Aug. 14--LACEY -- A lone person testified Thursday on a proposal to increase the public investment in the proposed Lacey Gateway Town Center by up to $14 million.

Michael Cade, executive director of the Thurston County Economic Development Council, testified in support of the proposal. He said it is an appropriate area for the proposed growth and development and the mechanism will spur job growth and economic activity.

Officials intend to designate 153 acres of property along Interstate 5 in Hawks Prairie as a revitalization area that would be subject to a form of tax increment financing.

The Lacey City Council didn't take final action. Its vote is scheduled for Aug. 27.

The financing would commit the city to siphon off a portion of the new tax revenue generated by the new dwellings, stores and office for up to 25 years to pay back bonds issued to build the roads and install the utilities needed to attract the development in the first place.

The property is part of the first phase of Lacey Gateway Town Center, which would include more than 1.2 million square feet of commercial, retail and office space, and 500 dwellings. Retail blocks would be situated around a public plaza or open space with offices or housing on the upper floors, accessed by streets with on-street parking and lined with storefronts. The project is led by Hawks Prairie Investments LLC, which is managed by prominent South Sound developer Tri Vo.

The developer plans to finance the internal road and utility improvements at an estimated cost of $42 million. The city would use the increased property and sales-tax revenue diverted through the financing tool to pay back bonds issued to reimburse the developer up to $14 million if certain conditions are met. The state would contribute funding through a tax credit.

The city must apply by Sept. 1 to be considered for the financing, which includes the state funding.

The program, which the Legislature funded earlier this year, is awarded on a first-come basis. If successful, it would increase the public investment in the Gateway project to nearly $24 million

The city secured nearly $10 million in state grant funding to construct the main arterials to access the property.

There are protections to ensure the public is not making a hefty investment in a private development that doesn't move forward.

The city would not sell bonds to reimburse the developer until it's demonstrated that Lacey Gateway brings in three times the revenue needed to meet its financing obligation. Some of the money beyond that obligation would be used to provide services to the development, such as fire and police protection. The state will not provide any matching money until it's assured the development is generating enough tax revenue to meet its obligation under the program.

City Manager Greg Cuoio has said the property should begin generating tax revenue and jobs by the fall of 2013.

One challenge for the developer will be getting the project off the ground in uncertain economic times. The Cabela's sporting goods store, meant to draw development into the area, opened in November 2007 and the remaining acreage remains undeveloped.

No other property owners are affected by the proposal. Several taxing districts, including Thurston County and the Port of Olympia, opted out, so the revitalization area does not divert tax revenue they'd otherwise gain. The proposal does not increase the sales tax or property-tax assessments

The town center's master plan is in environmental review.

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