In discussions about spurring activity on underutilized lots in Spokane, a freshly proposed incentive for development is the preferred alternative to the more punitive concept of taxing for highest and best use.

In other words, a carrot will work better than a stick.

Spokane Council President Ben Stuckart is proposing a provision to provide 10 years of property-tax abatement on new development on surface parking lots downtown and empty lots in other neighborhoods. The proposal is based on a 10-year tax abatement for multifamily housing projects that currently exists in certain parts of Spokane.

Under such a provision, property owners who develop their land would continue to pay taxes at their current rate—and wouldn’t have to pay taxes on increased valuations for the improvements—for a decade.

While there are other potential benefits, the impetus for the tax-abatement expansion is to encourage development where surface parking lots are now situated downtown.

As Stuckart describes it, downtown Spokane has an unusual conundrum: It doesn’t have enough parking, but it has too many surface parking lots. 

The use of those properties is the prerogative of the owners, and a revenue generating parking lot isn’t a blight on a neighborhood in the same way a vacant lot or abandoned building can be. Even so, there’s no question some prime downtown real estate is home to parking and has greater potential. 

Another idea that Stuckart floated involved taxing property for its “highest and best use” as a way of compelling more development downtown. He now says that idea is off the table. “Everybody I talked to really hated it,” Stuckart says. We can see why, and he was smart to look for another way to catalyze activity.

The tax abatement strategy isn’t certain to occur, and it takes a few gambles.

The state Legislature will have to pass a bill that would allow the multifamily provision to be extended to other types of development. Stuckart says he has a sponsor for such a bill, and if it’s successful, the tax-abatement measure potentially could be in place by the beginning of 2019.

If it becomes law, the city will need to be strategic in the neighborhoods it chooses to make the incentive available. It—and other taxing authorities—stand to lose new income from new development for an entire decade, and ideally, the incentive would be used only to encourage development that wouldn’t occur otherwise.

Also, in regard to downtown parking lots, the city is banking on the fact that new development would have a parking element—or that some of the new development would be parking garages. That’s far from a sure thing, and if the incentive results in a net loss of downtown parking, that exacerbates an existing problem.

But the potential to spur more development downtown is alluring. And if the goal is to rid the core of surface parking lots, the tax-abatement plan is a better option than taxing for highest and best use.

Ideally, the carrot would prove enticing and strengthen Spokane’s downtown.