Spokane Journal of Business

City-center plans edge forward

Soft economy hinders progress; officials to change zoning at U-City, look to buy land

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The city of Spokane Valley is moving forward with plans for a new city center, although the recent economic slowdown, particularly in the real estate sector, is slowing its efforts.

Since the city incorporated in 2003, officials there have been looking at designating a city center area that they say would help define the communitys identity and create a centralized hub of civic, commercial, and residential activity. Development of a city center also is seen as a catalyst project in a larger plan to revitalize the Sprague-Appleway couplet into a bustling commercial and residential area.

The city center is planned for the University City Shopping Center area, mostly between the couplet between Bowdish and Walnut roads. Preliminary plans for the first phase of the project, to be located between Dartmouth and University roads, include a new City Hall building and a public library, as well as 193,200 square feet of retail space, 32,000 square feet of office space, 138 living units, and 1,550 parking spaces, according to the citys master plan for the development. The structures would be divided into six designated areas, called blocks, with two additional blocks designated for the City Hall and library, documents show. The city would develop only the City Hall by itself.

The vision is to have a lively center, a truly mixed-use downtown, says Scott Kuhta, the citys senior planner and city center project manager.

City officials are working on new zoning regulations for the U-City area that they hope will encourage mixed-use development there. They expect to have those new regulations in place by the end of September, Kuhta says.

Meanwhile, the city is in negotiations with University City Inc., which owns the U-City mall property, to buy land that would accommodate a new City Hall building, Kuhta says. The citys staff would like to put together a purchase agreement for that property to submit to the Spokane Valley City Council for approval by the end of the year, he says.

The city also is talking with University City Inc. about allowing the city center to be developed on its property through a long-term lease agreement. In addition, University City has been providing feedback to city staff as they devise the new zoning code for the area, says its president, Jim Magnuson.

He says the company is committed to the city center project.

In a survey conducted by the city in 2004, 70 percent of the 400 respondents said they wanted a central gathering place for the city, and more than half picked U-City as the location for it, Kuhta says. A majority of respondents also said they would be willing to help pay for the city center, he says.

When one looks at the city of Spokane Valley, theres no central location that defines the city, says Mayor Rich Munson. Until were able to do that, well be nothing more than a bedroom community for the city of Spokane.

He adds, Its a lot more comfortable to stay in bed, but with change comes economic development and better-paying jobs. Vibrant communities are vibrant because theyre willing to embrace change and controlled growth.

The new City Hall and a new public library are considered key projects for the planned city center, as they would get the ball rolling on development and signal to private investors that the city is serious about its plan to develop a center, Munson says.

We feel that once the city actually has movement and is committed financially to the city center, then our citizens will be more welcoming of the idea, and it will be more welcoming to developers who will see were committed to the project, Munson says.

Although plans could change, the site that officials are considering for the new City Hall is located at the west end of U-City, near Dartmouth Road and the old Crescent department store, Munson says. Initial plans call for the structure to have roughly 60,000 square feet of space, says Neil Kersten, the citys public works director. The City Council is expected to vote next month on preliminary project details, including the size of the building, Kersten says.

The city has set aside roughly $6 million in a fund that it could use for the City Hall project, which has a projected cost of roughly $18 million, Munson says. The rent its paying for its leased office space at its current headquarters in the Redwood Plaza, at 11707 E. Sprague, would be used to help pay for its debt service, he says. The city also could pay for the project through the issuance of councilmanic bonds, he says. In Washington state, city councils can authorize such bonds without a vote from the general public.

Library plansWhile plans for the new City Hall are moving forward, the Spokane County Library District hit a roadblock in March when voters in and around the city of Spokane Valley rejected a bond issue that would have raised $33 million for the construction of two new library branchesincluding one at U-Cityand the expansion of another.

The library district said last winter it had reached an agreement to buy 3.5 acres in U-City, located at the south end of the property just north of Appleway Boulevard, for a new Spokane Valley library branch. Under that agreement, the library district has until August to come up with a financing plan for the project.

Despite the setback, Kuhta says the city is continuing to work with the library district on efforts to build a new library in the planned city center.

He says voters rejection of the bond measure this spring, as well as Liberty Lake voters recent rejection of a bond measure for a new civic center there, shows that getting public support for such projects during an economic slowdown can be difficult. The cooling of the economy, particularly in the real estate sector, also is hindering progress because the city plans to rely primarily on private investors to develop the city center, he says.

With the way the economy is and everybody feeling the pinch on gas prices, its hard times to propose bond measures right now, Kuhta says. We have to make sure our planning is done right and that we get a lot of citizen support.

He says that when city leaders were examining ways to launch the city center, they came up with three possible strategies. Those included adopting new zoning laws that could accommodate the development and seeing if the market would respond accordingly; zoning the land and installing the necessary infrastructure; or zoning the land and working with the property owner to attract a developer that would build the non-civic buildings in the city center. Initially, they explored the third option, but now have decided there needs to be some sort of public investment and zoning change first, he says.

We thought we had a good shot at it, but the real estate market has changed a lot, Kuhta says. A lot of people are backing off projects and financing is tightening up, but were still moving forward and hoping the real estate market will turn around.

The land-use issues surrounding development of the city center arent as significant as those in other areas on the Sprague-Appleway couplet where officials hope to spark development, he says. New zoning is needed, though, to accommodate the type of development envisioned in the city center, he says. City leaders intend for the center to be the citys most urban environment, and the new zoning rules would include a broader range of allowed uses than in many other Spokane Valley areas, including the highest building heights and higher commercial and residential densities.

Currently, zoning regulations in the U-City area are designed for suburban commercial development, including big parking lots, 20-foot setbacks, and lower height restrictions, Kuhta says. Under the proposed new zoning laws, along with looser height restrictions, buildings would be required to abut sidewalks, he says. Projects also would have to meet design standards the city plans to establish for the entire Sprague-Appleway corridor, he says.

Mixed-use, how buildings are placed on lots, and the design standards are the things that will make this area unique, Kuhta says.

Financing sourcesSales and property taxes the city would receive as a result of developments there would help pay for the citys expenses on the project, Munson says. Financing sources could include bonds, state and federal funds, and private developers who could help pay for infrastructure improvements. Munson says the city will keep funding through taxes to a minimum and is planning to launch an aggressive public information program to keep citizens up-to-date on plans.

We have every intention of making sure the public knows what were doing as we do it, he says. When we have to ask for money, people will understand exactly what that money will pay for.

The transportation portion of the Sprague-Appleway revitalization plan is projected to cost roughly $41 million, Kuhta says. That estimate doesnt include expenses for city center infrastructure, and no breakdown of public and private costs is available at this point, he says. The revitalization plan is being reviewed by the citys planning commission, and the City Council tentatively is scheduled to adopt the plan by the end of this fall, Kuhta says.

If a single developer came in and developed the entire city center, it could be completed in two or three years, Kuhta says. If the project is done in increments, it could take a lot more time to have change in the corridor, he says.

Kuhta says the citys options are limited in terms of the tools it can use to attract private development. One option might involve creating a tax-increment financing district, which is a tool that municipalities use to finance improvements up front then recoup their investments through gains in tax collections resulting from related development. Also, in a few months, the city plans to start working on an ordinance that would shift its environmental review of projects within the city center from the permit application stage to an earlier phase in the planning process, he says. Since the city will conduct a more detailed environmental analysis for the city center early on, that change would create a more streamlined permit process for developers involved in the project, he says.

Contact Emily Proffitt at (509) 344-1265 or via e-mail at emilyp@spokanejournal.com.

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