Spokane OKs Kendall Yards funding

A 78-acre development adjacent to downtown will get tax money.

The Spokane City Council voted 6-1 to create a “tax-increment financing” district for Kendall Yards and the surrounding area.

Over the next 25 years, 75 percent of increased city and county taxes generated by the site will be siphoned to pay for infrastructure like sewers, streets and water mains that the developer needs to build homes and businesses on the land north of the Spokane River. School taxes aren’t affected.

City leaders estimate Kendall Yards will get between $20 million to $25 million for improvements through the district. If taxes come in higher than expected as property values rise in the development, up to $43 million worth of infrastructure listed in documents approved by City Council could be paid by the subsidy. But if taxes come in lower than predicted, the developer pays the difference.

The district also is expected to generate taxes to pay for about $2.5 million for projects outside of Kendall Yards but in the same West Central neighborhood. Taxes raised inside Kendall Yards won’t be used offsite and money raised in the older neighborhood won’t pay for improvements in Kendall Yards.

Supporters said the district will promote new jobs and a stronger community. They said Kendall Yards was a great example of a program that deserves tax support because it’s in the city’s core and will revitalize an area that’s sat vacant for decades.

“I’ve grown up and I’ve watched this area stay undeveloped and polluted for as long as I can remember,” said City Council President Joe Shogan.

Monday night’s debate lasted about four hours, with testimony from more than a dozen supporters and detractors.

Louise Chadez, who lives in the West Central neighborhood, said she supports the development but not the tax subsidies.

“Corporate welfare,” Chadez said. “I think we should call it what it is.”

The River Park Square financing fiasco was referenced by some speakers who said the City Council was being rushed.

Others argued that the developer, Marshall Chesrown, has waited long enough and that the proposal has been well vetted.

“Those who are paralyzed by the past go nowhere,” said Steve Faust, executive director of Friends of the Falls.

Added Kendall Yards Project Manager Tom Reese: “If not this, what? If not now, when?”

Developer Don Barbieri argued that some of the money raised in Kendall Yards should support the older neighborhood. The estimated amount that will be raised outside the development isn’t enough to make a difference, he said.

“I think that project can afford to share some of its success,” Barbieri said. “We do have a chance to give rebirth to the historic West Central neighborhood.”

City Councilman Rob Crow said he doubts Kendall Yards would be built without the tax assistance. He said the agreement will protect taxpayers.

“Its going to be phenomenal and I look forward to seeing its completion,” Crow said.

Councilman Bob Apple, who cast the lone vote against the district, compared the tax area to the city’s trash incinerator and River Park Square, projects that he said have wasted taxpayer money. He added that he does not believe that extending the tax district into the older neighborhood is covered by state law.

Spokane’s Chief Operating Officer John Pilcher said the “paramount” consideration in drawing up the proposal was “not exposing the taxpayers to any undue risk.” He said the boundary of the district is “defensible and practical.”Neighborhood leaders raised concerns that federal money intended to aid low-income areas could be diverted to Kendall Yards. The council responded by approving new language explicitly barring the Community Development Block Grant money from being used inside the upscale development.

The “notice of hearing” about the district listed the block grants among “potential funding sources” to pay for public infrastructure.

City leaders said that was never their intent for Kendall Yards, but they agreed to put the prohibition in writing.

The council also added a provision to create an oversight board to ensure city tax money is spent appropriately outside Kendall Yards.

“I think this is our responsibility as the city of Spokane,” said Councilwoman Mary Verner, who proposed the amendment.