Kaiser seeks county funds

Kaiser Aluminum officials are asking Spokane County to help finance a $3.6 million tunnel under the North Spokane Corridor to provide access to the company’s Mead property.

The tunnel would link the 412-acre site to Market Street on the east and continue through the Kaiser property to Highway 2 on the west. It’s all part of a plan to sell the site – where hundreds of people once worked on the pot lines – as a mixed-use property open to residential, commercial and light industrial development.

“Kaiser could not do that tunnel on its own,” said Bob Burke, a consultant working with the company.

Spokane County officials said some options already have been discarded.

“One was that the county would just do it. We ruled that out pretty quickly,” said Commissioner Todd Mielke.

Mielke suggested that Kaiser utilize the county’s road improvement district process to pay for the tunnel over time using bonds. That would give Kaiser, or a subsequent property owner, 10-15 years to pay for the project.

The road improvement district process is typically used by homeowners seeking to pave existing county roads. An area for the improvements is established and property owners within it vote on the district. If it passes, the roads are paved and property owners are assessed a portion of the cost. The county usually subsidizes the districts by about 15 percent.

In Kaiser’s case, there would be just one voting property owner. The county could choose not to pay for a portion of the project in this case, said County Engineer Ross Kelley.

Businesses and developers more typically use tax increment financing to pay for such projects, but that’s not an option in this case. Kaiser’s bankruptcy status would make it next to impossible to get a line of credit to facilitate tax increment financing.

The company filed for bankruptcy protection in 2002, with debts of $3.1 billion.

That filing could even impact the bonds for a road improvement district, said County CEO Marshall Farnell.

“You’re still in bankruptcy. I don’t know how the market will look at that,” said Farnell.

Should Kaiser be unable to sell the property or pay its annual assessment for the project, the site would be turned over to the county.

“They’re taking the risk,” said Mielke.

Kaiser needs more than the road to sell its property for residential and commercial development. It also needs commissioners to approve a plan to change the property’s zoning from heavy industrial to mixed use.

Judging by commissioners’ responses to the company Monday, that appears likely, even though hearings haven’t been held yet.

Both Commissioners Mielke and Mark Richard referred to the site as a mixed-use property, though Commissioner Phil Harris reminded the Kaiser group that the plan still needs to go through the county’s comprehensive plan amendment process.

Changing the zoning to mixed use would be good for the county because it would encourage commercial and light industrial development, said Mielke.

“It will increase development in the county, and with it the tax base,” said Burke of changing the zoning. “This property is probably going to sit dormant for some time as a heavy industrial use.”

But that zoning change probably won’t be considered until the end of 2006, too late for tunnel construction.

The Washington State Department of Transportation has told Kaiser it must complete the tunnel prior to North Spokane Corridor paving in 2007. That means tunnel construction would have to begin by fall 2006.