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?
“What happens if the tax revenue expected doesn’t pan out?”
RCW 39.102.150 indicates that the city could, when it issues the bonds, make itself responsible for making up any shortfall:
“(2)(a) Except as provided in (b) of this subsection, the general indebtedness incurred under subsection (1) of this section may be payable from other tax revenues, the full faith and credit of the local government, and nontax income, revenues, fees, and rents from the public improvements, as well as contributions, grants, and nontax money available to the local government for payment of costs of the public improvements or associated debt service on the general indebtedness.
“(b) A sponsoring local government that issues bonds under this section shall not pledge any money received from the state of Washington for the payment of such bonds, other than the local sales and use taxes imposed under the authority of RCW 82.14.475 and collected by the department.”
The state contribution would be limited by the amount of the increase in local tax revenues, as I understand it. If the revenues don’t increase as expected, the state contribution would be less than expected. So, the answer to the question depends on the obligations assumed by the city when it issues the bonds, I believe.
Here is what the public notice to be published in the Kitsap Sun apparently says about the possibility of the city paying any shortfall in the expected increase of tax revenue, based on the May 28 agenda packet:
“Other resources available to finance the improvements within the RDA include: City of Bremerton General Capital Improvement Fund….”
RCW 39.102.100 requires that the public notice state what revenue would pay for the bonds:
“Prior to adopting the ordinance creating the revenue development area and to meet the requirements of RCW 39.102.150(1)(b), a sponsoring local government and any cosponsoring local government must provide public notice.
“(1) Notice of the public hearing must be published in a legal newspaper of general circulation within the proposed revenue development area at least ten days before the public hearing and posted in at least six conspicuous public places located in the proposed revenue development area.
“(2) Notice must also be sent by United States mail to the property owners….
“(3) Notices must describe the contemplated public improvements, estimate the public improvement costs, describe the portion of the public improvement costs to be borne by local infrastructure financing, describe any other sources of revenue to finance the public improvements….”
It looks to me as though the city would be able to issue general obligation bonds and assume the responsibility to make up any shortfall caused by lower than expected increases in tax revenue from the development.
I wonder: did the councilman get an answer to his question?
I have to agree with Mr. McConnell. There is much more to Bremerton than just downtown. Only someone who doesn’t really live here would think that the downtown area is the center of Bremerton. Even the main roads in don’t go through downtown, but rather East bremerton and Wheaton Way or West Bremerton and Kitsap Way. It is where the ferry fills and empties, and where one of the shipyard gates is.
A parking garage? Why? I have errands downtown two or three times per week and never have any trouble parking.
We can’t sell the condos; we can’t sustain restaurants even with the large shipyard lunch crowds.
Why? I think because nobody really cares about what the majority of Bremerton wants or needs for it’s community. We seem focused on only six square blocks and who can we entice from the outside.
This isn’t a Kevin Costner movie. We did build it and they haven’t come. When are we going to start looking at the majority of Bremerton and what can be done for us?
Binion here:
Excellent points, Bob and anonymous.
According to an analysis that used conservative assumptions, according to Lyon, the revenue will be there.
Will it really? Well, who knows. Government, like individuals, has to test waters, look at numbers and make decisions based on speculative, incomplete data. There are no crystal balls, all investments contain risk. That’s life in the medium-sized city.
Voters will decide if these risks are appropriate.
Hopefully they will decide. If attendance at city council meetings is any indication of civic engagement … well, let’s leave it at that.
And again, the city has room under the bond limit to borrow the money, it has decided these projects are worthwhile and is using the LIFT program to pay for it.
If it doesn’t get the LIFT go-ahead, it still plans on doing these projects, just probably under a different schedule. In some cases, some projects have already won grants, like the boardwalk.
As for Bremerton being more than a downtown, that’s obvious. However, city government ignoring other parts of town is sort of a different issue. Not invalid, just different.
The LIFT program requires a section of town be designated that fits a criteria along the lines of the “urban village” that we have been hearing so much about. My neighborhood, outside downtown, was gerrymandered out of the RDA because it contains mostly single-family dwellings, and would have “muddied the waters,” as it was explained to me.
That said, anonymous, I loved your Kevin Costner reference. It started a robust discussion in the newsroom over Costner’s best work. (It was agreed, Field of Dreams)
And not to say that you are responsible for coming up with a winning idea for improving all of Bremerton – you have a right to complain – but do you have any?
Any individual waiting for a risk free life…well, that silly person hasn’t yet been born.
I don’t know of 100% guarantees for any venture, government or private…none.
Life is risk. It is the balance of risk that should determine the course of action.
Medications often times are so loaded with unpleasant side effects, taking them is a careful study deciding if the risk is worth the benefit.
Not one of us can go to bed at night with 100% assuredly of awakening in the morning….neither can the city chose any action without some degree of risk.
Mr. McConnell might well ask, What if the expected tax revenue DOES pan out rather than his concern that it might not….
Sharon O’Hara
anonymous here. Guess I still haven’t figured out how to post. While I don’t have a winning idea for all of Bremerton, I do have a suggestion or two. Perhaps looking at B & O taxes and operating taxes in Bremerton compared to the rest of the county. There must be a reason for a business such as Lowes to move 1/4 of a mile down the road and out of Bremerton City limits. I believe taxation was one of the reasons given. Another suggestion are we focusing so much on the downtown that we are missing needs in other ares. What about roads and sidewalks where much need repair is being neglected. I live on a small side street in West Bremerton. Cars hit the last speed bump about a half mile from my drive and then floor it until the next stop approximatley a 1/2 mile in the opposite direction. When I contacted the city about one more speed bump to control traffic, I was told there was no more money in the budget for an additional speed bump although they realize speed can be a problem. It is hard to get excited about supplemental funding for a parking garage when we can’t even afford a speed bump!
I’m not saying we should give up on downtown but some balance for the rest of the neighborhoods would be very much appreciated.
I would like to think I am a Bremerton Citizen, not silt.