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Town Center Financing Tool From State Not As Simple As "No New Taxes"

University Place has the option to accept $500,000 in sales tax revenue generated in the city annually for Town Center infrastructure. It requires no new tax increases and UP's wallet is safe, but some are still asking questions about the money.

Some call it directing sales tax revenue back to the community in which it was generated.

Others argue that tax dollars are tax dollars, and it doesn’t matter which local government is doling them out.

And even others question why more money should be spent on an already expensive project.

Whatever the case may be, a state-funding tool that allows a city to recoup a portion of sales tax revenue generated within its borders is creating a stir in University Place.

Through the state Legislature’s Local Investment Financing Tool, or LIFT, the City of University Place was granted permission two years ago to collect $500,000 a year for 25 years to pay for infrastructure improvements at the city’s future development, Town Center. (Click here for city staff's report on the measure)

What that means is a portion of the $15 million in state sales revenue generated annually in UP from its 9.3-percent sales tax would go back to the city for the mixed-use project instead of the state. The city only can spend the money for street, sewer and other infrastructure improvements.

The money would be repaid with sales tax revenue collected in University Place, not out of the city’s general fund. There would be no tax increases.

No new taxes, no problem, right?

When the issue came up at the University Place City Council meeting this month, most on the dais said that redirecting sales tax money to help a project that will likely generate sales tax dollars for the suburban community when completed – yet has been crippled by a struggling economy and delays with potential developers – is a good thing.

They liken the model to the Greater Tacoma Convention and Trade Center, for which a public facilities district was created. A portion of the sales tax collected in University Place, Tacoma, Lakewood and other local governments helps pay for the center’s infrastructure every year. (Click here to view the City of Tacoma's report on the center)

The UP measure would require the creation of a separate board run by the University Place City Council that would take out a bond that must be repaid with sales tax dollars.

“Creating a public authority will ensure that the city and its taxpayers have no liability or responsibility for paying the bonds,” Mayor Debbie Klosowski . “Instead, the bondholders can only look to state funds.”

University Place City Councilwoman Caroline Belleci says although the community generates $15 million for the state every year, “we only get a portion of that back.”

But not everyone agreed that accepting the money is a good thing.

Councilman Javier Figueroa sent an e-mail to his supporters over the weekend with a laundry list of questions about the financing:

- Why should the city be allowed to spend any more tax dollars on the city

owned Town Center property?

- What specific projects/tasks will be completed with the bond money?

- Should we approve the bond issue and receive the funds before we know how

the funds will be spent?

- Will the funds cover the entire infrastructure that is needed to complete

the city's required infrastructure to secure/attract developers and tenants?

- Why were we told that the properties were pad ready?

- When will we be done using tax dollars towards the proposed Town Center?

The last question refers, in part, to some $11 million that the city has spent on the project’s infrastructure since 2009.

University Place School Board member Kent Keel, who’s running for a spot on the City Council in November, encouraged officials “to ask a lot of questions about this.”

“If I’m a resident of the state, I will be affected,” he said.

The questions come at a time in which the city has yet to officially sell a Town Center parcel for retail, although officials insist there is interest and action from developers that the public won’t know about until a deal is closed.

Momentum, officials have said, is key to Town Center’s attraction, as the opening of an Applebee’s has been pushed back to next year.

Depending on the rate of the bond when it’s issued, the city could get $5 million to $6 million.

Whether or not the city should accept the money is still up for debate.

The UP City Council is scheduled to vote on the measure at its June 20 meeting.

Jonathan June 16, 2011 at 03:06 AM
Candidate Howard Lee has suggested that the name of the Town Center needs to be changed. My reaction to that was that it would be a pointless and expensive exercise. But when I read comments like yours I begin to see the wisdom in it. Some people have a knee jerk reaction in opposition to anything associated with the words "Town Center." Many people don't realize that Town Center was both a project and a geographical area in the City. This LRF funding is for the Town Center area. Not the now defunct public private partnership by the same name that so many people vocally oppose. It has now been years since that project was abandoned and yet people are still vocally opposing it without even understanding what they are opposing. These funds would build sidewalks, streets, and parking within this Town Center geographical area. I understand that some people don't think University Place is worthy of these types of investments. I can't think of anyplace in the City where this type of investment is more appropriate. I think it is worthy, and I glad the State legislature also thinks so.
Stephen June 16, 2011 at 09:03 PM
We should put in more back-in parking spaces along the other side of Bridgeport. Hey, it's a 'shovel ready' project and they will be used just as much as the ones on the Northbound side. While we are spending, maybe we could pave the permanent/temporary parking lot at the corner of Bridgeport and 37th, I hate when I have to stomp my feet before going into the library and police department... wait a minute the police department is still across the street. Okay I hate having muddy feet while I eat good in the neighborhood ... wait, that's in Lakewood. Well, at least we have a brand new library where a brand new library once stood. Most of the UP City Council wouldn't know a "judicious and beneficial" use of taxpayer monies if it paraded into the City Council chamber naked and danced on the dais.
Ken Campbell June 18, 2011 at 04:09 AM
The establishment of the Town Center Project Authority Board and the authorization of the LRF will be considered at the June 20 Council meeting. For the packet information on these agenda items, go to the city's web page and select `government' and select electronic packets for the meeting http://www.cityofup.com/page368.aspx
James Rand June 18, 2011 at 08:45 AM
Mr. Bird, I don't think there is any confusion about what or where Town Center is.
James Rand June 18, 2011 at 04:11 PM
Ken, I read the agenda and it looks like a done deal. Oh well what's another $8,500,000!

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