A developer who is looking to build hundreds of apartment units off of West Main Street in Battle Ground is seeking to take advantage of a state law that allows property tax breaks for projects that feature affordable housing.
During its July 18 meeting, the Battle Ground City Council voted 4-3 to begin work on an amendment to a development agreement between the city and Deacon Development on a project known as “West Main Commons.”
The $85 million project’s current agreement features 220 market-rate apartments ranging from studio to two-bedroom units and 36,000 square feet of commercial space on the project’s north end. The development would be located to the west of Battle Ground’s Best Western hotel.
At the meeting, Deacon Development President Steve Deacon proposed an eight-year Multifamily Tax Exemption (MFTE) for the project. The exemption is allowed under state law and would abate property taxes on some of the development for that time period, if approved.
The MFTE would only apply to improvements to the residential portion of the project, Deacon noted. The commercial property and the land before improvements of the residential area would still be subject to a full property tax.
If approved, 10% of the units in the project would be deemed “affordable,” Deacon said. The affordability would be based on households with 80% of median family income.
“The MFTE is really very important for our financial planning. We’re realizing it more and more as the cost of construction goes up, it feels like every week,” Deacon said.
If the exemption is approved, the city is estimated to collect about $536,000 less in property taxes over the duration of the exemption.
Other taxing entities, like Clark County Fire District 3 and Battle Ground Public Schools, would also be impacted by the exemption.
Due to “considerable concern” over impacts to the fire and school districts, the developer offered to fund a $300,000 grant for both entities, which would be distributed by the city, Deacon said.
Councilor Shane Bowman was leery about the proposed tax break.
“I hate the fact that the other taxpayers are subsidizing it,” Bowman said.
When an entity like a school district runs a bond, the total amount is paid from the total tax pool.
“A ladder truck costs $1.2 million now. To split that ($300,000) with the school district … that’s peanuts to them,” Bowman said.
Bowman said he thinks the project is “phenomenal,” but noted he doesn’t like giving away tax money.
Deacon highlighted some of the positive revenues the project would generate. If built, the project would generate about $1.8 million in sales tax during construction, roughly $2.1 million from retail sales taxes, $1.2 million from property taxes with the MFTE in place, and $3.9 million in permit and system development fees.
Both Bowman and councilor Shauna Walters questioned the basis of one-and-a-half parking spaces per household in the development, as is included in the current agreement.
Deacon said he couldn’t speak to trends specific to Battle Ground, but nationally, he said there’s a trend of fewer cars per household.
“Just about every single apartment complex in this area, there are cars that are overflowing onto the street,” Walters said.
Bowman said the car makeup in the city is completely different than what a person sees in downtown Vancouver.
“If you go through most of our subdivisions in Battle Ground, you don’t have small vehicles. You have big trucks,” Bowman said.
City Manager Erin Erdman noted the commercial space has its own parking requirements based on square footage. The project currently includes plans for 85 studio apartments and 85 one-bedroom units, while the rest feature two bedrooms, which may result in the need of fewer parking spaces than other developments.
The affordable housing stipulation would have to stay in place during the eight-year exemption, according to the development agreement.
Deputy Mayor Cherish DesRochers said she is concerned about what would happen to the residents who utilize the affordable housing option once that stipulation expires.
“A lot of times when people get in somewhere, they want to stay there permanently, especially if they’re like a senior,” DesRochers said.
Bowman said housing built in the Esther Short Park area of Vancouver utilized what some members of the council called the “tax loophole” of the MFTE.
“I’ll bet you my council paycheck for the month that there’s no affordable housing left in the Esther Short Park area. It’s all high-end housing now that (the exemption) has ran out,” Bowman said.
Bowman, DesRochers, and councilors Adrian Cortes and Troy McCoy voted to begin work on amendment of the development agreement. Councilors Walters, Tricia Davis, and Mayor Philip Johnson voted against it.
“I’m not real hip on giving away the people’s money. I’m not real hip on opening up people’s checkbook. And I’m not real hip on letting folks pass by on their obligation,” Johnson said.
Johnson noted he owns three rental properties and said the exemption is the result of large-scale developers who have stronger lobbying powers in Olympia than “mom-and-pop” landlords.
“(If) I don’t pay my taxes … the county treasurer will lay them on the line and sell them for me,” Johnson said.
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