Tacoma City Council members took the next steps Tuesday in the campaign to keep Russell Investments from moving its headquarters out of town. They took action on one piece of a multifaceted $140 million incentive package introduced to Russell executives in March, by voting unanimously to create an International Financial Services Area in the city’s downtown.

Council members also held a public hearing and heard the first reading of an ordinance on a related item, a proposal to designate more than 658 acres of downtown as a Revenue Development Area. Establishing the area is part of the city’s attempt to receive $1 million a year for 25 years in future sales and property taxes.

The program does not impose new taxes, but allows the city to retain state sales taxes and some of the property taxes from future growth within the defined area. The city plans to use the money to pay back bonds that would yield about $13 million. The money would help fund a $72.3 million project to build 1,500 parking spaces and pay for streetscape improvements.

In addition, council members heard the first reading of an ordinance that would reduce the city’s share of the business and occupation tax for Russell and other financial services companies in the city, and eliminate it by 2013.

The move would benefit Russell about $1.5 million per year from 2009 to 2013, and save the company an additional $15 million over the next decade, according to the proposal.

Russell executives have not commented on the proposal. It’s expected that the company will make a decision about its future headquarters before the end of the year.

The company, the largest in Tacoma’s downtown core, has outgrown its headquarters and has indicated that it could build a new headquarters in Tacoma or move elsewhere, including Seattle.

A coalition of Tacoma leaders called the Tacoma Partnership put together the package aimed at keeping Russell in Tacoma. It includes $65 million in city funding, plus $54 million from the state and $24 million from the federal government.

Several business and civic leaders spoke in favor of the creation of a Revenue Development Area, including Bruce Kendall, president of the Economic Development Board for Tacoma-Pierce County; David Graybill, president of the Tacoma-Pierce County Chamber; and Tom Luce, executive director of the Executive Council for a Greater Tacoma.

All three men served on the steering committee for the group that developed the Russell incentive package.

Keith Stone, a resident of the city’s Dome District, also spoke in favor of the plan, but added that he wants the city to work to encourage retail and residential construction along with the parking structures, some of which are planned for the Dome District.

“We don’t want to become just a parking garage,” Stone said.

Jacob Carton with the group Jobs with Justice raised concerns about the plan, saying that he fears the incentives will create more “poverty wage” jobs unless the city imposes standards for jobs and housing. Carton also noted the absence of “working people” at the council meeting, something he attributed in part to the cancellation of last week’s planned public hearing and its rescheduling for Tuesday.

Last week’s City Council meeting was canceled due to a lack of quorum.

No one from Russell Investments spoke at the public hearing, but Elly Walkowiak of the city’s Community and Economic Development Department was not troubled by the absence. Walkowiak said she has been in contact with Russell officials and is confident they are watching the process.

The city has until June 30 to submit its application to the state for the sales tax revenue.

It’s a competitive process, and city officials expect to hear by September whether the application was successful.

The resolution establishing an International Financial Services Area calls on the city manager to develop recommendations to attract more financial services businesses, including banking, loan, security and investment management companies to the area of downtown between South Eighth and 15th streets and between Commerce Street and I-705.

Ryan Petty, director of the city’s Community and Economic Development Department, said the area wouldn’t just help Russell but was intended to also attract new businesses like Russell.

“It’s part of our strategy going forward to establish and recruit additional companies,” he said.

Jason Hagey: 253-597-8542

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