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Editorial: Council’s Y problem, budget gap intertwine

Wed., Nov. 11, 2009

The overriding decision facing the Spokane City Council between now and year’s end is whether to adopt the 2010 budget. Meanwhile, the council also has to decide what to do about the YMCA building it now owns.

These challenges aren’t directly related, but both of them touch on the adequacy of city revenues to cover city expenses. The council ought to keep that in mind as it mulls the Y property.

The 2010 budget dilemma is obviously complicated by the anemic economy. Tax collections are down, and Mayor Mary Verner has had to resort to a creative mix of strategies to resolve a $7 million revenue shortfall in the spending recommendations she sent to the council. And things could be worse next year, she has warned.

Even before the recession struck, however, city finance wizards had agonized for years over a persistent “structural gap” – namely, expenses tend to rise 6 percent a year and revenues only 4 percent.

Which brings us back to the decision about the Y.

More than three years ago, the YMCA put its 40-year-old building on the market, and a private developer offered $5.3 million for the slightly less than one-acre parcel, which is surrounded by Riverfront Park and overlooks the Spokane Falls. He planned an upscale, 14-story condominium project that ultimately would have generated about $1 million a year in property taxes.

It also would have added to residential vitality downtown, an outcome that carries a separate set of benefits for a thriving city.

The Spokane Park Board found that appalling and exercised an option on the property, putting $1 million down with no idea of how it would come up with the $4.3 million balance. Never mind that the developer planned to build his project back from the bank to make way for better public access and view opportunities than have existed there for decades. And never mind that his project would have contributed handsomely to the city’s tax base.

The City Council used $4.3 million from its garbage reserve account to pay the rest of the purchase price. Meanwhile, Spokane County commissioners offered to cover that expense from the Conservation Futures fund that ordinarily is used to buy up at-risk natural areas and wildlife habitat.

But only on the condition that the Y will be torn down and the site left undeveloped. That means it would stay off the tax rolls. A $17,000 study has concluded that operating the building as commercial office space would be a money loser anyway, so the council is under pressure to demolish it.

Accepting the Conservation Futures money is tempting, but it comes with two consequences. One, it consumes dollars that could be put to better use acquiring larger parcels away from the city. Two, it would foreclose any opportunity to find another private development proposal as appealing as the one the Park Board squandered in 2006.

Maybe the City Council considers that a reasonable trade-off. But tell that to a future council when it’s contending with its own budget dilemma and wondering why its predecessors didn’t narrow the structural gap when they had the chance.