BELLINGHAM - City Council has agreed to keep the Public Development Authority in business in 2014 with a $558,000 appropriation of sales tax money that would otherwise have been used for street maintenance.
At a Monday, Nov. 25, budget session, the council voted 5-1 in favor of another year of spending on the Public Development Authority, with Stan Snapp voting no and Gene Knutson absent.
Council member Seth Fleetwood, who proposed the funding measure, said he didn't like having to take money out of an already inadequate street maintenance program, but didn't know where else to find enough dollars to keep the development authority moving ahead on a renewal project that could return significant revenue to the city if it succeeds.
Jim Long, the development authority's executive director, had asked the council for a much larger sum: $1.1 million. Long hoped to take that sum from the $1.2 million in proceeds from the 2011 sale of a city-owned lot at 1100 Cornwall Ave. that was originally purchased with city parking revenue.
Instead, the council voted to transfer that $1.2 million back into the parking fund, where it will remain available for future projects.
Long said he was satisfied.
Long told the council that $558,000 was enough to launch the first phase of preliminary studies to lay the groundwork for a bold redevelopment project along the west side of Holly Street between Bay Street and Central Avenue. Among other things, that groundwork would include land surveys, geotechnical work to determine the suitability of the site for construction, and market research.
Snapp objected that the council was providing only half of the money that Long said the project will need to get started. As Snapp saw it, that leaves another unfunded half-million dollar expenditure hanging over the city budget in 2014.
Council members indicated that if the project still looks feasible after the first phase of work is done, they would be willing to consider appropriating additional money to the project before the end of 2014.
Long has a preliminary agreement with five private property owners that, combined with city-owned property, creates a 2.5-acre site on Holly Street that could be offered to a private developer.
Long touts the site as a key link between downtown, Old Town and the first phase of waterfront redevelopment being planned for the Granary Building area on Port of Bellingham property.
Long says the site could accommodate an 800-space parking garage below ground level, with a hotel, residences, and commercial and office space arranged around a pedestrian plaza that would provide a walkway over Roeder Avenue and BNSF Railway Co. tracks to the port property.
Council member Jack Weiss said the potential payoff to the city justifies the expense. He noted that the city owns about 40 percent of the 2.5-acre parcel, and would get 40 percent of the proceeds of any sale to developers, plus recovery of the money the city spends on the project. The private owners are not investing their own money at this point, but the city's parcel would be worth far less without their participation.
"It's not actually an expense," Weiss said. "It's a loan."
In an earlier interview, council member Michael Lilliquist acknowledged that the city won't recover that "loan" if the project fails to get off the ground. But he said the potential payoff is worth the risk.
Also at Monday's meeting, the council approved subtracting another $207,000 in sales tax money from 2014 street maintenance, to bolster a variety of social services that got funding cuts during the recession.
Public Works Director Ted Carlson said that after the cuts, the city would still be spending $7.6 million in sales tax revenue on street maintenance in 2014. He also told council members that city funding has not kept pace with maintenance needs for years.
Reach JOHN STARK at email@example.com or call 715-2274.