POST FALLS — The Post Falls City Council on Tuesday night decided to refrain from de-annexing a portion of the Expo Urban Renewal District on the west side of the city.

On a 5-1 vote, the council decided to follow the Urban Renewal Commission's recommendation to leave the site alone.

Council members in support of leaving the district as status quo said the district, which sunsets in 2021, still needs $3.5 million worth of improvements, including a lift station expansion and the buildout of arterials, to attract business and jobs.

De-annexing the property, they said, would likely prevent some of those improvements envisioned in the urban renewal plan from becoming reality before the district expires.

The Urban Renewal Commission last week unanimously recommended to the council that the district be left alone since the taxing agencies would not begin receiving funding from the de-annexation until 2018 at the earliest and the district will close in 2021. The relatively small amount of additional taxes that would be recognized by the taxing agencies in the event of de-annexation seemed to make the de-annexation proposal futile, the board concluded.

City council members in support of leaving the district as is also felt comfortable with the assertion of the urban renewal agency and Jim Watson, developer of the site between Pleasant View and Beck roads, that no urban renewal funds inside the district will be used for residential purposes.

Some urban renewal critics believe using urban renewal dollars for residential purposes was not the original intent of the funding tool to attract business and jobs in blighted areas.

Council member Joe Malloy was the lone dissenting vote. After the meeting, he said a red flag was raised for him when residential was proposed for the site. He said only commercial and industrial uses were planned for the site when the urban renewal district was formed and the residential proposal goes against that vision.

The developer's proposal is to change the zoning of 115 acres of industrial property to 70 acres of commercial and 45 acres of single-family residential for the Expo site. The council will hold a public hearing on the proposal on Aug. 2 at 6 p.m.

The Post Falls urban renewal matter came less than a week after Coeur d'Alene passed two ordinances allowing the distribution of more than $1.3 million of property tax revenue because of de-annexation of urban renewal property.

Urban renewal districts created by the cities and administered by the urban renewal agencies have a base tax rate when the district is created. That base tax rate continues to be collected by the county and remitted to taxing entities over the life of the district. As a district is improved, has new construction and increases in value due to improvements, the incremental tax created by those improvements in excess of the base tax is allocated to the URA to pay for the public improvements that have been made within the district.