The is scheduled to build a long-planned road on 56th Street that costs over $4.6 million, having finally received a Washington State Transportation Improvement Board grant for $2.5 million.
The city expected a developer, with whom it negotiated no contract or agreement, to pay an expected $1.2 million - but the city really only needs $800,000.
The developer, who signed an unenforceable letter of commitment, isn’t about to pay anything. The apparent state deadline is in early March, or else $2.5 million will go to some other city.
And, the Mayor and City Council, are anticipating the possibility of foregoing the grant money because it seems unfair that the developer won't pay.
No rational public official would forego $2.5 million of grant money if local matching dollars are reasonably available. In this case, either the city can allocate $800,000 from its healthy borrowing capacity, or the city can spend saved dollars from the Civic Center Debt Reserve, and choose to pay itself back later with interest, or not at all. (The Civic Center Debt Reserve is not a restricted reserve; it's just a fund with a name.)
Bottom line: once Gig Harbor proves to the Transportation Improvement Board that it’s a can’t-do city, rather than a can-do, future TIB grants will be scarce, no matter what the TIB says today.
The TIB is one of only two regular sources of funding for large local road projects. The one irregular way to fund a local road is to wangle a federal earmark. So, no rational public official would poison a grant well.
Why the city didn’t negotiate a contract or agreement instead of a vacuous, unenforceable letter of commitment prior to seeking a grant is hard to fathom. If the City Council in 1997 would have been satisfied with a simple letter of commitment, rather than an enforceable agreement with the developers immediately adjacent to Borgen Boulevard, then there would be no Gig Harbor North - no YMCA, Costco, Albertsons, Target, Home Depot, or for or that matter, St. Anthony Hospital.
It’s so unfair, public officials say, that the developer won’t pay. In fact, developers will pay more later than if they ante up $800,000 now. Upon future development, developers will pay the transportation impact fees in effect at the time. The fees will have gone up; they always do (death and…).
There will be plenty of transportation impact fee projects in this area. So, even though this road is completed now, the developer will still pay the full share transportation impact fees for other roads affected by its project (by its new vehicle trips).
As a resident of Gig Harbor, I want to pay the lowest cost for 56th Street road improvements. (Today is the best bid climate for a road project in our lifetimes.) As city taxpayers, we are eventually going to support construction cost of this road segment.
If the Mayor and City Council forego the TIB grant monies now, then the best case is that the City of Gig Harbor will need to place local cash on the barrelhead with the next TIB grant application. The greater possibility, however, is that the city won’t see these type of grant funds again for perhaps a decade.
Foregoing $2.5 million of grant money, in dismay over a lost developer contribution that no public official had legitimate right to expect - all over $800,000 that there are numerous ways to fund - is yet another example of “penny-wise and pound foolish.” If Benjamin Franklin was a City of Gig Harbor councilperson, he would procure $800,000 forthwith.