Spokane County commissioners have approved the issuance of tax-increment financing district bonds to a development group here that plans to make about $3 million worth of improvements to a section of road south of Spokane International Airport.

The 2,200-foot-long, north-south stretch of Thomas Mallen Road that is to be upgraded is between Electric Avenue and Geiger Boulevard, near the southwest corner of the airport property, next to Interstate 90. The planned improvements will include paving and widening the road and installing utilities, sewer and storm-water facilities, sidewalks, curbing, and landscaping.

The improvements are intended partly to accommodate the Armed Forces & Aerospace Museum that's planned at the northeast corner of the intersection of Thomas Mallen and Geiger, but also to encourage other development activity in that West Plains area, says Dick Edwards, one of the partners involved in the project.

Taxincrement financing allows a city or county to issue limited-tax general obligation bonds to pay for infrastructure improvements in a defined development area, then use much of the resulting incremental increases in property-tax revenues in that area to pay off the debt. After the debt is paid, those additional tax revenues flow to the normal taxing districts. TIF funds are used to pay for publicly owned streets, sidewalks, parks, sewers, and other such infrastructure needs.

County commissioners formed a TIF district in that area four years ago, at Edwards' request, and approved an initial series of bonds at that time to pay for about $1.2 million worth of other infrastructure improvements near the airport. This will be the second series of bonds issued in that district.

In this case, developers involved in the partnership have put up the cash for the project, and that money has been put into a county account. The bonds were issued to the developers on Aug. 2. They will be reimbursed over time—with a focus on interest first, then principal—as development activity causes property-tax revenues to rise.

"It doesn't cost the county one dime," says Edwards, part-owner of Hawkins-Edwards Inc., a Spokane commercial and industrial real estate brokerage that has been involved in a lot of real estate dealings on the West Plains over the years.

Spokane attorney Roy Koegen, the county's bond counsel, says if no development activity occurs in the TIF district, and therefore higher property-tax receipts don't result from the infrastructure improvements, the bonds simply aren't repaid, so the developers would shoulder all of the financial risk for the infrastructure improvements.

"We're betting the area is going to improve and we're going to get development out there," Edwards says. If that doesn't happen, the TIF project investors don't recoup their money, he says.

Though private developers are putting up the cash for the road improvements, the way the transaction is structured requires it to be treated as a county-controlled public works project, Koegen says.

Edwards says, "We'd like to get it out to bid this fall," but that will depend on how long it takes engineers to complete the design work.

He says other partners involved in this latest TIF project include Tim Welsh, Al Payne, Jack Gillingham, Bruce Morelan, and Pete Thompson, all of whom have property interests on the West Plains. The same group agreed to donate three acres of land at the northeast corner of the intersection of Thomas Mallen and Geiger for the air museum. Museum backers agreed to buy an additional three acres there, with an option to buy six more acres later for future expansion.

Backers of the planned aerospace museum originally were looking at locating the facility on airport-owned land at Geiger and Electric, but settled earlier this year on the current site. They are continuing to seek donations for the project and haven't issued any revised date by which they'd like to see construction begin. They had said a couple of years ago they hoped to have it under way by now.

The museum would be a roughly 117,000-square-foot complex, and its cost was estimated several years ago at more than $30 million, but backers say only about $4 million is needed to construct an initial phase of it.

Seven TIF districts have been approved in Spokane County since the Washington Legislature authorized use of the tool nine years ago, and three of those were created for sites on the West Plains. The four others were created for sites at Liberty Lake, at the Iron Bridge office campus on Trent Avenue northeast of downtown Spokane, in the West Central area that includes Kendall Yards property, and north of the shuttered former Kaiser Aluminum Corp. Mead Works smelter.