we’ll be successful,” she said. “This is pretty much a nuisance case against us.”

Joe and Maury Nollette, owners of Java City, a downtown espresso shop, say nothing written on the bill indicates payment is voluntary. In fact, it warns of interest and late charges for delinquent payments.

“No way does it look voluntary,” Maury Nollette said.

“So, if we pay it and (the city) loses, do we get back the same interest?” Joe Nollette said.

No, said City Manager Bill Pupo, adding there’s no extra money in the account for interest payments.

If business or property owners withhold payment and the city wins the suit, they would receive another bill. It is unclear whether they would be asked to pay interest and penalties, Schwartz said.

, DataTimes