Spokane County and two cities that lie within it still are in the process of negotiating a possible revenue-sharing agreement for industrial-zoned land on the West Plains, says Al French, Spokane County commissioner. 

The talks are moving forward, but no decision has been reached, says French, who had told the Journal last November that he hoped an agreement could be in place by the end of 2013.

“We have agreed to set up biweekly meetings to and to try and work through the different perspectives to try and get to an agreement,” he says. 

Theresa Sanders, administrator for the city of Spokane, says the county is reviewing the city’s latest proposed model for the program.

“We might have something where we can move forward or not by the end of March,” she says. “It depends on who gets what percentage, and whether the city and county feel that it’s equitable enough.”

As envisioned, the county would agree to give a percentage of incremental increases in tax revenue spurred by new development to the city in exchange for assurances that the city wouldn’t annex more industrial land. Such an agreement would provide the county with a consistent tax base long term, says French. For a city, it would provide income from new development without having to provide additional services.

Sanders says the last time the two entities met was around the end of January. The initial discussion began last year when the county brought the city a proposal, she says, and the city returned one in December, which the county is continuing to review. 

Sanders says that city and county are due to meet again late next week. She says she hopes the two jurisdictions can reach an agreement later this year. 

“I would say realistically, if we’re done this summer, I would be delighted,” she says. 

Several possible revenue sources could be included in the West Plains agreement, Sanders says. Currently being discussed are utility, sales, and property taxes. The county is proposing a 50-50 split between itself and whichever city is providing sewer and water service to that part of the West Plains. 

The city, Sanders says, doesn’t have an across-the-board percentage for its desired split. She says some of the modeling the city has done has the amount of revenue shared depending on the type of development, such as industrial or retail. 

For example, a mid-January summary of the city’s proposal, which was based off of hypothetical projects, showed the city receiving 40 percent of construction sales tax, 100 percent of utility tax, about 60 percent of the sales tax, and about 66 percent of property tax receipts on increases in revenue due to new development. 

French says one hang-up has been the way that the city approaches potential arrangements such as the revenue-sharing program.

 “I think the initial challenge for the city is that they have approached this from the perspective of negotiation,” he says. “We’re not trying to negotiate; we’re trying to build a partnership. We’re working to change a culture and try and develop a relationship where we both can win.”

Sanders says that the city also is looking for a win-win outcome, but that the ongoing process is negotiation-like in nature. 

“The way the actual work happens when the financial people sit down at the table is we put together a model we think makes sense, and the county looks at it and says. ‘We want to see this,’” she says. “From a staff perspective, it’s kind of testing the math back and forth.”

Sanders says the city is focused on increasing density and building its tax base within currently city limits. When done right, that kind of growth benefits both parties, she says. 

“As soon as we expand our footprint, we have to expand services,” Sanders says. “If we grow inside well, the county benefits as well. The county benefits from property and sales tax within city limits, but there’s very few county services within city limits.”

As an example, French says, the city has an agreement that if it annexes into the boundary of a fire district, it has to compensate that fire district for the tax base that has then been moved into city boundaries. However, the city still has to provide fire services, so it’s essentially paying twice for the same thing, he says. 

Another benefit to the program would be the city and county being able to work together to bring new development projects to the area, rather than worrying about who would get the tax revenue. 

“One key piece is while we think about driving density inside the city, we’re doing a good job of planning for commercial and industrial expansion outside the city,” Sanders says. “We all want to be ready when we have a commercial or industrial opportunity. Whether it’s in the city or not, we all win when those projects come. Whatever we do, we don’t want to impede those projects.”

French says that since the city and county began talks about a revenue sharing program last year, there have been multiple building projects that could have fallen under the plan. However, he says that any projects that began before an official pact is signed won’t count for revenue sharing.

“Once we sign the agreement, everything after is shared,” he says. “Everything before that belongs to the jurisdiction.”

Since the conversation between the county and the city began, French says, there have been a few projects in the West Plains that could have been included in revenue sharing that now aren’t eligible because they’ve already begun. 

“One is now off the table, and another one is going to be off the table next month, and the third could be off the table in 60 days, because they will have moved forward,” French says. 

The three West Plains projects, which include a metals fabrication facility and a second hanger for Spokane-based Associated Painters Inc., represent 500 to 600 immediate jobs, and could eventually employ as many as 1,000 people here, French claims. He also says Boise-based WinCo Foods LLC is in the construction phase of a new manufacturing facility in the area, as is Bellevue-based Odom Corp.

“There’s five deals there already in construction or imminent that could have been considered part of the revenue-sharing agreement that are off the table,” he says.