Media Center See also the compendium of articles on Kendall Yards at the Spokesman-Review

Taxes don't belong in developers' pockets

Sun, 18 Feb 2007 00:00:00 -0800

Guest commentary
Taxes don't belong in developers' pockets

D.E. "Skip" Chilberg
Special to The Spokesman-Review
February 18, 2007

Tax increment financing (TIF) has been used in other states for years but only recently in Washington. Voters rejected a constitutional amendment to allow it in the early '80s, and the Supreme Court declared one version unconstitutional in 1995. The Legislature then made minor revisions which haven't been challenged.

Tax increment financing involves a government issuance of tax-exempt bonds to pay for infrastructure to benefit a desired development. Those bonds are then paid off by shifting tax receipts gained from rising property values in the designated area. Those tax receipts are diverted before they get to the city or county general fund. They are not available for such purposes as public safety and other governmental services.

Any developer outside the TIF area is required to pay for the infrastructure as part of the development. Thus, a selected developer for the designated project in the TIF area is receiving a direct and substantial subsidy. In the case of the Kendall Yards proposal along the north bank of the Spokane River, that subsidy is estimated at between $10 million and $20 million, not to mention additional millions from property tax exemptions for condo development in the downtown area.

I've asserted that TIF is giving public money to rich people. Who else benefits from the tax shift?

Not the residents in the designated TIF area, the West Central Neighborhood. If all goes as planned, the development will raise the value of their homes, increasing the taxes they or their landlords pay. They will still be in the same houses, driving on the same streets, only paying more taxes with those additional taxes paying for streets, parking, etc. for Kendall Yards.

As the cost of government rises each year, the tax lost to the TIF project will be made up by all the other city and county taxpayers. Tax increment financing is a governmental expenditure, even though it's outside the budgeting process.

The basic justification for TIF is that the proposed project would not otherwise go forward without the subsidy. I can't understand why Kendall Yards needs a government gift.

The developer has made it very clear he has no intention of building affordable housing. Is his request based on a desire to sell expensive condos for less? Is the request based on the cost for environmental cleanup? The developer presumably was aware of the environmental issues and took them into account when he decided how much to pay for the property. If he didn't, it is not the taxpayers' responsibility now to pick up the tab. It certainly is not the taxpayers' job to ensure the developer makes an additional $10 million to $20 million. It's a safe assumption the developer knew the costs going in, and the project will proceed without the gift unless market conditions don't warrant the development.

I also wonder why the TIF district includes nearly all the West Central Neighborhood. Is it because the developer will seek tax exemptions for the condos in his development for 10 years, thus not generating enough taxes from the new development to pay off the bonds?

Spokane County Commissioner Mark Richard is quoted as saying there is "no risk" to the taxpayer, particularly because the developer has offered a letter of credit. I'm skeptical. A more complete answer would be that there is no risk to the taxpayer and particularly no risk to the developer. The bonds will be sold, the infrastructure will be built, and the taxpayers will pay for it. The taxpayer will then have a choice of whether to find additional taxes for public safety and other services, or to cut those services.

I believe in public-private partnerships. I was chairman of one of the best, the Washington State Housing Finance Commission. We all know that partnerships don't work, whether public-private or all-private, if benefits are not distributed. But the benefits from this proposed "partnership" accrue only to the developer at the expense of neighborhood residents and other taxpayers, with a potential benefit to tax coffers when the bonds are paid off and the tax exemptions expire.

I also believe there are serious ethical and legal questions. Taxpayers living in the city should be asking why the county is asked to issue the TIF bonds and not the city. Could it be because the City Code would require a vote of the taxpayers? I believe the proposal is a clear circumvention of city law, and feel it is my public duty to speak out.

Public weighs in on huge project Building heights, river, traffic at fore

Tue, 1 Aug 2006 07:07:45 -0700

Alison Boggs
Spokesman-Review

As the city of Spokane heads toward a Thursday public hearing for an 80-acre commercial and residential project just north of downtown, public concern has focused on traffic, building heights and the impact on the Spokane River.

About 60 people have submitted comments to the city on the proposed Kendall Yards development, which would bring 2,600 additional residences and 1 million square feet of commercial space to vacant land overlooking the north bank of the Spokane River. Within the next two years, the land between Maple and Monroe streets, south of Bridge Avenue, could hold 500 new residences and 500,000 square feet of commercial space, developer Marshall Chesrown told The Spokesman-Review last week.

Several of the public comments enthusiastically support the project. Others say the city should outright reject it. But most people just want the city to be mindful of their concerns as the permitting process rolls on. The primary issues fall into three basic categories: protecting the Spokane River, preventing buildings up to 12 stories high from being built in a residential zone, and addressing increased traffic in the West Central neighborhood.

In keeping with those comments, the city's planning staff recommends that Chesrown put together a Habitat Management Plan in conjunction with the state Department of Fish and Wildlife; conduct a traffic analysis for the West Central neighborhood; and submit each proposed eight- to 12-story building for additional city review. Exceptions were made for two of the buildings.

Additionally, and also in keeping with many public comments, the staff report does not recommend allowing Chesrown to take over Ohio Avenue along the dramatic western-most part of the development, with its rounded point overlooking the Spokane River.

West Central resident George Craig II said the developer has gone above and beyond to meet residents and address concerns. He urged the city to approve the development as is.

"The prevailing opinion is that this is the best thing that has happened in West Central in 50 years," Craig wrote, saying he's talked to hundreds of his neighbors about the development.

However, West Central residents Ken Olsen and Sam Mace called for the proposal to be denied, saying the application is incomplete and has been pushed through City Hall with "speculation, sales pitches and supposition and lacks the substantive data that would enable the public and planners to make a well-reasoned judgment."

Chesrown said certain members of the public focus too much on the negative aspects of development and not enough on what Kendall Yards could bring to the city. The land along the bluff overlooking the river, arguably the most valuable on the property, he said, will be turned into an extension of the Centennial Trail, open to the public. The first stage of this development will deliver 2,000 construction jobs. The "lion's share" of the first 350,000 square feet of retail space is already spoken for, he said, much of it by retailers not currently present in Spokane. The first phase represents a $300 million investment in the city, he said.

"This is a master-planned community," Chesrown said. "We're building a small city over there. That thing at build-out is going to be bigger than the city of Liberty Lake is today."

Typically, Chesrown said, when a city sees the potential for hundreds of new jobs, along with new businesses and high-quality residences, they embrace it. "Most cities are open arms to those types of things and they try to fast-track those types of projects."

Yet concerns remain.

Environmental and neighborhood activist John Osborn urges people to just look up at the bluff from the Spokane River and imagine tall buildings sprouting up.

"I really worry this incredible Spokane River Gorge is in trouble," Osborn said.

The Sierra Club supports Osborn's position, saying the development also poses risks to the habitat and health of the river gorge. However, the nonprofit Friends of the Falls group supports Kendall Yards wholeheartedly, saying "the clean up of a once-blighted area that was once a rich source of toxic runoff" will be a substantial benefit.

"The height of the buildings, as proposed, and the scale of this development, is appropriate, given its proximity to the center of our city," wrote Steve Faust, executive director of Friends of the Falls.

Several residents decried the unfairness of 10-year property tax breaks that some residents of Kendall Yards may receive when existing West Central residents, many of them low-income, pay more to compensate. A Spokane law designed to encourage multifamily housing near the downtown core provides for the exemptions.

West Central resident Patrick Malone worries that Chesrown intends to build up to 6,000 residences, not the 2,600 proposed. Chesrown admits that his vision for the site includes 8,000 residences. Though his proposal includes only 2,600, he said he believes the city will push for higher density in the next phase of building after officials see the first phase's success.

West Central residents Barry Chapman and Jessie Norris urged the city to protect the urban wilderness and historic character of their neighborhood.

"It's truly amazing to walk a few blocks from our house and be able to watch heron and osprey flying above the river against a backdrop of downtown buildings; not many cities can boast of the same opportunities," they wrote. "We also treasure the sense of community we have found with other residents of West Central."

Chesrown said Kendall Yards inevitably will force change in West Central. Since he bought the property last January in a bankruptcy auction for $12.8 million, real estate speculation drove the percentage of rental properties in the neighborhood from 50 percent to 80 percent, he said. The project is likely to drive property values up, he said, but it will also chase crime out.

"There is no question the West Central neighborhood five to 10 years from now will not resemble what it does today," Chesrown said. "It happens all over America. It's not something that's unique to Spokane."

But Chesrown said he questions the wisdom of preventing improvement to a blighted area.

"I don't see how that makes sense," he said.

Copyright 2006 Spokesman-Review

Neighbors raise significant concerns regarding fast tracking Kendall Yards development

Thu, 20 Jul 2006 07:15:16 -0700

For immediate release, July 20

For more information, contact John Osborn

SPOKANE – From dangerous increases in neighborhood traffic to overwhelming damage to the Spokane River corridor, area residents this week raised significant concerns with the City of Spokane about the proposed Kendall Yards development.

Citizens also cited the need to address the vague and outdated environmental analysis and the prospect for 12-story condominiums along the north shore of the Spokane River before the city approves the development.

“The city is poised to allow a million square feet of commercial and retail space and thousands of condominiums on this prime river property with practically no review,” said John Osborn, of the Summit-Bridge Alliance. “This is one of the largest in-fill developments in Spokane’s history and deserves the city’s most careful analysis – not the quickest approval. This enormous project will cripple Spokane’s hard-earned downtown revitalization and potentially mar one of the few undeveloped stretches of urban river frontage in the United States.”

The Kendall Yards development is proposed on 78 acres along the north shore of the Spokane River, just west of downtown. The public comment period on the Planned Unit Development was initiated over the long Fourth of July holiday weekend and closed on Monday. A public hearing is scheduled for Aug. 3 at 6 p.m. at the City Council Chambers. This is the public’s last opportunity to make its voice heard.

“Tens of thousands of people will be affected by this decision, from the Brown’s Addition residents whose vistas will be blocked by this development to children will face an enormous increase in traffic as they walk to Holmes Elementary School,” Osborn said. “We can attend the public hearing and ask public officials to set standards that will make Kendall Yards an asset for the Spokane community or sit back and assume that our silence will prompt city officials to do the right thing.”

The Bridge-Summit Alliance includes residents of the West Central Neighborhood interested in the impacts of the Kendall Yards Development. The alliance takes its name from the two streets – Bridge and Summit – that border the neighborhood.

Additional sources:

~ Summit-Bridge Alliance letter to the City of Spokane

~ Olmsted Brothers’ Report to the Spokane Parks Commission

Neighbors raise significant concerns regarding fast tracking Kendall Yards development

Thu, 20 Jul 2006 07:12:33 -0700

For immediate release, July 20

For more information, contact John Osborn, 509-939-1290

SPOKANE – From dangerous increases in neighborhood traffic to overwhelming damage to the Spokane River corridor, area residents this week raised significant concerns with the City of Spokane about the proposed Kendall Yards development.

Citizens also cited the need to address the vague and outdated environmental analysis and the prospect for 12-story condominiums along the north shore of the Spokane River before the city approves the development.

“The city is poised to allow a million square feet of commercial and retail space and thousands of condominiums on this prime river property with practically no review,” said John Osborn, of the Summit-Bridge Alliance. “This is one of the largest in-fill developments in Spokane’s history and deserves the city’s most careful analysis – not the quickest approval. This enormous project will cripple Spokane’s hard-earned downtown revitalization and potentially mar one of the few undeveloped stretches of urban river frontage in the United States.”

The Kendall Yards development is proposed on 78 acres along the north shore of the Spokane River, just west of downtown. The public comment period on the Planned Unit Development was initiated over the long Fourth of July holiday weekend and closed on Monday. A public hearing is scheduled for Aug. 3 at 6 p.m. at the City Council Chambers. This is the public’s last opportunity to make its voice heard.

“Tens of thousands of people will be affected by this decision, from the Brown’s Addition residents whose vistas will be blocked by this development to children will face an enormous increase in traffic as they walk to Holmes Elementary School,” Osborn said. “We can attend the public hearing and ask public officials to set standards that will make Kendall Yards an asset for the Spokane community or sit back and assume that our silence will prompt city officials to do the right thing.”

Additional sources:

Summit-Bridge Alliance letter to the City of Spokane

Olmsted Brothers’ Report to the Spokane Parks Commission

Jess Walter: The Urban Outdoors

Sun, 9 Jul 2006 20:59:34 -0700

OutThere Monthly

DUE TO A REPORTING ERROR I recently found myself at a public hearing. The topic was Kendall Yards, KY as I affectionately call it, the 77-acre town of Sandpoint that developer Marshall Chesrown plans to gently ram into my neighborhood over the next decade.

Like a lot of West Centralites, I'm guardedly optimistic about development on the north shore of the Spokane River, for several reasons:

1. I support packing the urban core, increasing density, saving gasoline, and keeping the rapacious Spokane County Commissioners from cul-de-sacking every last bit of forest.
2. Kendall Yards is being built on once-polluted railroad land, what is commonly called "a brownfield." (Coincidentally, this was my brother's nickname in gym class, for reasons I'd rather not get into.)
3. The development-condos, townhouses and plazas-has a certain urban cool factor. (Although California splits were also "cool" once.)
4. Housing prices in my neighborhood are finally going up and I stand to make money on a Spokane home for the first time. (I lived in one house seven years and lost $30K; when I tell this to friends in other parts of the country, they look at me like I'm speaking Urdu.)

So while I'm hopeful, I went to the hearing because we must be diligent guardians of a section of riverfront that has largely escaped human traffic, except for those humans looking for a place to get stoned.

At the hearing I sat next to my smarter friend Ken (not his real name).While I gleefully fell for the developers' Jetson's vision of sophisticated urban dwellers in jetpacks with clones to do their bidding, Ken (okay, it is his real name) came armed with a list of comments. ("Your Ôtraffic study' appears to have been done on Etch-a- Sketch.")

The planners dismissed Ken's traffic worries by saying the 5,500 new West Central residents (a 60 percent increase) would largely be pedestrian and light rail commuters.

Ken: "Then you're putting in light rail tracks?"
Developer: "Uh. No."
Ken: "Why not?"
Developer: "The city isn't requiring it."
Ken: "But you're putting in an easement."
Developer: "Uh. No."
Ken: "Why not?"
Developer: "The city isn't requiring it."
Jess: "Ooh, how about an Orange Julius!"

While I left the meeting still cautiously optimistic, it's become clear that the city and county are so horny for development they'll give it up to anyone with a real estate license and a tassled loafer. I know they've been waiting eighty years for this boom, but they're blowing a great opportunity. Just look at Seattle, where twenty years into its economic explosion, public transportation still somehow involves the monorail, a form of transit that exists only at Disneyland.

This is why the city should demand that light rail easements be a part of every new development within three miles of downtown. With a little tax money, in five years we could have light rail stripping the north side of the river, dropping down into Peaceful Valley and going up into Brown's Addition, cutting to Gonzaga, the lower South Hill, and over the river to SFCC. According to his website, Mr. Chesrown views KY as his "chance to give back to the community" (Wasn't it the Vikings, describing their raiding and plundering, who coined this phrase, "give back to the community"?) For the record: I don't blame Chesrown. It'd be nice if he "gave the community" a strip of light rail track, but he's a developer who got a huge chunk of land for peanuts and stands to make eleventy kabillion dollars. Fine. If he can get Spokane people to live close together and walk four blocks to get coffee (and maybe get me a jet pack) I don't care how much dough he makes.

The city and county, however, need to wake up. Inviting developers into your neighborhoods to do as they please is a like asking a meth addict to house-sit. When it goes badly, there's no one to blame but yourself.

[copyright OutThere Monthly, 2006]
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Jess Walter’s novel, Citizen Vince, is available in bookstores