The Kent City Council dumped its proposal Tuesday night to form a local improvement district (LID) to help pay for railroad-vehicle grade separation projects.

The council pulled from the agenda a resolution that would have set a Oct. 21 public hearing about a property tax fee on 500 or so property owners who would benefit from projects along South 212th and 228th streets that would separate vehicles from trains by moving a road either over or under the railroad tracks.

“After a large input from property owners we are back to the drawing table,” Council President Dana Ralph said. “The LID as presented will not move forward.”

The council met informally with more than 60 people on Monday night at the ShoWare Center to get feedback about the proposal. All of the property owners and business representatives who attended opposed the LID, said Andrea Keikkala, CEO of the Kent Chamber of Commerce, which organized the meeting.

“The LID as it is currently proposed is not going to proceed,” Councilman Dennis Higgins said. “There are some more questions that the council has for Public Works staff and some more conversations that the council would like to have with the community about the current situation and that will be happening right away so stay tuned for that.”

If the council had passed the resolution, it would have set up a public hearing and vote by the council about whether to form the LID. Even if the council approved a LID, property owners could have overturned it similar to what property owners did for street improvements along Southeast 256th Street in 2013. The council later decided to use business and occupation tax revenue for the 256th Street improvements that are nearing completion.

City staff expected the LID to bring in about $54 million for the three railroad grade projects, which will cost about $79 million to build the overpasses or underpasses. The city plans to pay about $8 million for the work and receive nearly $16 million in grants.

The LID property boundaries were roughly from South 240th Street north to South 200th Street and from Highway 167 west to the Green River.

The council approved in July a $100,000 contract with Foster Pepper PLLC to conduct a preliminary LID special benefit study for South 228th and 212th streets to determine the amount of benefits to each property within the boundary. That study showed property owners would benefit and helped lead to a 3-0 vote on Monday afternoon by the council’s Public Works Committee to refer the resolution to the full council. Higgins, Ralph and Brenda Fincher serve on that committee.

But the council quickly changed its tune after meeting with property owners.

“I believe you heard many firsthand accounts of how this will negatively affect the business community,” Keikkala said in an email to the council. “Due to the outpouring of concern and opposition from our members and the business community, the Kent Chamber of Commerce is opposed to the formation of the Local Improvement District number 366.”

Keikkala further outlined the chamber’s opposition in a formal letter to the council.

“The council seeks to have a small portion of the business community pay for the majority of the projects to avoid losing the grants,” she said. “The affected businesses may have to take out large loans; delay their own maintenance projects, hiring and expansion that would create jobs; or worse, move or close.”

City officials are scrambling to find funds in an effort to keep $13.2 million worth of grants from the state Freight Mobility Strategic Investment Board to help pay for the street/railroad projects. The board wants the city to deliver a funding package to it by November.

Keikkala said the chamber would work with the council to lobby the freight mobility board for another extension of its grant. About $9 million in grants from other sources also could be lost if the city doesn’t have a funding plan to get the board’s grant money, according to city staff.