Title
Approval of a Resolution Authorizing a Multifamily Housing Tax Exemption Agreement Between the City of Olympia and 500 Columbia Place LLC.
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to approve the resolution authorizing a Multifamily Tax Exemption for 500 Columbia Place LLC and authorize the Interim City Manager to sign the agreement.
Report
Issue:
Whether to authorize the Eight-Year Multifamily Tax Exemption for 500 Columbia Place, LLC.
Staff Contact:
Cary Retlin, Home Fund Manager, Community Planning and Development, 360.570.3956.
Presenter(s):
None - Consent Calendar Item.
Background and Analysis:
The downtown Harbor Heights Apartments at 500 Columbia Street NW will create retail and commercial office space, and 116 new units of multifamily residential housing in the Multifamily Tax Exemption Downtown Residential Target Area. The project has been reviewed by the Site Plan Review Committee, and the land use, design and environmental review has been completed. The property is currently under construction.
500 Columbia Place LLC is seeking an eight-year tax exemption for the 116 market-rate units. The tax exemption applies to all qualifying residential units for eight years, but can be extended to 12 years if 20 percent of the units serve households below 80 percent of MFI (Medium Family Income). Staff worked with the development team to encourage the 12-year program - and they enthusiastically considered that program. Unfortunately the developer was unable to make this project financially viable for the 12-year affordable program units because of construction and other costs (a challenge other downtown developers have shared).
Background on the Multifamily Tax Exemption in Olympia
The primary purpose of this program is to promote construction of housing in key areas of the city where we would like to incentivize housing development. State law authorizes the City of Olympia to adopt a multifamily housing tax exemption program (RCW 84.14). The program provisions under Olympia Municipal Code under 5.86 were most recently amended in 2009 to create an eight- and 12-year program for market-rate and affordable-housing provisions.
The property tax exemption applies to only the increased value of building housing (new construction). The exemption does not apply to the land or costs associated with any non-housing improvements. The units in this project meet all the requirements to be eligible for a tax exemption, including:
• The housing is located in the Target Area, which is one of three designated residential target areas adopted by the City Council (which was modified earlier this year);
• 50 percent of the space or more is for permanent residential occupancy;
• Four or more new housing units are created;
• The project complies with the City’s comprehensive plan, building and zoning codes;
• The construction/rehabilitation will be completed within three years of approval of the application;
• The property was vacant at least 12 months prior to application; and
• No tenant displacement occurred.
Neighborhood/Community Interests (if known):
This project is within the Downtown Neighborhood Association and Olympia Downtown Association areas, and is of general interest citywide.
Options:
1. Approve the resolution authorizing the Multifamily Tax Exemption agreement and authorize the Interim City Manager to execute the agreement.
2. Remove this item from the Consent Calendar and provide further direction to staff.
3. Direct staff to take other action.
Financial Impact:
Property taxes will continue to be paid on the underlying property, and on non-residential portions of the new construction. The value of the residential improvements (estimated to be $30,400,000) will be exempt from Ad Valorum tax for eight years after completion of construction.
Attachments:
Resolution
Agreement