The Lacey City Council has an opportunity Thursday evening to move its town center proposal one step closer to reality.
The council should authorize the city staff to apply for state funding to help finance the construction of roads and the installation of utilities in the Lacey Gateway project adjacent to Interstate 5.
The plan is to get the infrastructure in place so that when the economy improves and credit is easier to come by, the city will be well positioned to welcome new businesses and the jobs they bring to the Gateway development, boosting city tax receipts to pay for public services.
Investments now will pay off in the form of new jobs and in tax revenue later.
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Take the Market Place development off Marvin Road, for example. That’s the retail development that includes Home Depot, Best Buy, Costco and other, smaller businesses. That 37-acre development generates about $2 million in sales taxes and property taxes for the city annually. Those taxes help pay for police, fire and other public services.
The Gateway project is 153 acres adjacent to I-5 at Hawk’s Prairie. The project is led by Hawks Prairie Investments LLC, which is managed by developer Tri Vo. He kicked off the project by attracting outdoors retailer Cabela’s to the site. Vo hopes to develop 1.2 million square feet of commercial, retail and office space along with 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. It will, in effect, become Lacey’s downtown.
But before anything can happen, the entire 153 acres has to be graded, streets have to be constructed and water, sewer and electrical lines must be put in place.
It’s estimated those infrastructure improvements will cost about $42 million. Developer Vo will be responsible for those costs.
But Lacey can take advantage of a state financing program that allows the city to issue bonds that are financed from additional tax revenue generated by the development. The city can then use the proceeds from those bonds to reimburse the developer for a portion of the infrastructure costs. It’s the kind of public-private partnership that leads to development — development for the public services we’ve all come to expect. Such partnerships also help cities reach their growth management goals to concentrate development and stop urban sprawl.
That’s the action the council should initiate at Thursday’s regular council meeting. If all goes according to plan, the city in partnership with the state, should be able to reimburse Tri Vo $14 million of his $42 million investment.
The city has until Sept. 1 to file for the financing. Under the partnership, the city would use $500,000 a year from the additional taxes, matched by $500,000 from the state to repay the bonds.
But the city staff, led by City Manager Greg Cuoio, has built several conditions into the agreement. For example, the city must be receiving $3 in tax revenue for every $1 it plans to spend before the bonds can even be sold.
“This opportunity for a grant award (from the state) is the chance of a lifetime for the city,” Cuoio said. “It allows us to begin to move forward on our vision of turning the Gateway project into a true town center where we have new businesses, restaurants, a town plaza and hundreds of new jobs. This moves the project forward. Otherwise we have to sit back and wait and hope that someone brings jobs to the city of Lacey.”
Cuoio acknowledges that it would be tough to proceed in today’s difficult economic times but he thinks the economy will turn and the property will begin to generate tax revenue and jobs by 2013.
But that doesn’t mean Lacey should be stuck in neutral until then.
The council must take advantage of the state financing package now because it will position the city well to create a larger, more stable tax base when the economy rebounds. That’s important for Lacey residents because the development will create jobs and additional tax revenue to sustain key public services.