Taxes sought to help cover Kendall Yards work

Developer Marshall Chesrown is seeking millions of dollars in local property taxes to help cover some of the public improvements needed for his Kendall Yards development on the north bank of the Spokane River.

Spokane City Council members on Thursday were asked to support a plan in which part of Kendall Yards property taxes would be diverted to pay for public improvements such as sidewalks, streets and utilities.

Both city and county property taxes would be used for the improvements, said Gavin Cooley, the city’s chief financial officer.

The project could need as much as $810 million worth of public improvements over the next seven years, and about $20 million would be financed through the expected increase in property taxes on the Chesrown property. The rest of the improvements would be paid by the developer.

Cooley said the total value of city-county property taxes dedicated to the project over 20 years is estimated at $29 million to $43 million and would be used for principal and interest payments on a portion of the project bonds.

“This is a small piece, but an important piece to move this project forward,” Cooley said.

Economic Development Director John Pilcher said the proposal is among potential government incentives that would help make the Kendall Yards project a reality. Chesrown previously received loans for contamination cleanup of the former railroad site.

Spokane’s hearing examiner three weeks ago approved the 80-acre project that could bring some $3 billion of investment, 2,600 residences and 1 million square feet of commercial space to land perched above the river to the west of Monroe Street.

Taxes on the existing property value plus 25 percent of the increased value would continue to go to city and county coffers even with the so-called “tax increment financing” arrangement.

“The property is still going to pay taxes,” said Tom Reese, manager of the project.

Spokane County would organize and approve the district, and the city would enter into an agreement with the county to allow its share of the increased property taxes to go for the public improvements. Council action is expected on Oct. 23.

Officials and an attorney said they are looking at the possibility of tax-exempt bonds.

More than 223,000 tons of contaminated soil was removed from the site under one of the largest cleanups of its kind in the country, setting the stage for development of the large-scale urban village on the long-vacant property. The project was financed with $2.4 million in brownfields cleanup funds that were made available by the federal government and loaned to Chesrown through the state.

Councilman Al French said the city needs to get the project moving.

Later in an interview, he criticized other city officials for not having moved more quickly on the tax-increment financing.

“Why are we waiting until the eleventh hour to make sure we get our ducks in a row?” he asked.

Cooley said there has been no delay, and officials were waiting for the hearing examiner to approve the project and for the appeal period to expire before moving ahead with the plan. They also want to base the financing on 2006 values by gaining approval before the end of the year.

Other council members said they want more explanations about the benefits of tax-increment financing so they can explain them to their constituents.