Title
Approval of Resolutions Authorizing Two 8-Year Multifamily Housing Property Tax Exemption Agreements Between the City Of Olympia and Fourth Street’s Cottages, LLC for Cottage Apartments
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve resolutions authorizing two 8-Year multifamily housing property tax exemption agreements between the City Of Olympia and Fourth Street’s Cottages, LLC for Cottage Apartments
Report
Issue:
Whether to approve resolutions authorizing two 8-Year multifamily housing property tax exemption agreements between the City Of Olympia and Fourth Street’s Cottages, LLC for Cottage Apartments
Staff Contact:
Jacinda Steltjes, Housing Division Manager, Community Planning & Economic Development, 360.753.8482
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
Project Summary
Fourth Street’s Cottages, LLC is requesting an 8-year multi-family property tax exemption (MFTE) for a market-rate housing project being constructed at 414 Franz Anderson Rd. SE, parcel number 41700600100, and 422 Franz Anderson Rd. SE, parcel number 41700700000, in Olympia’s Eastside residential target area. The project will produce 50,447 square feet of residential space and 12,777 square feet of parking for the project’s residents. The project, known as Cottage Apartments, will produce 58 market-rate housing units which are anticipated to become available beginning February 2027.
8-Year Multi-Family Tax Exemption Program
The City’s 8-Year Multi-Family Tax Exemption (MFTE) program, which permits market-rate housing units, was revised in January 2024 to reposition the program as a tool intended to increase affordable housing. Olympia Municipal Code 3.57, formerly OMC 5.86, now requires all applicants for the 8-Year MFTE program to pay a fee in lieu of producing affordable housing units- defined as units that cost low-income households whose annual gross income does not exceed 80% of Area Median Income no more than 30% of their income. The fee in lieu of producing affordable housing units is equal to 5% of the anticipated ad valorem tax exemption in Olympia’s Eastside residential target area and Downtown residential target area. The fee is 25% in the Westside residential area. Fourth Street’s Cottages, LLC will pay approximately $43,477 as a fee in lieu of constructing affordable housing units.
Climate Analysis:
The project is located approximately one-half of a mile from Intercity Transit bus routes 60, 62A and 62B, located along Martin Way. Proximity to transit options encourages residents of the project to use public transportation.
However, the project also includes a parking garage for residents. The city does not require any parking for the project and the inclusion of dedicated on-site parking encourages auto-centric transportation and an increase in carbon emissions.
Equity Analysis:
The City is currently updating its Comprehensive Plan, to include its Housing Element. The Plan must illustrate how the City of Olympia plans to make housing available to meet the needs of the population growth projected to occur by 2045. The Housing Element of the Comprehensive Plan outlines the need for 14,295 additional housing units in the City of Olympia and its Urban Growth Area in the next 20 years. Of these, roughly 4,350 new units are projected to be needed for households whose annual gross income is 100%+ of area median income. The Cottage Apartments will produce 58 market rate units.
Lastly, the fee in lieu of developing affordable housing units will be directed toward the production of affordable housing units in Olympia. In this way, the 8-Year MFTE program and the Cottage Apartments project will help support the creation of affordable housing units in Olympia, of which the Housing Element calls for approximately 7,600 units for households whose incomes are at or below 80% area median income.
Neighborhood/Community Interests (if known):
Housing is a top concern within the community. The Multi-Family Tax Exemption program is a program that the community expressed strong opinions about when it was revised in January 2024. Some members of the community publicly commented that they feel the MFTE program should not be available to market-rate housing developers.
Financial Impact:
There is no direct financial impact to the City of Olympia. However, property taxes associated with the value of the residential improvements will be exempted for an eight-year period. The amount of property tax Fourth Street’s Cottages, LLC will be exempted from paying will be determined annually by the Thurston County Assessor’s Office. The annual exemption takes into account the assessed value of the residential building improvements and the current year’s property tax rate. Olympia’s MFTE programs operate using a tax shift rather than a tax deferral approach. This means the tax exemption MFTE projects experience is shifted to other Olympia property owners to maintain the overall revenue collected by the taxing districts.
Options:
1. Approve the resolutions as presented authorizing the City Manager to sign the multifamily tax exemption agreements between the City of Olympia and Fourth Street’s Cottages, LLC
2. Approve amended resolutions authorizing the City Manager to sign the multifamily tax exemption agreements between the City of Olympia and Fourth Street’s Cottages, LLC
3. Take no action.
Attachments:
414 Franz Anderson Resolution
422 Franz Anderson Resolution
414 Franz Anderson Agreement
422 Franz Anderson Agreement