Spokane City Council considers funding options for Latah Valley infrastructure

(The Center Square) – New development in Latah Valley could come to a halt under an emergency ordinance that Spokane’s City Council is expected to vote on in the next two weeks.

Councilmember Paul Dillon’s measure would enact an immediate building moratorium on new preliminary subdivision and short subdivision applications within the Latah/Hangman and Grandview/Thorpe Neighborhoods, replicating a similar ordinance that expired last year.

The halt would give Spokane time to plan for wildfire protection and other infrastructure in the area, including a Latah Fire Station and modifying sections of the city’s municipal code.

The question is how Spokane will fund the millions needed to build the new infrastructure.

When briefed last week, Councilmember Michael Cathcart noted that after the previous moratorium, the city planned to pay for growth with growth, meaning developers would pay fees that the city would use to fund the needed infrastructure; instead, the money went elsewhere.

The lack of funding left the city council considering various revenue options, most notably a TIF, an acronym for tax increment financing. Other avenues include bonding, new or modified fees, state and federal grants as well as appropriations from the state Legislature.

During a city council study session last week, Planning Director Spencer Gardner said none of the options are a silver bullet, but a combination could address the problem.

“TIF is a way of siphoning off future property-tax revenue from new growth, bringing it forward into today, through bonding, for example, to pay for infrastructure,” Gardner said.

Properties within a TIF boundary still pay taxes, but he said the amount going to the general fund decreases as revenue is used to build infrastructure instead. The idea is that money generated from Latah Valley will stay in Latah Valley instead of going elsewhere. Opponents of TIF funding say it robs local government services of funding to aid in economic development that would have happened in the area anyway.

Gardner said the earliest the city could get a TIF up and running is 2025. Ideally, it would start collecting revenue for the infrastructure by June of that year. The process involves a lot of bells and whistles with other agencies before money can roll in.

Jim Frank, founder of Greenstone Corporation, a residential and commercial developer in the area, said TIFs are commonly used in Spokane and throughout the state. He put together a boundary map of areas with deficient infrastructure that could benefit from the improvements Latah Valley needs before moving forward with future development.

Since the boundaries include part of the City of Spokane and the county, Frank said Spokane County has to form the TIF and set a base tax level by June 1. However, since that’s out of the picture this year with current time constraints, the county would set that level by June 1, 2025.

“The assessed [property] values for June 1 of 2025 are [those] upon which taxes will be assessed for the year 2026, and so you won’t actually collect most of that money until 2027,” Frank said.

The process is a long-term strategy that takes time. Frank said that 75% of revenue from the increment placed on top of existing property taxes would go toward building new infrastructure, while the other 25% would stay within the local jurisdiction.

He said school bonds and levies are not included in TIF revenue, and the method will not affect the state’s property tax assessment for schools.

“No jurisdiction’s tax assessment is impacted unless they agree to participate in the TIF,” Frank said. “The city would have to agree, the county would have to agree, any fire district would have to agree. If they don’t agree, their property tax revenues are not included and don’t go to the TIF.”

Echoing Gardner’s comments, Frank said a TIF works best with other funding sources. He suggested the city explore different funding options while starting the TIF process.

He continued that if Spokane wants the future tax revenue that comes with growth in Latah Valley, it needs to secure funding; if it fails, the growth will happen elsewhere.

“It’s hard for me to see how you’re going to fund $150 million worth of infrastructure if you don’t include TIF,” Frank said.