Wednesday, January 20, 2021
Jan. 20, 2021

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Vancouver City Council OKs tax break for apartment complexes

Members of council, community question program’s value, cost

By , Columbian staff writer
Published:

The Vancouver City Council approved a tax exemption for the developers of two new apartment complexes this week, though there’s growing skepticism from the council and outright frustration from some community members over whether the tax breaks are ultimately helping or harming the city.

The Multifamily Tax Exemption program, or the MFTE, offers tax breaks to developers who price a portion of their units under a certain monthly rent threshold, or who offer to provide some sort of public benefit, such as a park or an art installation.

The idea is to increase housing stock, providing an incentive for developers to build in Vancouver. But some are starting to question if the trade-off is worth the lost revenue — and if the tax breaks are actually necessary in order to draw developers.

“It appears to be a handout,” said Glen Yung, one of the community members who addressed the council Monday and a frequent critic of the program. “We have no data specifically telling us yes, indeed, these projects wouldn’t have happened without it.”

One project approved for the program on Monday, a mixed-use complex located at 1605 Columbia St., agreed to price two of its 10 units so they’re affordable to tenants making up to 80 percent of the area’s median income. The other project, a 178-apartment complex in The Waterfront Vancouver development, will price 20 percent of its units for tenants who make 100 percent of the area’s median income.

In exchange, the Columbia Street property will receive a 10-year break on its property taxes, saving the developer $21,000. The much larger Waterfront property will receive an eight-year exemption, to the tune of $748,000.

Teresa Hardy, another community member to speak at Monday’s hearing, asked the city council to freeze the program until staff can complete a more comprehensive audit of its impact on Vancouver.

“The city is not collecting taxes on residential units for eight or 12 years. There should be transparency with the public as to how much these units will cost the city in services while we are not collecting taxes,” Hardy said. “What’s the cumulative impact of all these approved MFTEs? And how large of a deficit is created by this program in its entirety?”

Tenants are living in 1,514 units built under the program, which was established in 2001. Another 1,618 units have been approved for the exemption, with around half of those already under construction.

A flawed formula

The formula used to calculate Vancouver’s median income is an often-criticized element of the MFTE program because it groups the city together with the larger Portland metro area, where higher salaries artificially inflate how much Vancouver residents can seemingly afford.

In Vancouver alone, the median income for a family of four is $64,000. But in the greater Portland metro area — used to calculate rent affordability — the median family of four makes $92,100.

As a result, apartments that are technically “affordable” as defined by the MFTE remain out of reach for most Vancouver families, even as their developers receive a tax break for meeting that metric.

The problem is particularly egregious with housing projects that get the eight-year exemption for pricing 20 percent of their units at 100 percent of the area’s median income, said Councilor Ty Stober. He was one of two councilors to vote against approving the exemption for the Waterfront apartment project, where rents will range from $1,550 for a studio to $2,825 for a two-bedroom unit.

“I don’t believe that there really is a discount off market-rate housing at this price point. It is a way for developers to skirt the public benefit process,” Stober said.

Sarah Fox, the other councilor to vote against granting a tax break to the Waterfront project, said that the city needs to revise its metrics of affordability before moving forward.

“Vancouver’s definition of income is out of whack,” Fox said. “It really is not satisfying to say, rents of this rate are really showing us, as a city, a real public benefit.”

The city council started the work of reassessing the income formula late last year, with a general consensus that it should be tied to Vancouver alone. A tentative timeline laid out Monday would see that work completed by July.

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