Three proposed multifamily residential developments in downtown and uptown will be exempt from property taxes for several years under agreements approved Monday by the Vancouver City Council.
The developments will add a total of 399 units to a city that has had an apartment vacancy rate as low as 3 percent, and puts the units where the council — and the state’s Growth Management Act — wants them, in urban areas with easy access to employment, shopping, entertainment and public transit.
“Between 2000 and 2010, the buying power of Vancouver residents declined; renter income increased by less than a quarter of what was needed to keep up with median rental increases,” City Manager Eric Holmes wrote in a report for the council. “In addition, the rental market has tightened considerably over the last few years.”
The council voted 7-0 to approve the limited property tax exemptions, part of a program aimed at encouraging high density developments in targeted areas of the city.
In addition to location, qualifying factors include current use (the proposed site must have been vacant for at least 12 months before the developer applies for the exemption) and size.
Two projects were granted eight-year property tax exemptions, while a third received a 12-year property tax exemption because it has an affordability factor.
That $16.5 million, 113-unit project, the South Tower at Vancouvercenter, will complete the development east of Esther Short Park. Twenty percent will be rented to or owned by people whose income falls at or below 115 percent of the area median income, according to the agreement.
The rent cannot exceed 30 percent of the resident’s income, said Peggy Sheehan, program manager for the city’s community and economic development department. The owner would calculate it for each tenant.
In a Dec. 8 workshop with the city council, Sheehan said 115 percent of the current annual individual median income would be $55,890, meaning monthly rent would be no higher than $1,397.
The South Tower at Vancouvercenter includes 2,048 square feet of retail space; tenants would park in the city’s Vancouvercenter garage.
The eight-year exemptions were granted to two projects by Vancouver developer David Copenhaver.
The Uptown, a $37 million, six-story full block development facing Main Street between 17th Street and McLoughlin Boulevard, includes 167 market-rate units. It also calls for 8,100 square feet of retail space, a 142-space parking structure and use of 25 on-street parking spaces.
Copenhaver’s second project, 610 Esther, sits across from the southwest corner of Esther Short Park.
He bought the property, including the two-story Esther Short Building and a vacant lot, earlier this year for $5 million from the city.
The $24 million project includes 119 market-rate units and 199 parking spaces, 45 of which would be allocated to an adjacent (non-city owned) office building.
Construction on all of the projects are expected to start late this year.
In Holmes’ report, he said the three projects will create a total of 85 construction jobs and generate $3.67 million in taxes over 20 years, even factoring in the exemptions.
That’s compared to $917,000 worth of taxes generated by the sites’ current states.
Each tax exemption agreement was subject to a public hearing Monday. Nobody testified in opposition.
Under the tax exemption, the land value is taxed as usual but the addition of new property to the tax base is delayed, Sheehan said.
At the end of the exemption period, the project is added to the tax base as new construction.
Any other new construction associated with the project is taxed as usual.
Prior to 2007, the ordinance allowed projects to be exempt from property taxes for a decade without affordability requirements, according to Holmes’ report.
Exemptions for Heritage Place, Vancouvercenter and Anthem Park have expired.
Since 2007, the council approved 12-year exemptions for Prestige Plaza and the 15 West Apartment project that’s under construction.
