Portland's Pearl District (Photo free from File Morgue--portland-pearl-district-photo-by-gilbert928)

Let’s say you’re the mayor of a medium-sized city in Washington state —let’s call it Northlakeshoreline —and your city has a problem. The country’s economy is a mess, of course, and the closing of a large factory in your city hasn’t helped things locally. You’d like to be able to make some significant improvements in a part of your city that is really run down. But your budget is tapped out dealing with bigger demands on social services and just keeping up with basic city needs.

You have an idea. Why not draw a line around the part of the city — let’s call it the Sherwood Forest neighborhood — that has some of the lowest property values and the biggest problems with roads, drainage, and basic infrastructure needs. You ask the assessor to give you a snapshot of how much all that property is worth and you partner with a local developer who gives you a sense of how the value of the property could be increased. After a lot of discussions, meetings, and number crunching you realize that if you fixed the infrastructure problems you could attract new development that would significantly improve tax revenue from Sherwood Forest — enough revenue, in fact, to pay for the improvements. But that revenue is off in the future. What do you do?

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What a great solution, you think. Borrow money now to fix up a neighborhood, create some jobs and economic activity in the process, and pay back the loan with the increased taxes you can collect. You’ve just invented Tax Increment Financing (TIF).

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Tax increment financing is one example of something called value capture. It’s the idea that a good with future benefits that is out of reach today can be paid for with loans, and those loans can be paid back with the benefits of the good created with those loans. The increase in property values in the Sherwood Forest TIF district pay for the annual loan payments. This means as mayor you don’t have to make any cuts in order to pay for the improvements. And the best part is that after the loan gets paid off, the city can keep the extra tax revenue for use in the general fund. Tax Increment Financing has been used most notably in Oregon where the Pearl District in Portland is often cited as a big TIF success story.

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Of course, in the real world, the implementation of TIF is far more complicated. But the concept is pretty straightforward. Cities and counties in Washington State don’t have access to this tool. Why not?

Washington State doesn’t collect taxes using a rate based system. Believe it or not, part of what makes the story I just told work is that there is a fixed rate of taxes assessed on the property from year to year. Attaching a rate—x percent of tax of the total value of a property—is important because as the value increases incrementally, a city can capture that incremental increase and pay off the debt.

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Washington has what is called a budget based system of collecting taxes to fund the operation of government. That means that our fictional city of Northlakeshoreline would come up with its budget first, then levy a tax on all the properties so that they share the burden equally. That means the tax assessment is evenly distributed over all the taxable properties in the city.

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Under Washington’s constitution a city is able to borrow money to improve public infrastructure and those improvement might result in increased property values. But the taxes that the city collects on those properties are NOT based on their assessed value. Those properties are taxed based on a rate set by the value of new construction throughout the city, the previous year’s city budget, and up to an additional one percent of the previous year’s city budget. That rate is applied, equally per $1000 of value, to ALL properties across the city.

Confused? Join the club. This budget-based problem is what makes TIF in Washington such a challenge. The framers of the Washington State constitution were aiming to create a fair and predictable system for assessing property taxes. They wanted to be sure that some people wouldn’t be unfairly targeted for extra taxes. Taxing all property uniformly—essentially a flat tax—seemed to them the best way to create a fair system. But it also creates other problems.

One problem is figuring out how to capture tax revenue to provide services that benefit just one part of a tax district. If I have a mosquito infestation near the river, why should the people who live across town have to pay to fix that problem? But I can’t tax the folks by the river more than the others because of uniformity. That means I have to pay to fix the problem out of the general fund that everyone pays into, in order to fix a highly localized problem.

But the framers, in their wisdom or by accident, allowed for the creation of taxing districts. So the city of Northlakeshoreline can create a Mosquito Control District (yes they exist!) so that people who live by the river can get taxed—uniformly—to attack the mosquito problem. So they will pay more property tax per $1,000 of value of property, but they also get the benefit of the services their taxes are paying for. A TIF district wouldn’t be providing services but infrastructure—roads, drainage, and parks for example—and paying for them over time. It is possible that the TIF challenge will be met by creating a new kind of taxing district.

And the other option might be to just amend Washington’s constitution to exempt properties in designated TIF areas like Sherwood Forest. There ARE already exemptions (in sections 10 and 11 of Article VII of the constitution) that tax property owned by senior citizens and certain kinds of farm and timber land, and open space at a different rate than other properties in a taxing district. A similar carve out could be made for properties in TIF areas so that they could be taxed with a rate that would allow the capture of additional value.

No matter what, the time is now for TIF. But the next part of the story will be whether the openings left by the framers for creating new districts are wide enough or whether a constitutional amendment is needed.

The Economist has an interesting article about how some private equity firms are investing in care homes. The firms are hoping to make money from aging populations in rich countries, but they may face obstacles, the story says.

Photobucket.com.

Being a public-sector employee, I understand just as well as anyone the dire financial situation our local municipalities are in, due to substantially lower revenues from sales, property, utility, real estate excise other taxes. And I am all for creative solutions. Keep ‘em coming!

But I have to agree with Kemper Freeman, Jr., that Seattle Mayor Mike McGinn’s  plan to hike Downtown on-street parking rates is ill advised. There is no doubt that it would raise needed revenues. And if you’ve driven the obstacle course of potholes that our local streets have become, you certainly can’t argue that SDOT needs more revenue. But a healthy, thriving and competitive retail sector is crucial to the continued success of one of this nation’s most successful downtowns. Parking for $4 an hour is a mighty high rate. In fact, it would be one of the highest in the country.

Is it high enough to scare away retail shoppers, restaurant-goers, theater-goers, etc.? That’s hard to say, but is it worth the gamble?

In the early 1990s, during Downtown Seattle’s possibly darkest period, after the closing of several venerable retail establishments, not the least of which was Frederick & Nelson, I served on a task force convened by Mayor Rice. The objective of that task force was to study Downtown parking options. Without going into detail about our findings, the prevailing notion was that there were enough obstacles to retail’s success in Downtown, and parking rates (something the City could actually control) should not be another!

We should not rest on the laurels of our recent successes Downtown by assuming that the retail community is so rock-solid that it can withstand yet another blow after the Great Recession. If substantially increased hourly parking rates deter retail visitors, that could be the proverbial last straw for many retailers.

Portland, a city we often look to enviously for its innovative and progressive ways, has both an easily accessible system of public parking garages, as well as an affordable set of parking rates, due to an aggressive validation campaign.

Perhaps we should look to our neighbors for some creative ideas. Perhaps the $4/hour parking rate would be palatable if there were an ambitious new validation system. Perhaps a more modest hike in parking rates would pass under the radar, yielding more revenue without scaring away customers. I’m sure there are many ideas that perhaps a new Downtown parking task force could take under advisement. The Mayor would do well to consider convening such a task force before a unilateral parking-rate hike.

So I’ve been thinking. What would I be willing to take in exchange for supporting the deep bore tunnel? What would it take for me to capitulate and get on board the deep bore bandwagon? Okay, here it is. It’s pretty simple and straightforward: a sensible land use policy. I think it might just be worth the $4.5 billion, the rancor and the power grab by the Seattle City Council if we could get our act together on land use in Seattle. We know compact communities are better for the environment, use less energy, and promote walking, biking, and transit use. So warm up the boring machine but here’s what I want first.

Let’s start with Beacon Hill. About 15 years ago I moved to Beacon Hill and got involved in the neighborhood planning process. It was fun. I learned a lot and the various committees and organizations on the Hill worked hard to develop a vision for Beacon Hill. There was a small, dedicated, and relentless group focused on getting Beacon Hill a station on the new light rail line that would be passing deep under the neighborhood. There was no plan for a Beacon Hill station, or at least there wasn’t any money. But the group persevered, and, amazingly, landed a plan for a station and a commitment for a station shell. They pushed some more. Finally, there was a commitment to build a station—one of the deepest in the world at the time—to serve the neighborhood.

At the time the neighborhood was also planning where to put the library and how to take advantage of the lid going in at the reservoir in Jefferson Park. All of these things were challenging (sometimes controversial) and took a lot of energy from neighbors. But the station seemed to be an unqualified and big win. We’d finally get that core to the neighborhood conceived of in the planning process. The neighborhood could finally grow up with mixed use buildings and retail. We’d exchange the squat and decaying buildings for transit oriented development. Again, not without controversy, but why not take advantage of the rail line to create a compact downtown for Beacon Hill centered on transit.

Well, what does downtown Beacon Hill look like today?

All photos are by Roger Valdez.

I moved to Capitol Hill some time ago. But a recent trip to Beacon Hill made me wonder “what happened.” Then I thought about the City Council falling all over themselves to dig the tunnel on the water front. Why that big project and not Beacon Hill?  Fifteen years after I moved there, Beacon Hill does not have thriving transit oriented development. Instead the station looks like the stump of a felled tree. And that’s about how it feels.

So dig your tunnel City Council. But I’d like to see the rezones on my desk for transit oriented development on Beacon Hill by the end the day. That shouldn’t be to hard, just dust off the plans we worked so hard on. We’d also have a chance to consider things like district energy, affordability, and LEED requirements as part if the legislation. And rezones are free! Write up that resolution for Monday, pass it with a unanimous vote (sure they’ll be a few whiners in the audience but that shouldn’t slow you down. You’re the “get it done gang,” after all).  How exciting! Maybe one day we’ll be able to stand up and say we’re like Redmond. Here’s what they built near their park and ride.

And what the heck, once the rezones are signed, sealed and delivered, I’ll bet we can talk Mayor McGinn into taking a trip out of town so Richard Conlin can do the honors and sign them into law. I’ll even loan him a pen.

Seattle Bubble has an interesting post. It says that many homebuyers in King County are apparently unwilling to

Photo courtesy of photobucket.com.

Southern Sudan plans to rebuild cities in the region in the shapes of animals and fruit, according to this BBC News report. SeattleScape blogger Mark Hinshaw sees potential there. Here’s what he has to say:

The World Institute for Anthropomorphic Town Planning announced last week that Washington State will be the recipient of six grants to counties for free-standing urban development.  Each county would be required

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“We are excited about this prospect because we know that many legislators have been wanting get rid of the Growth Management Act,” said Keefer Bakelite, Palouse County Commissioner. “Who could possibly object to towns shaped like animals?”

Says Professor William “Willy” Grant of CWU’s urban planning school, “Few people know it, but animals make the ideal shape for communities. Civic uses fit nicely in the head, industry fits in the stomach, housing in the legs. Waste disposal systems go, um, well… near the tail.”

A number of counties are vying for the grant, having already selected the Bighorn Sheep, the Black Bear, the Salmon, and the Geoduck for their own submissions. Palin T. McHall, Executive Director  of the WIATP remarked, “Other counties will have to be extra creative as some of the best animal shapes are already taken.”  “Insects are also eligible,” he adds.

For their part, Futurewise and the Sierra Club are in a political quandary. “We hate free-standing communities. But we all love animals. It’s a true dilemma,” one close source who chose not be identified said.

Personally, I think it would be swell to have a town in look like a cicindela tranqebarica.

My bus crosses the Aurora Bridge with its wonderful public view of Mount Rainier, the city, the ship canal, the Olympics and Cascades. Since we’re destined to lose our grand aerial view from the Alaskan Way Viaduct, the pending loss of the view from the Aurora Bridge is even more aggravating.

Aurora Bridge lit up. Enhanced photo by Kenji Tachibana

So we’re spending $4.6 million, forcing residents of Fremont and Queen Anne to endure months of daytime irritation and sleepless nights while the construction crews drill and rivet and corrupt our bridge so we can possibly deter a small subset of suicide attempts.  But we’re not going to solve the problem of suicide this way and we’re not going to eliminate every hazard to our physical and mental health by such clumsy methods.  If the goal is to spend gas tax dollars to prevent loss of life, there are hundreds of unfunded highway safety projects, railroad grade separations, and drunken driving enforcement actions that would be more effective.

As reported in yesterday’s DJC, the Sheraton Hotel is finally going to improve the dreadful blank wall along the western side of 7th Avenue between Pike and Union Streets created by its first and second towers.

While I’m thrilled to hear that this long-awaited improvement scheme has not fallen through the cracks and is scheduled to start next week, it’s taking all my patience not to be cynical about this interesting state of affairs.

As I commented in an opinion piece I wrote on the subject for the DJC on 4/6/09, the big blank wall along 7th Avenue (and parts of both Pike and Union Streets as well) should not have occurred in the first place.  The City’s Downtown zoning code would otherwise require street-level uses and “transparency” (doors and windows that allow both visual and physical access to those activities) along 7th Avenue.  Somehow the Downtown Design Review Board approved a departure from those standards in exchange for wall treatment

Mirrors will be added to the blank wall of the Sheraton to make the streetscape more inviting. Image courtesy of Gustafson Guthrie Nichol.

To my mind, there is no more naturally interesting phenomenon as one walks down a city street than interacting – both visually and physically – with a variety of shops, cafés, and other establishments that organically inhabit street-level tenant spaces over the years.

I commend Gustafson Guthrie Nichol for their bold, innovative and, yes, probably very engaging “garden walk.”  In my article, I made a rather glib reference to such an applied treatment being akin to lipstick on a certain porcine animal.  And, as with any maquillage, I fear it will require an inordinate amount of maintenance and continual primping to remain the engaging and interesting street-side phenomenon that they intend.

As for the intended reflection of the Eagles Temple across 7th Avenue, this is an interesting homage to that landmark.  It reminds me of the storied reflection of Trinity Church in the adjacent Hancock Tower’s wall of glass in Boston’s Back Bay. There’s something playful and creative about this approach to a response to the

The western side of Seventh Avenue between Pike and Union streets consists of one uninterrupted, blank concrete facade. Photo by DJC staff.

Again, actual street-level tenant space, with doors and windows, could last the lifetime of the building with a changing array of establishments naturally responding to their street-level location with appropriate displays and accessibility.  Yet the placement of mirrors seems so impermanent.  Does the Sheraton Hotel management really intend to maintain and likely replace those mirrors essentially ad perpetuum?

Not to be ever the naysayer, I am anxiously awaiting the unveiling of the 7th Avenue “garden walk” next Spring as it will be a vast improvement over the existing pitiful situation.  And the Gustafson Guthrie Nichol group do marvelous work, so it will be a pleasure, yet again, to interact with their work in our cityscape.

Downtown Seattle has its  McGuire apartments, 25-story building the owner plans to demolish because it says construction defects are too expensive to fix — a contention the contractor disagrees with.

Sarasota, Fla. has its 15-story Dolphin Tower condo complex, which engineers plan to jack up to fix severe design and construction flaws that have caused a key concrete support to fail, according to a Sarasota Herald Tribune story. Read it here.

Opponents of the deep bore tunnel are getting desperate. Now some are proposing a City referendum. Assuming your standpoint is something other than “stop the tunnel at all costs,” this is a ridiculous idea. Without getting into the minutiae, here are a few major flaws in their thinking.

1. It would cause delay, which would increase cost. To ensure top-quality, low-price proposals, WSDOT would presumably postpone the team selection, and much of the public deal finalization would be delayed as well. Even if the referendum resulted in a “go,” this would risk moving the pricing into a period of general economic recovery. As everyone in construction knows, any economic recovery will cause prices to rise substantially due to higher material costs, normalization of margins at every level, etc. The current RFP process is well timed to take advantage of low pricing that we know will last into early next year, but might not last much longer.

2. If opponents were to win, what then? Would it be a simple matter of clarifying Seattle’s exposure to overruns, or would it stop the tunnel concept entirely? Does anyone think that another option would be more popular? Based on who is supporting the referendum, it sounds like the “surface” option is their intended goal. That might play well in some neighborhoods, but it’s the worst nightmare for many of the viaduct’s

The deep bore tunnel being studied as part of the Alaskan Way Viaduct replacement will carry four lanes of traffic under downtown Seattle. Much of the two-mile-long tunnel will go through glacial till, reaching a depth of 220 feet. Image courtesy of WSDOT

3. It would be a City referendum for a State project that affects the whole metro. I agree that the cost risk should be shared by the State and the City…which currently appears to be the case, barring any future contract language that specifies otherwise. Aside from the issue of Seattle’s risk, there’s the issue of who the viaduct belongs to. Referendum supporters appear to be forgetting that tunnel is a State project, and serves a region-wide traveling public. Do they really think the State will let Seattle delete a regional lifeline? If the tunnel were stopped, the result would be another highway of some kind. Probably an aerial replacement, built a couple years after the current plan during a time of much higher pricing. The no-replacement people would get to look at THAT for the next 60 years, which horrifies me as well.

4. The other concepts have MORE cost risk. In 2008 it could be argued that a tunnel had higher cost risk than an aerial option. Off the cuff, the opposite seems to be true today. The tunnel has gone through a year and a half of intense study, design, and improvement since becoming the chosen option. A replacement viaduct (or any other concept) would start over with very minimal design, very minimal knowledge of what’s under the existing viaduct, and very minimal idea of what would be needed to minimize the considerable construction inconveniences. Further, those who prefer other options typically forget to include the cost of knitting South Lake Union and Lower Queen Anne back together via a lowered Aurora, which would be a much more difficult project in their scenarios, and they leave the current tunnel severely under code. (This is all completely separate from the hidden costs of disruption (during construction and permanently) with the surface, aerial, or cut-n-cover options, which would dwarf the project cost in every instance.)

In another blog post I discussed why the idea that driving will suddenly become unpopular (an idea held by many surface option supporters) is wrong as well. I won’t get into the opponents claims about overruns on past projects, which are based on ancient history rather than the modern practices of agencies like WSDOT, Sound Transit, etc., who have done well in keeping their recent work on budget.

I suspect the referendum won’t happen because smarter heads will prevail. And if it does, it’ll probably lose, because as some old polling suggested, the public’s #1 priority is to get it done, even among many people who consider the tunnel their second or third favorite option. The tunnel is a good plan, which does an excellent job of balancing millions of viewpoints, and is ultimately the lowest-risk concept.