Sales tax could help build Mill Creek urban village

Published 10:23 pm Wednesday, September 2, 2009

MILL CREEK — A mini version of the Mill Creek Town Center, with a mix of residential, retail and commercial office, is planned near this city’s eastern boundary.

If fully built by 2018, the 50-acre East Gateway Planned Urban Village is expected to have 75 town homes and 400 apartments, with 324,000 square feet of retail and office space and about 40,000 square feet set aside for public use.

City planners also want to build a new connecting road through the development. That road, plus the sidewalks, sewer pipes and lighting that go with it, is estimated to cost $9 million.

Monday, the City Council gave city officials the green light to apply for a new state program that shifts some state sales tax to local governments as a way to spur economic development and defray the cost of building a new road.

“If the state’s going to do it, we might as well take advantage of it,” Councilman Mike Todd said. “I think it’s a good opportunity for us to potentially do something in the East Gateway area.”

One developer’s representative told council members the potential financial benefits are a “really big deal.”

City leaders say the new program, called Local Revitalization Funding, could save the city millions of dollars in road, sidewalk, sewer and other infrastructure needed before private retail or residential development can happen in East Gateway.

The council’s action doesn’t commit the city to spend any money on East Gateway. It simply allows it to apply for the program.

The LRF program could save the city half of the cost of infrastructure — about $4.5 million over the next 20-plus years, said Landy Manuel, the city’s finance director.

Local Revitalization Financing is a tool that uses the gradual growth in local tax revenues to pay for public improvements.

Under terms of the program, cities and counties that participate could only use the sales tax money to repay up to half of bonds sold to pay for those infrastructure improvements.

The state has $2.5 million available annually and applicants are eligible to receive a maximum of $500,000 a year for 25 years, beginning in July 2011, Manuel said. Seven other cities are already part of a demonstration project that guarantees them a combined $2.25 million a year, City Manager Timothy Burns said.

Manuel told the council the city estimates it will spend about $319,000 a year repaying the bonds. The state will kick in the other half, about $319,000.

“We could also ask private developers to pay some toward the bond,” he said, after the meeting.

Applications are on a first-come, first-served basis, said Mike Gowrylow, state Department of Revenue spokesman. The revenue department set up an atomic clock to time receipt of applications, which were accepted beginning at 9 a.m. Tuesday. Mill Creek’s application was ninth out of 12 and the state likely has enough money for only six of those applicants, Gowrylow said.

If Mill Creek’s application doesn’t make the cut, the city probably won’t build the road through East Gateway, though a developer could possibly pay the full cost, Burns said.

The city has estimated the East Gateway project will create about 800 new jobs — plus 70 new construction jobs.

Kirkland commercial broker Tom Dillon, whose company, First Western Properties, Inc. represents national developer Phillips Edison &Co., said his company has “some idea” about possible tenants for the site but that it’s far from certain whether the developer will buy any property.

That depends on whether the developer decides it’s economically feasible and on negotiations with a property owner, he said.

Bob Sherry, a representative for Phillips Edison, told the council the program could be a major boon to development of East Gateway.

“I’m a long ways from being committed to do this project,” he said. “But having $41/2 million available out there to help us will certainly go a long way.”

Oscar Halpert: 425-339-3429, ohalpert@heraldnet.com.