New Taxing District May Pay Dividends Windfall For Residents Depends On Fortunes Of Riverbend Commerce Park

If city officials are right, a new taxing district around Riverbend Commerce Park ultimately will lower everyone’s taxes.

The success of the plan depends on the amount of development the district draws.

A look at existing special taxing districts shows mixed results.

One district, located around Seltice Way, has had great success, city officials say. It helped to land Harpers, a furniture manufacturer employing more than 500 people.

The other district, located downtown, still is waiting for much of the development city officials anticipated when they formed their plans for it a few years ago.

“There’s just not a lot going on (in the downtown district),” said Jerry Basler, Post Falls urban planner.

Starting this year, the Riverbend district will use the same controversial funding method the other two districts use: tax increment financing.

It involves freezing the amount of taxes local taxing agencies receive from an urban renewal district - an area the city has determined is deteriorating or needs help competing with nearby cities. Taxes in the district will continue to increase as the district becomes more developed, but the increase in taxes will be used to pay off bonds for the improvements.

Pat Leffel, project manager for the Riverbend Commerce Park, says tax increment financing will be key in making the park more competitive with other areas - especially cities in Washington.

“It allows us to get infrastructure in the ground which you normally wouldn’t have,” he said.

In an early plan for the downtown district, the urban renewal commission estimated tax increment financing would generate $368,296 for the district by 2004, when the financing would end.

But without as much development as they planned, city officials are toning down their estimates.

“We certainly aren’t getting that (amount) because we have to have development to have the funds come in,” said Karen Streeter, city councilwoman and chairwoman of the urban renewal commission.

By the time 1997 taxes are collected, the downtown district will have earned $165,478, according to county auditor records. That money will help pay for road work on Third Avenue such as curbs, gutters and, if there’s enough left over, sidewalks.

Basler is preparing new estimates for the cost of the improvements because of the slow pace of development.

The West Seltice District will have earned $1.67 million in tax increment financing since it began collecting the revenue in 1994, according to county auditor records.

The urban renewal commission has used $1.68 million to resurface part of Seltice Way and to help pay for other road improvements when Harpers came to town. The Idaho Transportation Department, which pitched in for the road improvements near Harpers, will reimburse the commission for some of the money. City officials do not yet know how much, Basler said.

This summer, the commissioners plan more improvements to the Seltice Way district, including street lights and a bicycle and pedestrian path.

Proponents of tax increment financing say Harpers has played the largest part in making the West Seltice District a success. They say the company chose the Post Falls location in part because of tax increment financing.

Harpers will pay $503,388 in property taxes for 1997, $496,012 of which will go to the coffers of the urban renewal district.

When the renewal program ends, all of the property tax money generated each year from Harpers - and from other developments in the West Seltice district - will go to the regular taxing agencies like the city and the county.

The improvements the Riverbend district will bring exemplify the kind of benefits tax increment financing can deliver to attract companies, said Jim Hammond, city administrator.

There, the funding will pay for an interchange linking the Riverbend Commerce Park area directly to I-90, bypassing the outlet malls drivers now must pass through to get to the park.

In the Riverbend District, plans have forecast $3.89 million raised in tax increment financing to pay for the interchange and other street improvements.

The University of Idaho is planning to build a branch campus in the Riverbend District sometime this spring, and Streeter expects other “clean” industries to follow.

The risk of tax increment financing, however, is that taxpayers all over Kootenai County could pay more in the meantime, said Alan Dornfest, a policy supervisor for the state tax commission.

They could indirectly pick up the tab for the some of the improvements because they will help make up for the districts’ share of the tax base.

“The dollars get spread differently. They get paid by everybody else,” Dornfest explained.

And that’s the problem, say critics, many of whom have called tax increment financing nothing more than corporate welfare. They say wealthy companies don’t need government handouts, especially at the expense of taxpayers.

“For at least 15 years (the duration of the Riverbend Urban Renewal District), everyone outside the city limits will be making up in one way or another for lost revenues that will be channeled into Post Falls’ Urban Renewal Project,” county Commissioner Ron Rankin charged in a letter to the Post Falls Urban Renewal Commission. He also is a member of the Kootenai County Property Owners Association, which opposes tax increment financing.

Overall, however, taxes for Post Falls residents have gone down.

Since 1994, when the first urban renewal district - West Seltice - began using tax increment financing, the levy rate on property for taxpayers living in Post Falls has dropped by about .007.

But even if taxing agencies have to increase their levy rate now, over the long term, they will benefit, Leffel said.

“The benefit is, at the end there is substantially more in their revenue,” Leffel said.

For example, empty land in the Riverbend district generates very little tax revenue. But adding a building to the land can increase the amount it generates in taxes a thousandfold.

So with the Riverbend Urban Renewal District beginning this year, city officials are faced with a $3.8 million question: Will using tax increment financing in the Riverbend District pay off?

They’ll have to wait until the renewal program ends in 2012 to find out.

, DataTimes ILLUSTRATION: Map: Urban renewal districts