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Developer tax break for Midtown District being considered

SNOHOMISH — From the new Midtown district that runs down Avenue D and beyond, the city is looking to stimulate development.
The city already offers a tax break within the Pilchuck District, which runs up Maple Avenue, for anyone who wants to build a new multi-family building. City planners are now asking if the new Midtown District should become another area.
The short-term property tax break is for new apartments, townhomes or condominiums. The break exempts the tax assessed on the building (but not the underlying land) for a set period of time: Eight years of tax discounts for building one, and it stretches to 12 years if 20% of the residential units are rent-limited to be affordable for people who earn moderate to low incomes.
“We’re trying to attract development to Midtown, and now we’re trying to direct it to affordable housing, and this is a way to do it,” city planning director Glen Pickus responded to a comment at the City Council.
The city’s exemption is identical to state law.
A tax deferral is a break, but not a subsidy, Pickus said.
Developers today look for cities that offer tax breaks, and almost expect it, Pickus told the council.
In the Pilchuck District, it appears only one redevelopment project has utilized the deferral: The mixed-use building at 161 Lincoln Ave., which has seven units upstairs.
The council favored giving priority permitting for projects that include affordable housing.
It might delve into offering discounts on the city’s impact fees on parks, utility connections or roads. The city cannot waive school district impact fees, Pickus said.
A couple of residents who spoke at the meeting opposed giving developers tax breaks.
“Those exempted property taxes would then fall to the shoulders of the rest of the residents to make up a budget shortfall,” Merritt Weese said, adding that “I have no confidence that after eight to 12 years a property owner wouldn’t just raise the rents” to market rate on the affordable housing units, which only leads to displacing the tenants who live in those units.
There were other incentive suggestions which were shot down. For example, council members did not favor an idea to allow bonus heights taller the city’s established building height limits if affordable housing is built into the project. Another idea shot down was to reduce the minimum number of parking spaces at a development.

 

  

 

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