Kassab asks city for tax break
Downtown Vancouver apartment project needs same deal others got, he says
Tuesday, July 19, 2011
The developer who plans to build apartments on the site of downtown Vancouver’s Burgerville restaurant has asked the Vancouver City Council for the same state tax break that helped spur millions of dollars worth of development on the fringes of Esther Short Park.
Elie Kassab has asked city leaders to limit property tax assessments to the land beneath his proposed 92-unit apartment complex and its ground-floor commercial spaces, while allowing him to forego taxes on the upper three stories of the buildings for the next 12 years. That would save him an estimated $93,000 annually, or about $1.1 million total, according to a city consultant’s analysis.
Without the property tax break, it wouldn’t be possible to build his planned apartment complex near the Interstate 5-Mill Plain Boulevard entrance to downtown Vancouver, said Kassab, a local developer and president of Prestige Development. “It won’t pencil out without it,” Kassab said.
He needs the backing of a majority of the seven-member city council to get the tax break he’s asking for.
At least one city council member expressed concern about encouraging downtown rental units. City Councilwoman Jeanne Stewart said owner-occupied condominium units might be better than rentals, because condos bring more stability to downtown.
But the market potential of apartments has changed since state legislators passed the multifamily tax abatement ordinance, said Councilman Pat Campbell.
“There are younger people and people who have lost their homes that are looking for a place to live,” he said.
Other downtown projects that took advantage of tax abatements include the Heritage Place, a $17 million condominium and retail development across from Esther Short Park in downtown Vancouver. Tax abatements also helped build the apartment units in the $100 million Vancouvercenter on the east side of the park.
The two projects touched off a multi-million-dollar wave of redevelopment in the downtown core, bringing more than 525 housing units online.
Nearly a decade later, city leaders still want to attract downtown residents, said Tim Leavitt, Vancouver mayor, who appeared to support using the tax abatement for Prestige Plaza.
Explaining his need for a tax abatement, Kassab called the construction-lending environment stringent. Financiers are scrutinizing every detail of his $12 million project, he said, despite its potential in a booming rental market.
Cover full city block
Called Prestige Plaza, the project includes two four-story buildings that surround a 70-space surface parking lot. The complex will take up a full city block between C and D streets, bordered by Mill Plain Boulevard to the north and by East 13th Street to the south.
Planned to open in mid-2012, Prestige Plaza’s ground floor will include eight live-work spaces for small-business owners.
Retail or restaurant space will face Mill Plain Boulevard in almost the exact same spot Burgerville has stood since 1962. The Vancouver-based company plans to close the hamburger stand by the end of September.
“There could be a restaurant, a café or a convenience store in that space,” Kassab said.
Burgerville chief executive officer Jeff Harvey has said his company plans to replace its walk-up restaurant with another downtown Vancouver location.
Apartment rents at Prestige Plaza will start at $700 per month.
Generate $2.4 million
The units would be the only part of the project eligible for the 12-year property tax break, according to Paul Lewis, city consultant.
Property taxes will be assessed on the land underneath the development and on its ground-floor commercial space, he said, predicting that in 25 years, Prestige Plaza would generate an estimated $2.4 million in property and sales tax revenue.
The amount would double the estimated $1.2 million generated over the same time period by the site’s Burgerville.
“This is a great example of what we can do with the limited resources we have,” Leavitt said. “I certainly don’t want to see our downtown be a ghost town. I don’t think anyone does.”
Some council members said the project could spur new development off Interstate 5’s Mill Plain Boulevard entrance into the city.
Recent projects in the area include the $57 million Al Angelo Building, and Vancouver-based iQ Credit Union’s $10.5 million headquarters, which both opened in 2009. The Angelo project replaced a vacant and crumbling Denny’s restaurant. The credit union represented a complete remodel of the city’s former service center.
In September, the city will vacate its aging City Hall, which takes up the city block between the Prestige Plaza site and iQ Credit Union’s headquarters. City leaders have not yet decided what they will do with the crumbling building, owned by the city while the land is owned by Vancouver Public Schools.
Editor's note: This story has been modified to reflect a correction.