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I’ve been asked two questions about
this story, published today, about a program the city may apply
for that allows the city to keep some tax revenue to pay for large
capital improvements.
It’s not an easy thing to read about, or write about, but
because of the questions I thought it would help if I tried to
explain it again.
1 The city wants to build these three projects: a boardwalk, a
fancier, more pedestrian-friendly Pacific Avenue and a parking
garage. Let’s take as an example the 366-slot, underground parking
garage it wants to build at the corner of Park Avenue and Burwell
Street on property it already owns.
Parking garages are losing investments. They won’t make back the
money it takes to build them, however, they are necessary to
stimulating an economy.
2 A program through the state will allow the city to pay for the
garage, (that is, pay off the loans for the garage) with sales and
property taxes generated in downtown Bremerton
that otherwise would go to the state. Let’s call this a “kick
back,” although it isn’t in the classic, Chicago meaning of the
word.
3 The city has to prove the projects will generate extra tax
revenue to justify the “kick back.” In this case, garage fees are
expected to be about $200,000 a year, not nearly enough to pay for
the project. However, with the additional parking, an analysis
found that tax revenue within the designed area would increase
because of additional economic activity, partly caused by the easy,
cheap parking.
4 OK, now switch gears. For this year’s program, the state will
forgo $2.5 million a year for 25 years in tax revenue generated by
the projects. Total.
5 The most a city can get is $1 million a year for 25 years. The
money must be spent to pay off loans (otherwise known as bonds)
that paid for the original project. See how it’s kind of
circular?
6 The program was available last year, and this year. The
Legislature has not approved it for another year.
7 As for “other people’s money,” which some people took
exception to, apparently I did not provide enough context.
Lyon’s comment came out of a conversation where I mentioned that
many of the revitalization projects are being paid for with grants
and other forms of outside money, money that Bremertonians did not
earn.
Lyon was not being flippant, she was agreeing with me that, in
other words, it appears that Bremerton is not paying the full price
for Bremerton’s revitalization. It’s getting a lot of outside
help.
8 McConnell’s comments were twofold. First, he noted that
downtown isn’t the only neighborhood in need, and second that there
appears to be some risk involved in joining the LIFT program: what
happens if the tax revenue expected doesn’t pan out?
