About three seconds cost the city the ability to invest millions of public dollars in the proposed Lacey Gateway Town Center through the use of a form of tax increment financing.
That was the strangest thing Ive run across, Lacey Mayor Graeme Sackrison said. It was sort of like when you lose out in the final seconds of eBay.
The financing tool allows authorized local governments to siphon off a portion of the additional local tax revenue generated by new development or redevelopment in so-called revitalization areas for up to 25 years to pay back bonds issued to build the roads and utilities needed to attract the development in the first place. The state contributed a portion of its sales tax generated in the new development to help pay back the bonds as well. Its maximum total contribution is $2.5 million a year; the cap for an individual project was $500,000.
State lawmakers approved the so-called Local Revitalization Financing program this year. It succeeds an earlier form of tax increment financing called the Local Infrastructure Financing Tool, or LIFT, which state lawmakers approved in 2006.
Complaints about the processes used to select participants back then prompted state lawmakers to try a different approach to select those that receive a share of the state contribution this time around: first-come, first-served. The program also includes dedicated funding for seven demonstration projects in specific locations.
The state Department of Revenue, which manages the program, said it would begin accepting applications through its Web site at 9 a.m. Sept. 1. The agency included a link to the atomic clock its servers use so the time was synchronized for all of the potential filers. The submit button on the Web page didnt become active until 9 a.m. so the applicants had to refresh the page at the start time, click the submit button and cross their fingers that their application crossed the digital finish line ahead of others.
Lacey City Manager Greg Cuoio called it a cyberspace race.
Twelve applications were received in 15 seconds. The first five applications were fully funded, and a sixth was partially funded. Those six applications were received in less than five seconds.
Laceys application was eighth in line, 2.85 seconds behind the last fully funded project.
James Petit, the program lead for the state Department of Revenue, said there were local governments disgruntled that the application process comes down to switches that decide this.
State lawmakers involved in the programs passage acknowledged that the selection process wasnt without flaws, but they noted there were shortcomings in the earlier programs too.
The LIFT program included a combination of projects selected by state lawmakers and a state board. As a result, said Rep. Troy Kelley, D-Tacoma, who guided the most recent legislation through the House, there were accusations the selections were motivated by politics or the criteria favored either rural or urban areas.
Im not ready to say this is worse than the last process, he said.
Sen. Derek Kilmer, D-Gig Harbor, the legislations chief sponsor, said the demand for the program proves Washington needs to follow in the footsteps of the majority of other states and approve a form of tax increment financing without these limits. The difficulty is that budget writers consider the loss of the tax revenue to the state without factoring the revenue gain in future years, he explained.
The question becomes: Why wouldnt we green-light all of these if they are revenue- and job-creating for the state? he said.
The city had planned to use the revenue diverted through the financing tool to reimburse the developer up to $14 million for the construction of the internal road network and other utility improvements in the first phase of the Lacey Gateway Town Center. The developer planned to finance the internal road and utility improvements at an estimated cost of $40 million, Cuoio has said.
The phase included more than 1.2 million square feet of commercial, retail and office space, and 500 dwellings. Retail blocks would be situated around a public plaza or open space with offices or housing on the upper floors, accessed by streets with on-street parking and lined with storefronts.
Cuoio said the unsuccessful applications will mean a delay in moving forward with the development. A representative of the developer, Triway Enterprises, did not respond to phone messages seeking comment.
The city secured nearly $10 million in state grant funding awarded through a competitive process several years ago to build the major roads to serve property located along Interstate 5 in Hawks Prairie.
The six applications not funded this year are first in line if state lawmakers authorize more state money going to the program. Kelley said hes optimistic that will occur sometime within the next two years.
Christian Hill: 360-754-5427
chill@theolympian.com
