Making way for affordable housing in Northeast Spokane could cost city millions

The Spokane City Council knew what the city would gain in affordable housing units by selling property to Catholic Charities.

What the council didn’t realize, until Monday, is the financial burden it faces in relocating city operations that had previously been based in northeast Spokane to make way for the nonprofit’s newest apartment complex.

The city is expected to close Oct. 31 on the sale of property at the corner of North Foothills Drive and Nevada Street, which includes a dirt parking lot for the employees of the nearby water department headquarters and a small ancillary office building.

As its deadline to vacate the property nears, the Water Department briefed the City Council’s Finance and Administration Committee Monday on its plans to construct a new parking lot on water department headquarters and refurbish offices for the relocated employees.

The price tag of the relocation could exceed $3.5 million, according to the estimates laid out on Monday.

That cost far would exceed the $550,000 for which the city agreed to sell the property to Catholic Charities in 2019.

“We’ve known about this for a long time, so I feel like we should have been planning ahead of time,” Councilwoman Kate Burke said on Monday.

Gonzaga Family Haven

Facing a mounting housing crisis and looking to mitigate homelessness, the City Council eagerly supported the proposal to sell land to Catholic Charities, which will develop the property into about 72 units of affordable housing.

Dubbed Gonzaga Family Haven, the planned units will be tailored to graduates of Catholic Charities’ Rising Strong program, which provides treatment and support to parents who are at risk of losing their children.

The council approved a purchase and sale agreement with Catholic Charities last December. The nonprofit conducted a feasibility study of the property this year and decided to trigger the final sale on Oct 31.

The property was appraised twice at an average of $1.06 million. To keep its utility system whole, the City Council will be asked to approve a $500,000 expenditure from the general fund to make up the difference.

It’s the first of what is shaping up to be several major expenditures to make room for the affordable housing project.

The move

The closing of the sale will force the city to find new parking for the employees across North Foothills Drive at the Water Department headquarters, which is not included in the sale. The several employees who occupy a smaller office building, at the north end of the property being sold, will have to be relocated.

First, the city estimates it will spend $150,000 on temporary relocation costs.

Then, in 2021, the cost of designing and constructing a new parking lot at the water department’s headquarters is estimated to be $2.3 million. Refurbishing workspace for the relocated employees could total $1 million, and the city expects to spend an additional $50,000 relocating the employees to that new space.

The costs are not final and it’s undecided how they will be paid for, Director of Water and Hydroelectric Services Stephen Burns told the council on Monday.

Burke questioned why, when the council approved the purchase and sale agreement last year, the costs related to the move were coming “out of the blue.”

Burns said it was unclear until this summer, when Catholic Charities completed its feasibility study, that the sale would be finalized.

“We didn’t know whether or not Catholic Charities was going to move forward with the purchase of the property until a couple of months ago. We were kind of hamstrung by that timeline to get a plan out,” Burns said.

Councilman Michael Cathcart questioned the cost estimates, saying the proposal includes what “seems a little bit like a Taj Mahal of a parking lot.”

Burns agreed that the preliminary estimate “has a sticker shock to it,” but guaranteed the parking lot would cost more than $1 million to build.

The Gonzaga Family Haven project isn’t the only development causing city officials to shuffle.

The city is also making way for the new middle school approved by voters in 2018 that will encroach on city property in northeast Spokane, forcing the relocation of Engineering Services Department employees, who had previously worked in a small building on Marietta Avenue, onto Water Department headquarters.

City Spokeswoman Marlene Feist noted the improvements both projects – Gonzaga Family Haven and the new Middle School – could bring to the neighborhood.

“It’s just a matter of getting through the changes we need to make to accommodate it all,” Feist said.