Tension mounts over state plan to transfer 192 acres in Spokane to private developer

A pending land swap by the state Department of Natural Resources is sparking controversy in Spokane.

The department wants to transfer nearly 200 acres southwest of the city’s downtown to a private real estate developer, which has plans to build as many as 1,000 homes, a park and a civic center. In exchange for the land, the city would get a different commercial plot in Bellingham.

The state says this fits with its goals to generate revenue for schools and increase housing on state lands. The Spokane property was once used for logging but hasn’t generated timber revenue in more than a decade, so it is time to find another use for it, according to the department.

But nearby residents and many city leaders say the surrounding infrastructure is not ready for such heavy development and that the plans could eliminate some of the last undeveloped land in and around Spokane. 

Phil Larkin, a local conservation advocate, applauded the department’s efforts to expand housing. But in this case, he said the site is poorly suited for what’s been proposed.

“I feel like they’re ignoring the nuance blatantly,” he said.

The plot, known as the Thorpe property, is located in the city’s Latah Valley. The department’s plan is to transfer the 192-acre plot to Redmond-based Blue Fern Development, which has plans to develop 160 acres of it. 

Blue Fern would give the state a 4-acre parcel in Bellingham which is the site of a Haggen Grocery Store and parking lot. The Haggen property is currently for sale, and Blue Fern would need to acquire it first, according to state documents.

The exchange has been years in the making and has led to tense community meetings, a failed conservation effort and a push from the Spokane City Council to pause the proposal. 

The department could present its plan to the Board of Natural Resources for final approval as soon as next month. 

Community conflict

The Latah Valley lacks enough roads, fire departments, schools, water and other resources to handle so much new housing, said Adam Marshall, co-founder of Citizen Action for Latah Valley.

Another worry is that the plot is in an area susceptible to wildfire. Building more homes there raises the risk of property damage if there is a blaze. And with few roads, and some passing through narrow tunnels leading in and out of the valley, evacuating residents and getting fire crews in could prove difficult and dangerous, Marshall said. 

“There’s all levels of either lacking or deficient or nonexistent infrastructure along the valley for any further development of any size, certainly not a project where hundreds of more people are coming in,” Marshall said. 

City leaders also have concerns. 

The Spokane City Council has imposed bans on development in the area since 2022, citing the lack of infrastructure.

Last week, the council passed a resolution urging the state to pause the transfer process for 180 days to give community members another chance to weigh in. The resolution passed 5-7 but in itself does not force the state to change course. 

“We value the City Council’s input, and we will incorporate and respond to it — along with the comments we received at last week’s public hearing — as we consider the best path forward,” said Department of Natural Resources spokesman Michael Kelly.

A need for more housing 

The Department of Natural Resources has a constitutional duty to make money for the state from the lands it manages, and when the agency can’t do that, it often looks for ways to swap land for property that will generate revenue.

In this case, the state would earn lease payments from tenants at the property in Bellingham.

“This DNR-managed property is not fulfilling its potential to do a lot of good for the city of Spokane or the state of Washington,” Kelly said. “That is why we believe it is imperative to look at other options.” 

The Thorpe property is designated for residential development under the county’s comprehensive plan, which Kelly said makes it an opportune place to build. 

Figuring out how to get more housing on state lands is still new to the agency, said Krosbie Carter, housing policy advisor at the department. The agency is trying to be sensitive about where it’s opening land to construction. It’s only looking at plots that are allowed to be developed under the state’s Growth Management Act, which requires local governments to plan for growth in their communities. 

“We aren’t looking out in very rural areas for parcels that have no infrastructure because that’s not where the county and city plans have said they want housing,” Carter said. 

Spokane City Council member Jonathan Bingle, who voted against the resolution to encourage a pause in the exchange, said not moving forward on the development would mean missing out on more housing, which the city “desperately needs.”

“For us to achieve these goals, development really is the solution if it’s done properly,” Bingle said during last week’s meeting.

Other options

At a community meeting last week, the department presented other options they are considering for the Thorpe parcel.

One would allow the department to exchange properties with the housing developer but then allow the developer to transfer rights to the city or the Spokane Tribe in exchange for another plot of land not in the Latah Valley. 

Another option would be for the department to transfer the land directly to the Spokane Tribe. Or the department could auction the property to the highest bidder.

Kelly said the agency is currently talking with the Spokane Tribe as well as the city and Blue Fern about whether any of these options are viable. 

The city also asked the state to transfer the land to them directly through a process known as a Trust Land Transfer. The city’s parks department applied for the transfer in an attempt to preserve the land as green space.  

As part of the Trust Land Transfer process, the Department of Natural Resources ranks applications to determine which ones should advance. The Legislature has the final say over these transactions.

The Thorpe property ranked 18th out of 30, likely not high enough for the department to move forward with the city’s request. Kelly, the department spokesperson, said at least two-thirds of the Trust Land Transfer Advisory Committee gave low marks for the land’s ecological values, economic values and tribal support. That’s three of the five categories on which applications are evaluated.

Erin Hut, the city’s communications director, said the city is currently working with community members and the state to determine the best path forward for the land. 

The mayor’s office has secured some funding for planning and fire safety in the Latah Valley, Hut wrote in a post on the city’s website, adding that Mayor Lisa Brown is “committed to working with the City Council, neighborhoods, and other governments to ensure that the past practice of allowing development without appropriate infrastructure and public facilities does not continue.”

Community members have until Dec. 18 to submit public testimony on the state proposal.

From there, it’s up to the department to determine when it will present the plan to the Board of Natural Resources. 

Kelly said the agency hopes to present it at the board’s Jan. 7 meeting, but Kelly acknowledged the department needs time to review community input and talk through alternatives. Those discussions could push the presentation to the board later in 2025. 

 The Jan. 7 meeting is before the next commissioner of public lands, Dave Upthegrove, will be sworn into office. The commissioner is a voting member of the board. In a text to the Standard, Upthegrove said he would not comment on decisions in the current department and is focused on building his team before he takes office Jan. 15.