Urban renewal deal draws concerns

POST FALLS - A deal aimed at sparking a long-awaited city center anchor through tax-increment financing is risky business, an ex-director of the Post Falls Urban Renewal Agency said.

Luke Malek said tying urban renewal funding to the multi-use Post Falls Landing project on the Spokane River to build infrastructure to spur on development is a good idea, but the agency's agreement with developer Harry Green is misdirected.

"The developer's reimbursement in this instance is tied to all the parcels in city center, not just the ones he builds up," Malek said. "As such, his incentive to develop his land is lessened."

In urban renewal districts, a proponent or developer will use its own funds to install public infrastructure. The incremental taxes that are paid based on the higher assessed values after development are remitted to the URA and are, in turn, paid back to the proponent/developer for cost reimbursement (in this case $2 million) for such infrastructure.

Improvements must be deeded to the city before reimbursement.

Malek said he believes the Landing contract goes against the strength of Post Falls' traditional URA model that forces all the risk on the developer and leaves taxpayers off the hook.

"The taxpayer bears more risk (with the Landing deal), but not necessarily all of it," Malek said. "Enough so that the developer's incentive to create taxable growth is significantly diminished."

Malek said if the risk is spread, there is potential that a partially completed development that never sees growth or brings jobs will still be funded by taxpayers.

"Under this paradigm, a developer could walk into a bank with an agreement, and get a loan based on the fact that he will get paid for every dime he uses creating these roads by money already in the bank at PFURA," he said. "Any other developer walks into a bank and asks for a loan based on their ability to create growth that will put money in the PFURA coffers and ultimately repay the developer for his infrastructure investment."

But Tom Lien, URA executive director, said the agency spent a lot of time analyzing the deal and believes it has taken appropriate action with the public in mind.

Green constructed roadway improvements, a marina and two condominium buildings several years ago, but little construction has taken place since.

Lien said the assessed value of those improvements have been taxed as have all other non-public parcels in the Center district and the Urban Renewal District portion of those taxes have been remitted to the URA for use in public infrastructure projects within the district.

Current project examples include improvements to William and Frederick streets and a Centennial Trail parking lot on Fourth Avenue.

"Both these projects and the Landing are stated in pre-approved projects within the City Center development plan," he said, adding there are about 25 projects in the plan, all subject to funding from increment.

"The challenge in responding adequately to the myriad of questions that arise ... is that the districts and therefore developments are not always the same between the districts," Lien said.

Lien declined to comment on Malek's concerns of the Landing's contract compared to other developers.

"We remain open to citizen comment at each monthly commissioner meeting," he said.

Malek's concerns are the latest in a flurry of feedback on the Landing decision.

Green did not return a message seeking comment, but responded with a letter to the editor to a guest opinion column in The Press that criticized the URA's decision to assist a slow-moving project that started about nine years ago.

Green wrote that the URA agreement will provide jobs and needed capacity for expanding the Landing and district.

"Prior to any work beginning, Post Falls Urban Renewal and city of Post Falls had to approve the project, scope of work, specifications, engineers estimate and permit construction documents," Green wrote.

Malek believes Green's agreement is different than other developers.

"He'll get paid whether the public improvements he builds bring value or not," Malek said. "His reimbursement is tied to all the parcels in City Center, not just the ones he builds up. Every other developer must create the increment that pays them back."

Malek said he believes the agency had good intentions, however.

"I have no doubt that the agency acted in good faith and will do as it has always done by using concerns of the public to improve processes in the future," he said. "The future of urban renewal rests in its responsible use."

Urban renewal funding has been a hot topic with tax watchdogs and debated at the Legislature, but Post Falls hasn't had as many controversies as many other similar agencies across the state.

In fact, Post Falls is the first agency in Idaho to close out a district (West Seltice) and notched another first in 2009 when it dished out $2.2 million from surplus revenue accumulated in the East Post Falls Urban Renewal District to seven taxing districts.