Proposal would ease downtown utility bill disparity

Developer Ron Wells has a waiting list of nearly 200 people wanting affordable apartments in downtown Spokane.

“There’s another 50 to 60 that couldn’t wait around and had to find something else,” said Wells, who owns and manages several apartment complexes and wants to convert the derelict Ridpath Hotel into a mix of traditional and micro apartments that many believe will help jump-start a vibrant urban core. “We know a lot of people like living in a convenient, affordable and close-in location.”

But the key is affordability, and while Spokane has plenty of buildings with empty upper floors suitable for apartments, developers have hit a snag with the way the city bills for water and sewer services.

Commercial buildings filled with hotel rooms or professional offices pay just one basic monthly utility charge of about $56, plus additional fees based on the amount of water used. Commercial buildings containing apartments or condominiums, however, pay the basic monthly charge for each residential unit.

“If you’re trying to provide affordable, market-rate apartments in the $400 (per month) range, that’s a big bite,” said Wells, whose Ridpath project is expected to have more than 200 units. “There’s got to be a way to correlate taxes and fees with actual usage.”

City leaders agree.

A proposal by soon-to-be-former City Councilman Steve Salvatori would adjust utility billing policies to remove the discrepancy. Under the plan, which Councilwoman Amber Waldref is co-sponsoring, residential and mixed-use commercial buildings would be billed the same as hotels and office buildings. In general, the change would apply only to commercial buildings being repurposed for housing, not to those originally built for residential use.

“It costs the same to treat a gallon of sewage whether it comes from a commercial office building or an apartment or condo,” said Salvatori, who is resigning his council seat next month and moving to Dallas. “If you are in a 100-year-old building that used to be a commercial office building, why should it cost 15 times more if your building has floors converted to residential?”

Salvatori called it a common-sense way to remove what he and others consider a punitive barrier to creating more places to live in the urban area.

“The city doesn’t really have anything to lose in this because in the biggest empty buildings the water is turned off and there’s no utilities being paid at all,” he said. “The capacity is in and paid for – it’s just a matter of getting the buildings back in use and the utilities turned back on.”

Concerned with the number of empty and mostly empty buildings in Spokane, Salvatori and Waldref began meeting with developers about a year ago to figure out what was preventing more mixed-use projects. The utility billing disparity quickly emerged as a key impediment.

Developer Steve Elliott, for example, said he pays about $400 a month for sewer and water service to one of his office buildings but nearly $4,000 a month for a comparably sized residential building, the Monroe Madison, because each apartment unit is billed the fixed monthly charge.

“If you’ve got a building and turn it into an apartment house, you’re penalized,” Elliott said. “It’s the same amount of water, the same amount of sewer. It doesn’t make any sense.”

The concept is being circulated around City Hall and appears to have unanimous support on the council, but some members still have questions about how it would be applied. Currently, the proposal would make the utility-billing change available to buildings in commercial zones that had previously been billed at the commercial rate. Although the city would lose some revenue from existing mixed-use buildings able to take advantage of the change, utility officials say new revenue created by development of empty buildings would make up for it.

The proposal has yet to be formally introduced, but Council President Ben Stuckart said he hopes to get at least a resolution of support approved before Salvatori leaves.

“This is a huge monthly incentive that the city can do,” Stuckart said. “We’re very committed.”