Commissioners OK special tax district for development

Spokane County commissioners gave their blessing Tuesday to a tax increment financing district that would subsidize the 80-acre Kendall Yards housing and commercial development near the county courthouse.

Commissioner Bonnie Mager dissented, however. She wanted more time for study and negotiations and felt she was being rushed to accommodate a groundbreaking ceremony next Wednesday.

Mager said she favors the project, but “it just feels like the tail is wagging the dog here.”

The plan to build 2,600 residences and a million square feet of commercial space on the north bank of the Spokane River goes to the Spokane City Council on Monday night for final action on a proposal to give the development 75 percent of the property tax increase it generates over the next 25 years.

The remaining 25 percent will continue to go to the city and county for general government services. After 25 years, all of the tax revenue will go to the city and county general funds.

The so-called West Quadrant Increment Area is unusual, though, because the city and county governments will get 75 percent “increments” of their own for economic development projects.

The tax increment district includes land outside the Kendall Yards development. While Kendall Yards will get all of the tax increment from its portion of the district, Spokane County and the city of Spokane will share the 75 percent of taxes diverted from the rest of the district for special projects.

Under a city-county agreement commissioners approved Tuesday, Spokane will get 70 percent of the diverted taxes; Spokane County, 30 percent. Based on a preliminary estimate by the city economic development adviser Cody George, over 25 years Kendall Yards will get $20 million to $25 million while Spokane gets $1.75 million and Spokane County gets $750,000.

Although it is up to the City Council to create the district, state law requires county commissioners to give their “concurrence.” Commissioners Mark Richard and Todd Mielke, both Republicans, did so cheerfully on grounds that Kendall Yards will bring needed economic development.

In earlier discussions, Mager echoed the suspicion of county Treasurer Skip Chilberg, a fellow Democrat, that developer Marshall Chesrown would build Kendall Yards even without public reimbursement for some of its utilities and other infrastructure. Project manager Tom Reese reiterated Tuesday that the tax increment financing district “is absolutely critical to the project going forward,” and Mielke and Richard say they don’t want to risk losing it.

Mager questioned the need to establish the district Monday just because the developer wants to have a groundbreaking ceremony on Wednesday. Approval any time this year would be sufficient to start the process of capturing property tax money for the development.

Reese said he and other project officials have taken a long time “educating” commissioners about the project and “I would only ask that it not be delayed any further.” A postponement Tuesday would “send a signal” and raise questions about whether the district would ever be established, Reese said.

Noting Mager took office in January, Mielke said he and Richard had been reviewing the project for two years and didn’t feel rushed. Mielke described Kendall Yards as “a fulfillment” of the state Growth Management Act, which encourages fill-in developments to reduce sprawl.

Kendall Yards would reclaim vacant railroad land on the north bank of the Spokane River, from Monroe Street to Summit Boulevard.

Richard said he thought the project “clearly met” state requirements that tax increment financing districts encourage use of land developers had previously bypassed and that the districts create jobs.

Mager said one of her concerns was that commissioners were giving away their leverage before achieving a formal agreement with the developer over use of county land. County facilities manager Ron Oscarson told commissioners that, despite verbal agreement, no contract has been signed on a plan to reroute Jefferson Street across a county parking lot.

County officials want Jefferson realigned. The idea is to create a tree-lined corridor with a view of the courthouse and tie the courthouse campus into the Kendall Yards development.

The realignment would take about 40 spaces from a parking lot on the west side of the Spokane County Health District building, and county officials want Chesrown to replace the parking spaces with a land swap.

Reese assured commissioners Tuesday that realignment of Jefferson Street to link the courthouse campus to Kendall Yards is “absolutely key and fundamental” to the development.

Mielke said commissioners retain leverage because Kendall Yards can’t use any county land without cutting a deal.