Candidates divided over street upgrade

SANDPOINT – Great Northern Road is a bumpy, washboard route that parallels railroad tracks along the west side of Sandpoint’s small airport.

It would be a convenient access to Schweitzer from the west side of town and could attract more manufacturing business to the airport if it just weren’t so rough. Everyone pretty much agrees that the street needs to be upgraded, but the question of how has divided candidates in the Sandpoint City Council election.

Four candidates are vying for the three open council seats in the Nov. 8 election. The three candidates with the most votes will win places on the council.

Incumbents Cindy Elliott and Frances Ogilvie have endorsed the use of urban renewal districts to raise the necessary money to improve the road and complete downtown revitalization.

The total estimated cost to upgrade Great Northern Road, install utilities to support light industrial development there and finish the city’s downtown revitalization project is about $14 million, plus about $2.5 million in grants for the road project, according to recent news release from the Sandpoint Urban Renewal Agency.

The other two candidates, retired City Clerk Helen Newton and former city Planning Commission Chairman Steve Lockwood, are concerned that the tax increment financing used for urban renewal will raise taxes for Sandpoint residents.

“I don’t think residents should have to subsidize business, and that’s what urban renewal appears to me,” said Newton, who retired this year after 24 years as Sandpoint city clerk.

Lockwood said he is running in part because he’s concerned about the cost of living in Sandpoint, where property values have dramatically escalated in the last couple of years.

“There are a number of folks who are being eased out of town,” he said.

Ogilvie said he initially voted against forming urban renewal districts to capture tax dollars for new infrastructure, but now, “I definitely support it. … it’s an additional funding tool for the city to use.”

And Elliott said the use of tax increment financing benefits the entire city. “Great Northern Road will be another north-south arterial, and downtown revitalization doesn’t just benefit those businesses that are facing the project,” she said.

Elliott also points out the city must replace the entire downtown storm water system, which is overloading the city’s sewer, or risk hefty fines from the Idaho Department of Environmental Quality. Federal grants that the city used for the first phase of downtown revitalization are no longer available, she said, so the city needs another source to get the work done.

Elliott said the impact on local taxes won’t be known until the council hears the specific urban renewal proposals, but Ogilvie called the funding tool “tax neutral” – meaning it won’t affect the taxes of residents outside the urban renewal district.

That’s how it’s supposed to work in theory, said Alan Dornfest, a property tax specialist with the Idaho Tax Commission. But it doesn’t always work that way in practice.

If the City Council shows restraint, and doesn’t increase its budget to the maximum allowable by law, there may be no shift in taxes to the city residents.

However, Newton points out that the city has budgeted to the 3 percent statutory ceiling for the past six years, and six years ago, it increased its budget beyond that by levying for its foregone taxes from the years it hadn’t taxed to the max.

Cities also can increase their budgets beyond the 3 percent cap when new construction generates excess tax revenue, Dornfest said.

In fact, the city could budget new construction tax revenue, thereby exceeding that 3 percent cap, even if the new tax base is in the urban renewal district and out of reach of the city’s general fund. That means taxes would have to go up on properties outside the district to generate the extra revenue.

But just because that’s legal doesn’t mean it will happen.

Elliott said the council may need to delay other projects in the city to prevent a shift in taxes to existing residents and businesses.

“It could be neutralized by deferring projects,” she said. “I would support that.”

Lockwood, who chaired the first phase of downtown revitalization, boils the complexities of urban renewal down to a basic concept.

“If we as a community spend more money, we tax more in order to have the money to spend,” he said. “It ends up the same, either way.”