Vancouver could lose one parking lot a year but gain affordable housing under a proposed tax break.
In a Monday public hearing, the city council will consider adopting a sales tax deferral on construction material used to build affordable housing in parking lots.
Projects must be on underdeveloped urban land currently used for parking lots and must be affordable for 10 years to qualify.
“That additional affordability component is tremendous,” Councilor Ty Stober said at a Dec. 16 Vancouver City Council meeting. “I’m excited because this also helps us meet our climate goals by a decrease in the amount of … surface parking space in the city.”
Owners of underdeveloped ground-level parking lots are eligible for the tax deferral if they develop residential projects where at least half of the units are affordable for people making less than 80 percent of the area median income ($63,150 a year for a single person). If the units stay affordable for 10 years, they qualify for tax deferral forgiveness.
Michael Andersen, cities and towns director for the think tank Sightline Institute, has written much about trade-offs between parking and housing.
Housing for people making up to 80 percent of the median income is still close to market-rate prices, Anderson said. However, he thinks the program is a step in the right direction.
“For some of the best opportunities for finding places we can build new homes within urban areas, we should be looking at places with a bunch of underused parking spaces,” he said.
Although city staff admit few projects would qualify for the sales tax deferral, it’s a way for the city to make building projects that do qualify more affordable, said Patrick Quinton, economic development director for the city.
“If we have one project a year under this program, that’s a good outcome just because I think it’s such a narrow set of circumstances,” Quinton said. “There aren’t that many housing projects in total, very few of them ever happen on a parking lot.”
The city can maximize its impact by taking advantage of the program, created recently when the state passed a law giving cities the ability to create a retail sales and use tax deferral program as a tool to support affordable housing production, Quinton said. The tax break would mostly come from the state, which has a 6.5 percent sales tax, while the Vancouver sales tax is 2.2 percent.
The program would likely cost the city less than $600,000 per year, according to a city staff report. A construction project with $6 million in eligible materials costs would mean $522,000 in forgone taxes.
“Given that we just passed a budget and approved raising taxes for our residents, I would like for us to be very thoughtful, including our staff and manager, about any tax deferral efforts that we do at the city,” Councilor Diana Perez said.
